Cut Federal Contract Spending By At Least 10 Percent
"Barack Obama will reform federal contracting and reduce the number of contractors, saving $40 billion a year."-- Obama's "The Change We Need In Washington"
By ZACK HALE
The sheer size of the $787 billion stimulus package, much of which will be channeled to private contractors for "shovel-ready" projects, might seem to render hollow Obama's campaign promise to cut federal contract spending by at least 10 percent. While it remains to be seen whether Obama will cut spending that much, the early numbers suggest outflows to federal contractors are on pace to match last year’s totals.
To be sure, stimulus funds have been disbursed slowly up to this point, making it difficult to predict how much money the federal government will award to private contractors (see chart of recently announced stimulus spending below). According to Recovery.gov, only about $36 billion was paid out through the end of May, just $1.8 billion of which was awarded in federal contracts.
Combined with regular spending, the federal government has so far this year written checks for $146 billion on slightly more than 1 million federal contracts (see chart below). That's less than half the total spent in 2008 and about 3 million fewer contracts, largely because most of the stimulus money is being spent on the state and local level. These numbers will change, however, as the pace of recovery spending increases -- Obama announced Monday that the federal government will pump money into public works projects during the summer in an effort to create or save 600,000 jobs.
Tracking progress on Obama's reform-minded pledge is even more difficult because his promise of greater transparency is moving as slowly as stimulus funds. Critics have complained that the administration has taken too long to post spending data on Recovery.gov.
APRIL 23, 2009
Contracts Surging, Not Declining
The influx of stimulus money intended to spark the economy has also boosted the number of federal contractors, according to Sen. Claire McCaskill.
"The dirty little secret is that we're growing government," McCaskill, D-Mo., said April 23 on MSNBC. "Nobody wants to say they're hiring new government employees, so we've just done $500 billion in contracting and hired people through contracts. It's a mess."
McCaskill and Sen. Susan Collins, R-Maine, on April 21 held the first meeting of their Subcommittee on Contracting Oversight. It's intended to remedy wasteful spending.
MARCH 04, 2009
Executive Memo Mandates Contracting Guidelines
President Obama issued a presidential memorandum that he said will set his agencies on a path toward new efficiencies and reduce unnecessary spending.
The president established a deadline -- the end of September -- for OMB chief Peter Orszag to "reform the way we do business" by developing contracting guidelines. The guidelines are intended to welcome small businesses to the contracting process, strengthen oversight while maximizing transparency, and save up to $40 billion annually.
"We are cutting what we don’t need to make room for what we do," the president said, before turning his sights on military contracts with massive cost overruns, outright fraud, or poor oversight. The president was joined in his announcement by Sens. John McCain, R-Ariz., and Carl Levin, D-Mich., who Obama said he will "partner" with on legislation to reform the military procurement process.