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2009: Putting the brakes on federal contracting

The Obama White House capped off a decade of unprecedented growth in government contracting by announcing plans to rein in that growth.

Contract spending more than doubled over the first eight years of the decade from $259 billion in 2000 to $530 billion in 2008 as the government responded to Sept. 11 attacks, established a new Cabinet agency, funded two wars and responded to natural disasters like hurricanes Katrina and Rita.

But in 2009, the new Obama administration hit the brakes.

In a series of memos issued in July and October, the administration ordered agencies to:

• Reduce contract spending by 7 percent — approximately $40 billion — by September 2011 by terminating wasteful, poor-performing, unnecessary or duplicative contracts and making better use of multi-agency contracts to get bulk discounts on commonly used goods and services.

• Increase the number of contracts subjected to full and open competition to ensure the best prices are received.

• Reduce the use of "risky" contracts that reimburse vendors for their actual costs and increase the use of fixed-price contracts to ensure project costs are controlled.

• Find work done by contractors that can be transitioned — or "insourced" — to federal employees. Agencies are expected to report the results of their studies to the Office of Management and Budget by April.

• Create five-year acquisition workforce strategic plans. The plans, due to the OMB in March, should increase acquisition workforces at all non-Defense agencies by at least 5 percent over the next five years. For its part, the Defense Department announced in April it would hire 20,000 more acquisition professionals, converting 11,000 contractor performed jobs to federal employees and adding 9,000 new federal civilian positions.

• Report contractor performance into the governmentwide Past Performance Information Retrieval System.

Work is under way: last week, OMB reported agencies already have identified $19 billion worth of procurement cuts for the current fiscal year. Efforts to hire more federal acquisition personnel, insource contactor-performed work, and report more frequently on contractor performance is expected to pick up in 2010.

In addition, with OMB's new procurement policy administrator Daniel Gordon recently confirmed, agencies will soon have a better idea of what work must be insourced. His office is expected to release a new definition of what work is "inherently governmental" and thus cannot be done by contractors.

Other procurement reforms were announced this year. The council of federal contracting officials that oversees the Federal Acquisition Regulation proposed new rules to:

• Require vendors that provide acquisition support services to federal agencies to certify that their employees have no personal conflicts of interest.

• Centralize the reporting of past-performance information, including suspension and debarments, into a new database called the "Federal Awardee Performance and Integrity Information System."

• Better link contract award fees to contractor performance.

Congress also weighed in with its own reforms. It passed 2009 and 2010 omnibus appropriations and Defense authorization bills that prohibit agencies from conducting public-private competitions for federally performed work under OMB Circular A-76.

Also, a newly created Senate subcommittee promises more congressional oversight of federal contracting. Part of the Senate Homeland Security and Governmental Affairs Committee, the panel is chaired by Sen. Claire McCaskill, D-Mo. It has already examined sole-source contracts with Alaska Native Corporations, lessons learned from military support contracts in Iraq, and the transparency of government contract data.

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Procurement policy administrator Daniel Gordon was recently confirmed by the Senate.

Procurement policy administrator Daniel Gordon was recently confirmed by the Senate. (TOM BROWN / STAFF)

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