In September of 2011, President Obama issued a memorandum to reduce wasteful duplication in federal contracting. The memorandum was part of President Obama’s Campaign to Cut Waste. The memorandum requires that starting January 1, 2012, all agencies will submit their business cases to a White House database before opening any new contracts for bids. The requirement is for all government-wide contracts and for other contracts with an estimated value of $250 million or more. For contracts that are planned to begin in 2014, the threshold to report to the White House drops to $50 million. All contracting officers must develop a business case that shows they have explored any existing contracts to avoid duplication, rather than starting a new contract.
The White House is hoping that agencies will work together to consolidate contracts and streamline the procurement process for agencies. By working together on contracts and avoiding duplication, the government can hopefully save millions of dollars. The current administration has its eyes set on saving money and reducing work for everyone involved in procurement, not only government – but industry as well.
In a brief written by Brian Friel, BGOV Analyst, Friel identifies ways that the government can help remove wasteful and duplicate contracts in the federal government. One of the ways mentioned is by taking a look at high-risk contracts defined by the GAO. Since 2005, GAO has issued a listing of contracts most at risk for waste, fraud, abuse and mismanagement. As Friel reports, the Administrator of the Office of Federal Procurement Policy at the White House, Daniel Gordon, stated that one option is to remove GAO’s high-risk distinction from contracts. By opening up contracts to multiple agencies, savings can occur and duplication can be avoided.
Friel acknowledges that avoiding duplication in government contracts is no easy task. When duplication occurs, companies who are planning to make the bid and submit proposals can drive up contract costs. Likewise, government is forced to staff more people and administer more costs, driving up the costs for government.
A final solution that Friel proposes is that agencies can combine their buying power. If agencies can work together to buy materials of a similar need, costs will be driven down and agencies will be more transparent in the purchasing process.
Like many different areas of government, one of the challenges for limiting wasteful spending from contracts is that there are not enough skilled and trained contract officers. The government is currently in need of more acquisitions professionals to monitor and enter into contracts with companies, ensuring that all qualifications are met, and that wasteful spending and duplication is avoided.
****For an inside look at BGOV and the data, insights and analysis used in the referenced brief by Brian Friel, please contact bgov@bloomberg.com or 1-877-498-3587****