Obama Priority: Contract Reform


President Obama made a number of campaign commitments regarding the federal government’s contracting system, including more competition, more fixed-price contracts, and reducing government’s dependence on contractors.


With the passage of the Recovery Act, what’s become clear is that it can’t be effectively implemented without either more contract officers and/or fixing the complex procurement process.  This issue has quickly jumped to the top of the agenda.  Not only was government contracting a topic at the President’s Fiscal Responsibility Summit, it has begun to gain greater reach. 


Max Stier, president of the Partnership for Public Service, editorialized about the need for more, better trained, contract officers in “Federal Contracting System in Serious Disrepair.’  He says President Obama “should avoid a knee-jerk reaction of arbitrary cutbacks in contracting or automatic increases in the size of the federal career civil service.”


Yesterday, the President announced a contract reform initiative.  The directive asks OMB to lead a process to develop guidelines by July 1, 2009 to be used to re-assess all existing contracts to determine their usefulness.  In addition, OMB will lead a related process to develop guidelines by September 30, 2009 that would (1) govern the use of sole-source contracts, (2) define appropriate oversight of different contract types, (3) assess the capacity of agency contract staffs, and (4) clarify when outsourcing of services is not appropriate.


The media picked up the Obama contracting initiative as a “waste, fraud, and abuse” story, but the issue is really much more about governmental capacity, not malicious behavior.  For example, the Senate Committee on Homeland Security and Governmental Affairs held a hearing today where Allan Burman, former OMB administrator of the Office of Federal Procurement Policy testified on the contracting community’s ability to help implement the Recovery Act.  He clearly defined the challenge: “I would particularly like to call the Committee’s attention to the need for agencies to be fully prepared to define requirements and desired results early in the planning process, and to have sufficient and well-qualified acquisition resources [i.e., people!] in place to manage the procurements in an timely and effective manner.”


What’s not clear is how contracting officers will handle a record amount of new spending under the Recovery Act, with stricter requirements than existing contracts, and then comply with new OMB guidance to review all existing contracts to determine their usefulness!


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