Agencies must cooperate with DOGE to review certain government contracts and grants, including examination of whether the government should terminate or modify such contracts or grants to reduce or reallocate spending, promote efficiency, or advance administration policy.

By Dean W. Baxtresser, Kyle R. Jefcoat, Anne W. Robinson, and Morgan L. Maddoux

On February 26, 2025, President Trump issued an executive order titled “Implementing the President’s ‘Department of Government Efficiency’ Cost Efficiency Initiative” (the Order) that directs the heads of agencies and their respective DOGE team leads to review existing “covered contracts and grants.” The review aims to identify which contracts or grants can be terminated or modified to reduce or reallocate federal spending in order to promote efficiency and the administration’s policies.

The Order applies broadly across the government but excludes from its coverage, among other subject areas, contracts or grants addressing the military and law enforcement. Specifically, the Order exempts “direct assistance to individuals; expenditures related to immigration enforcement, law enforcement, the military, public safety, and the intelligence community; and other critical, acute, or emergency spending, as determined by the relevant Agency Head.”

The review of existing covered contracts and grants is ordered to begin “immediately” and conclude within 30 days. The Order instructs agencies to prioritize a review for waste, fraud, and abuse of covered contracts and grants issued to educational institutions and foreign entities. Also due in 30 days is a review of agency contracting policies, procedures, and personnel. The Order prohibits issuing or approving new contracting officer warrants — which allow a person to negotiate contracts on behalf of the US government — during this 30-day window unless necessary.

Following the review, agency heads and DOGE team leads are directed to “issue guidance on signing new contracts or modifying” existing contracts to promote government efficiency and other administration priorities. Agency heads may approve new contracts prior to issuing new guidance on a case-by-case basis.

As part of the administration’s efforts to promote government efficiency, the Order also directs each agency to build a centralized system to record every payment (and its justification) issued by the agency pursuant to contracts and grants. Each agency is also instructed to build a system that documents approval for federally funded travel for conferences or other non-essential purposes. Once an agency’s systems are in place, the agency head will require brief, written justifications for federally funded travel and payments.The system will pause and review payouts that have no accompanying written justification. Payment justifications will be posted publicly to the maximum extent deemed practicable.

Aside from contracts, grants, and other federal payments, the Order sets out plans for offloading federal property. Within 30 days, agency heads are required to identify termination rights for existing leases and consult with DOGE personnel and the General Services Administration (GSA) to determine which leases should be ended. Within 60 days, GSA is required to submit a plan to dispose of property that agencies no longer need. DOGE has been targeting leases for termination since the start of the Trump administration, focusing on “unoccupied” and “mostly empty” office spaces.

Contractors or federal funding recipients whose contracts or grants are terminated or modified should be mindful of the possibility of increased public scrutiny and potential investigations, audits, or reviews into allegations of waste, fraud, or abuse of federal funds. In addition, contractors or federal funding recipients may be entitled to termination payments or other damages in the event that the government terminates a contract or funding agreement prior to its termination date.

Latham lawyers are carefully monitoring the rollout of new government contract and grant guidance.

The authors would like to thank Hannah Hsieh for her contribution to this blog post.