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OMB Tells Federal Agencies To Cut Contract Spending By 7%

The White House announced yesterday through three Office of Management and Budget memo’s that federal agencies must cut contract spending by 7% by September 30, 2011.

The first memo gave federal agencies a benchmark to decrease contracts by 3.5% in 2010 and then by another 3.5% by 2011.  The President also asked that agencies reduce the amount of high-risk contracts by 10%, using 2008 as the base year. The memo gave the example of a high risk contract such as a noncompetitive contract or cost-reimbursement contract.

The second memo  requested that agencies focus on better management of its workforce in order to decrease reliance on outside contractors. The third and final memo said that agencies must submit to Past Performance Information Retrieval System, which tracks government agency contracting. The retrieval system is not avaible to the public. 

Feburary 1, 2010 is the start date of the official monitoring of agency compliance to President Obama’s request of lessening government reliance on contractors. President Obama’s goal of cutting contract spending by $40 billion a year is in stark contrast to former President Bush doubling the amount of government contracting from 2002 to 2008 to $188 billion.

“Too much money is spent on too many wasteful contracts, and too many contracts are awarded with too little competition. 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, ” OMB Director Peter Orzag said in statement.

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