Advertisement

You will be redirected to the page you want to view in  seconds.

White House orders agencies to cut spending on services contracts

Jul. 7, 2011 - 07:38PM   |  
By SARAH CHACKO   |   Comments
Contract spending on 15 types of professional and management support services quadrupled from $10 billion in 2000 to $40 billion in 2010, according to Office of Management and Budget figures. "That's where the money is. That's where the spending is increasing," said Office of Federal Procurement Policy Administrator Dan Gordon.
Contract spending on 15 types of professional and management support services quadrupled from $10 billion in 2000 to $40 billion in 2010, according to Office of Management and Budget figures. "That's where the money is. That's where the spending is increasing," said Office of Federal Procurement Policy Administrator Dan Gordon. (Thomas Brown / Staff file photo)

Federal agencies must reduce contract spending for acquisition support, information technology development and other services by $6 billion over the next year, White House officials announced Thursday.

Contract spending on 15 types of professional and management support services quadrupled from $10 billion in 2000 to $40 billion in 2010, according to Office of Management and Budget figures.

"That's where the money is. That's where the spending is increasing," said Office of Federal Procurement Policy Administrator Dan Gordon.

Over the last few years, OMB has asked agencies to contract less, get bigger discounts by making departmentwide and governmentwide bulk purchases, and set fixed prices for contracts when possible. But contractors are still hired to write reports that go unread, do the same work as federal employees and perform inherently governmental functions, such as managing other contractors, said OMB Deputy Director Jeffrey Zients.

Service contracts also tend to be done through higher-risk contract types, Gordon said. Of the total government contracts, 64 percent are fixed price and the rest are a mix of contracts that reimburse contractors' cost, he said. With management service contracts, only 26 percent are fixed price, he said.

Some agencies that need contractor services will have to find savings by moving to fixed-price contracts or by negotiating lower labor hour rates, Gordon said.

"We will continue to rely on contractors for support," he said. "What we're saying is that we need to spend less money."

Professional Services Council President Stan Soloway, who was at the announcement event, asked Gordon how his office would ensure cutting the targeted services would not result in increased contracting in other areas or new costs through insourcing.

Gordon said his office and OMB will work with agencies to identify areas to cut or modify contracts. Agencies should not interpret the request as a call for insourcing or a "numbers game" where contracts can just be moved under different categories, he said.

"We're going to be watching … to be sure we don't do this in a mechanical way, that we do this in a thoughtful way so we reduce risk to government and still get the great benefit that we need to get from our contractors," he said.

More In Acquisition