Purge of consultants beats goal as Obama seeks cuts
By Nick Taborek,
The Obama administration is ahead of schedule on a target it set last year for cutting back on consulting contracts.
Federal awards for consulting, or “management support services,” totaled $13.1 billion in the first half of fiscal 2012, a 28 percent decline from the same period in fiscal 2010, according to procurement data. The administration last year set a goal of reducing such spending by 15 percent in the year ending Sept. 30, compared with 2010 levels.
Federal contracts in 12 targeted consulting areas totaled $43 billion in fiscal 2010, with companies such as Lockheed Martin, Deloitte and Booz Allen Hamilton Holding among the biggest recipients of awards.
“Sometimes agencies are spending money on consultants to write reports that really don’t go anywhere — they sit on the shelf,” Jeff Zients, then-deputy director of the Office of Management and Budget, said when he announced the goal. “Some of these contracts are unnecessary and can be reduced.”
The Obama administration last year said it would reduce contract spending in the 12 consulting areas, including acquisition planning, program management and information technology services.
Spending in those areas had quadrupled in the past decade, “far outpacing the already fast growth in contract spending generally,” according to a memo in November from Danny Werfel, OMB’s controller.
Consulting awards to Bethesda-based Lockheed in the 12 categories declined 25 percent to $620 million in the first half of fiscal 2012, from $829 million in the first half of fiscal 2010, according to data compiled by Bloomberg. Awards in the same areas to New York-based Deloitte declined 24 percent in the period, to $150 million from $197 million.
The Obama administration has been working to identify areas in which costs can be reduced “without causing harm to the mission,” Moira Mack, an OMB spokeswoman, said in an e-mailed statement.
Many agencies have set up controls to ensure that before an agreement is renewed, officials are “thinking especially carefully” about whether services provided by consultants can be eliminated or scaled back, Mack said.
Agencies are also using “smarter buying practices to reduce costs,” such as eliminating duplicative contracts, she said.
Contractors that perform consulting work for the federal government may benefit if Republican presidential nominee Mitt Romney is elected in November, said Larry Allen, president of Allen Federal Business Partners in Arlington County.
“You would see a fairly big change in the insourcing-versus-outsourcing discussion,” Allen said in a phone interview. “You would have much more of a predisposition for outsourcing, and that could lead to an increase in service contracting.”
Andrea Saul, a spokeswoman for the Romney campaign, did not provide answers to e-mailed questions, and the campaign’s press office did not return a phone call seeking comment.
Dan Gordon, a former top procurement official under President Obama, said a potential Romney administration would not necessarily take a different view of the need to limit consulting contracts.
“I would think that they would want to cut spending on services when the spending was not justified, and that’s what we were doing,” said Gordon, now associate dean for government procurement law at George Washington Law School. “It seems to me that that’s an area where Republicans and Democrats agree.’’
— Bloomberg Government