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Editorial: Guidance, oversight key as agencies seek new ways to save

Jul. 8, 2012 - 02:34PM   |  
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As traditional funding streams dry up, agencies increasingly are embracing unconventional methods to get the goods and services they need but don’t have funds for.

many are employing Energy Saving Performance Contracts to renovate their facilities with energy-efficient fixtures and systems, for example. In these deals, the contractors bear the upfront renovation costs and are paid back with energy cost savings those upgrades generate each year. Similarly, the Defense Department and a host of other agencies are conducting more reverse auctions — online offerings of contracts to the lowest bidder — to secure rock-bottom prices on everything from medical equipment to janitorial services.

There are other examples. Military services use so-called enhanced-use leases to trade the use of unused properties on military bases for cash, energy or renovations of dilapidated facilities.

And the General Services Administration is trying a new tactic: trading old federal buildings for new ones as a way to modernize the inventory. For the first time, GSA has notified industry that it is interested in trading an old courthouse in Los Angeles for a new office building. While it remains to be seen what kind of deal, if any, it can strike, GSA’s motivations are clear: The agency is poor in appropriations but rich in old, dilapidated properties.

Such bartering can be a smart way to do business, but there is plenty of opportunity in this brave new world for sweetheart deals, miscalculations and mistakes to cost taxpayers millions.

as managers begin exploring new, unconventional business tactics, it is vital that the Obama administration move quickly in issuing clear and comprehensive guidance. At the same time, auditors and inspectors general must be tasked to provide oversight and accounting for these deals to ensure sound legal and fiscal footing.

Managers should be encouraged to be innovative in business tactics that promise cost efficiencies in an era of tighter budgets, and Congress and the administration must support them with clear guidance and effective oversight.

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