OMB Continues Push for Commercial Products and Services

Key Takeaways

• FY24: >2/3 of federal spend non‑commercial, $130 B on common services
• Agencies must report non‑commercial awards and justify lack of commercial options
• Competition advocates must hold senior authority and push commercial buying
• OMB will benchmark commercial purchases and may review agency solicitations
• Contractors should gear up for increased FAR Part 12 opportunities

Pulse Analysis

The OMB’s latest memorandum, M-26-12, revives the commercial‑first philosophy first codified in the 1994 Federal Acquisition Streamlining Act and reinforced by President Trump’s 2025 Executive Order. While the FAR has long encouraged use of Part 12 for commercial items, OMB’s data show that in FY 2024 more than two‑thirds of federal contract dollars still flowed to non‑commercial solutions, with $130 billion spent on professional services, IT, telecom and facility operations. This gap signals a missed opportunity for cost savings and risk mitigation, prompting the White House to tighten oversight.

The memo’s reporting requirements force agencies to disclose every non‑commercial award above $10 million, detail market research, and explain why a commercial alternative was rejected. It also elevates the agency competition advocate to a senior‑level position, tasking them with championing commercial buying, coordinating with small‑business directors, and feeding data into a new benchmarking system overseen by GSA. By tightening data collection in FPDS and transitioning to SAM.gov, OMB aims to create a transparent baseline that can be used to measure progress and identify outliers.

For contractors, the shift represents both a challenge and a lucrative opening. As agencies are compelled to justify non‑commercial spend, the likelihood of FAR Part 12 solicitations—where commercial vendors can compete on price and innovation—will rise. Companies that can demonstrate commercial readiness, flexible pricing, and compliance with emerging data‑reporting standards will be better positioned to win federal work. Monitoring OMB’s upcoming benchmarks and aligning internal processes with the new stewardship actions will be essential for any firm seeking to capture a slice of the federal market’s evolving procurement landscape.