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Molly Moorhead
By Molly Moorhead December 12, 2012

Contract spending on the decline

When President Barack Obama promised to drastically cut federal contracts, he cited the statistic that total spending by the federal government on contracts grew by 12 percent a year between 2000 and 2008. Obama said he would reverse that trend and save taxpayers $40 billion a year.

Four years later, we've found that Obama hasn"t hit that dollar figure, but he has trimmed contract spending significantly and gutted its growth.

In 2010, federal contract spending was $535 billion versus $550 billion in 2009, according to data provided by the White House.

In 2011, contract spending held steady at $535 billion. "This marks the first time in almost two decades that spending has either declined or remained unchanged for two years in a row. In fact, had contract spending continued to grow at the same pace as it did in the last administration, we would have spent $690 billion on contracts, or $155 billion more than agencies ended up spending in FY 2011," Danny Werfel, controller for the White House Office of Management and Budget, wrote on the White House blog.

Werfel wrote that the reductions were accomplished by ending contracts that were "unnecessary, unaffordable or redundant" and by "leveraging the government's buying power through increased use of government-wide and agency-wide contracts."

In 2012, contract spending fell by another $20 billion from the 2011 level.

A December 2012 blog post by the OMB's Joe Jordan noted an example at the Department of Homeland Security, which saved more than $386 million last year by pooling purchases for products from canines to surveillance equipment across FEMA, the Coast Guard and border patrol.

"Things are going in a good direction, but they're still not in a good place yet," Craig Jennings, of the government-accountability group OMB Watch, told the Washington Post.

So the Obama administration has fallen short of it"s $40 billion-a-year goal, but contract spending is on a downward track. We rate this a Compromise.

Our Sources

White House Office of Management and Budget, "Cutting Waste and Saving Money Through Contracting Reform," July 7, 2010

Executive Order 13576--Delivering an Efficient, Effective, and Accountable Government, June 13, 2011

White House Office of Management and Budget, "Turning the Tide on Contract Spending," Feb. 4, 2011

White House fact sheet, "Obama Administration Succeeds in Reducing Contract Spending
for First Time in 13 Years," accessed Dec. 12, 2012

White House Office of Management and Budget, "Contracting Smarter, Saving More," Feb. 24, 2012

White House Office of Management and Budget, "Historic Savings in Contracting – and Plans for More," Dec. 4, 2012

Email interview with Ari Astles, OMB spokesman, Dec. 12, 2012

Washington Post, "Federal contract spending falls 4 percent," Dec. 6, 2012, via Nexis

By Lukas Pleva December 23, 2009

Making progress on trimming federal contracts

During the campaign, Barack Obama promised to review and reform the federal government contracting process. He made the promise in response to significant growth in the use of contractors and the number of noncompetitive contracts. Since 2002, for example, spending on federal contracts has more than doubled. Between 2002 and 2008, noncompetitive contracts increased from $82 billion to $188 billion, according to a report published by the Office of Management and Budget in December 2009.

Since taking office, President Obama has taken numerous steps that put him closer toward fulfilling his promise. At the beginning of 2009, the OMB issued a three-prong list of reforms that it would seek to implement over the next several years. These reforms include achieving 3.5 percent in savings among federal agencies in 2010 and 7 percent by the end of 2010, reducing the use of high-risk contracts for new projects during 2010, and identifying organizations within each federal agency that may be overreliant on contractors.

On Dec. 21, 2009, President Obama announced that 24 of the largest federal contracting agencies have identified more than $19 billion in savings for the upcoming year, putting them on track to meet the 3.5 percent target reduction in 2010. According to the OMB, the agencies have also "identified initiatives to support a 10 percent reduction in money spent through new high-risk contracts" and "each agency has identified at least one pilot initiative where potential overreliance on contractors may be affecting performance."

On Jan. 14, 2010, the White House will also host the White House Forum on Modernizing Government. The purpose of the meeting is to discuss strategies that can help bridge the gap between the federal government and the private sector in the "use of technology to drive productivity and improve service quality."

We will watch and see how this develops, but for now, we rate this promise In the Works.

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