News Release


FOR IMMEDIATE RELEASE:  Wednesday, July 29, 2009
Contact: OMB Communications, 202-395-7254

Note: Click to listen to OMB Executive Associate Director Jeff Liebman discuss the new guidance.


White House to Save $40 Billion Annually through Contracting Reforms

WASHINGTON, D.C. — The White House today formally unveiled contracting and workforce reforms that are designed to save the taxpayers at least $40 billion a year. The reforms, released by the Office of Management and Budget (OMB), focuses on three areas: improving acquisition, managing the multi-sector workforce, and contractor performance information.

"Today’s guidance is a major step forward in providing the federal government with the capacity to carry out robust and thorough management and oversight of its contracts in order to achieve programmatic goals, avoid significant overcharges, and stop wasteful spending," said OMB Director Peter Orszag.

President Obama, in a March 4 memorandum, established his principles for contracting reform, and charged the OMB with identifying the best approaches to accomplish his goals.

Today’s guidance will help restore accountability, save taxpayers money, hold contractors accountable for past performance, and end the all-too-common practice of overreliance on contractors.

"We are taking steps that are effective immediately to change the culture of government contracting, putting the focus on providing the best services for the taxpayers," Director Orszag said.

Since 2002, spending on federal contracts has more than doubled, reaching more than $500 billion in 2008. During this same period, there has been an increase in the dollars obligated non-competitively and without sufficient competition. Between fiscal years 2002 and 2008, for example, dollars obligated noncompetitively increased from $82 billion to $188 billion.

The guidance requires agencies to reduce contracts by a minimum of seven percent, with special focus on high-risk contracts, such as non-competitive contracts and cost-reimbursement contracts that provide limited incentive to control costs. The guidance also requires agencies for the first time to track contractor performance through a new unified database. This change will improve agency practices associated with the use of contractor performance information and assist agencies in making better business assessments and contract award decisions. Agencies will be able to check on a contractor’s past performance before signing a new contract with it. OMB will be monitoring their compliance with this requirement and will be publicly release statistics on agency compliance.

The guidance on managing the multi-sector workforce lays out a new framework for managing the workforce that evaluates all the functions an organization performs to assess if an agency has achieved the best combination of public and private labor resources to serve the American people. Agencies will be required to pilot this new framework by examining at least one program, project, or activity where the agency has concerns about over-reliance on contractors.

A second phase of contracting guidance is scheduled to be released in September. This next phase will focus on maximizing competition, choosing appropriate contract types, building the capacity of the federal acquisition workforce, and clarifying when outsourcing is appropriate.