OMB: Updated Contracting Guidance Focuses on Building Oversight Capacity

October 27, 2009 -- Washington, DC — The Obama Administration is moving quickly to crack down on mismanaged and wasteful federal contracting practices while strengthening oversight and accountability capacity across the government.

The White House Office of Management and Budget (OMB) issued guidance today that requires federal agencies to increase the capability and capacity of the civilian agency acquisition workforce to ensure sufficient management and oversight of acquisition dollars. The guidance also provides specific instructions for agencies to avoid high-risk contracts that can result in excessive costs being passed on to taxpayers.

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"These steps are essential to achieving the President’s goal of $40 billion in annual savings through contracting reform. Without action, we will see more contracts that are over-budget, delayed, or otherwise failing to live up to performance objectives," OMB Director Peter Orszag said Tuesday.

Today, the Administration is expanding contracting reform efforts in two areas: 1) issuing a plan to increase the capability and capacity of the civilian agency acquisition workforce; and 2) providing guidance on increasing competition and structuring contracts for the best results.

Since 2002, spending on federal contracts has more than doubled. In 2008, contracting totaled more than $525 billion. There also has been an increase in the dollars awarded without full and open competition. Between fiscal years 2002 and 2008, noncompetitive contracts increased from $82 billion to $188 billion.

In March, the President issued a memorandum setting key reform goals: do not waste taxpayer dollars on ineffective, inefficient, or fraudulent contracts; build agency capacity to manage and oversee contracts; and take steps so that inherently governmental functions are not outsourced.

OMB responded with major contracting reform guidance in July. It addressed three specific areas: improving acquisition, expanding contractor performance information, and managing the multi-sector workforce. These reform packages put agencies on the path to save taxpayers’ money by cutting contract spending by 7 percent and high-risk contracts by 10 percent, to hold contractors accountable for past performance, and to end the overreliance on contractors.

"We need more well-trained, well-qualified professionals in the federal agencies for effective planning, oversight, and contract management," OMB Deputy Director for Management Jeff Zients explained.

Zients is scheduled to discuss the Administration’s contracting reform efforts at a Senate hearing on Wednesday.

In addition to the workforce improvements, the OMB guidance focuses on reductions in high-risk contracts. Federal agencies are required to reduce these contracts by 10 percent this fiscal year. A mid-year assessment will gauge agencies’ progress. If they are not on track, OMB will work with the agencies to develop aggressive plans to meet the 10 percent reduction target before year’s end.

Source: OMB