President to Take On Government Contracting

By Stephen Splane

Mar 4, 2009 7:56am

At 10 a.m. today President Obama will sign a presidential memorandum to reform government contracting, an action that the President will say grew out of a bipartisan consensus forged at last week’s fiscal responsibility summit.

Over the last eight years, government spending on contracts has doubled to more than $500 billion; in April 2008, the Government Accountability Office issued a report after having looked into 95 major defense systems, concluding that the projects had surpassed their original budgets by a total of $295 billion and were delivered, on average almost two years late.

Calling the system of government contracting "broken," an administration official tells ABC News that the President’s action today will aspire to make sure "that the American peoples money is spent to advance their priorities, not to line the pockets of contractors who have figured out how to work the system, or to maintain projects that don’t work."

Some of the steps that will be taken include opening up the contracting process to small businesses, stopping the outsourcing of services that should be performed by the government, ending unnecessary no-bid and cost-plus contracts, and strengthening oversight. The President will say such steps can potentially save the American people up to $40 billion annually.

The president will say, the official says, that he will "do whatever it takes to defend the American people, which is why he’s increased funding for the best military in the history of the world." but he will also assert that "he does not accept billions in wasteful spending." He will discuss steps being taken by Defense Secretary Robert Gates to reform procurement, and will praise the bipartisan work on this issue being done by Sens. Carl Levin, D-Mich., and John McCain, R-Ariz., the chair and ranking Republican on the Senate Armed Services Committee.

Beginning today, Peter Orszag, the director of the Office of Management and Budget, will work with Cabinet officials and agency heads "to develop tough, new guidance on contracting by the end of September," the official says. -jpt

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