Like Clinton, Obama Calls for Fewer Federal Contractors to Cut Spending
Tuesday, November 11, 2008; 12:00 AM
Like every newly elected president, Barack Obama has spelled out an agenda for how his administration will improve the use of taxpayer money. But as he pushes reforms of the government's $440 billion federal procurement system, he faces tremendous obstacles to success, according to contracting specialists, lawyers and industry officials.
During the campaign, Obama and vice-president elect Joseph Biden pledged to reverse years-long trends, including pork barrel spending by Congress, the tendency of government employees to leave to work for government contractors and a sharp rise in the use of no-bid contracts. Obama also wants to make federal buying systems more efficient and said he would reduce federal spending by $40 billion by using fewer contractors.
Contracting specialists, former federal procurement officials and trade group representatives said that to fulfill those promises, the Obama administration will have to summon the will to effect a huge cultural change inside the government to take procurement more seriously.
Government acquisitions programs have long been plagued by delays and cost increases, but experts say the problems have worsened in recent years as the size of the federal workforce has barely grown even as the amount of spending on services, technology and other goods more than doubled. The Clinton administration cut the number of procurement workers as part of an effort to trim red tape, and the Bush administration accelerated the trend with a philosophical commitment to outsourcing and small government.
The number of officials in five contract-related jobs classifications in 2000 was 57,835; by 2006 the number was 58,723, according to a report by the House Oversight and Government Reform Committee.
An annual Government Accountability Office assessment of Defense Department weapons programs helps illustrate some of the problems. Planned commitments on systems rose from $790 billion in 2000 to $1.6 trillion in fiscal 2007, the report found. At the same time, the amount that programs exceeded cost estimates soared from $42 billion in 2000 to $295 billion last year. Average delays of the programs examined by the GAO increased from 16 months to 21 months.
"They're inheriting an almost broken procurement system" said Charles Tiefer, a contracting law professor at the University of Baltimore Law School. "During the last eight years, a lot of the critical oversight machinery was undercut or neglected."
Some specialists think the Obama administration may have to hire and train tens of thousands of new contracting workers to make up for past reductions.
The Obama campaign promised that his administration would hire more procurement workers and use technology more widely to improve the efficiency of the government. It also has proposed expanding a "Google for Government" initiative already underway, including an improved "user-friendly website with the details of all government spending," according to a campaign policy paper.
To get a handle on contracts awarded without full and open competition, the Obama administration will require federal agencies to justify each one. The amount spent on such contracts rose to more than $207 billion last year from $67.5 billion in 2000.
Alan Chvotkin, executive vice president of the Professional Services Council, a contractor trade group, said the government will always need to rely heavily on the private sector. But he said agencies need many more well-trained procurement workers who can buy goods and services.
"We do need to grow the size of the workforce to fulfill that 21st century mission and find those skills," said Chvotkin, who added that it may take 100,000 or more new workers to properly manage the government's buying needs. "So much has been said about the problems and so little has been done."
Paul Murphy has been tracking data about changes in the procurement system as closely as anybody in recent years, as president of the market research firm Eagle Eye. Murphy said he thinks the Obama administration is stepping into a potential thicket of conflicting policy issues.
He said that if the government embraces ever-larger contracts, as proposed by Obama as a way to seek better deals by leveraging the government's buying power, that could enable agencies to squeeze discounts from vendors. But such an effort might run head-on into efforts to expand opportunities for small businesses. Achieving more transparency in the contracting process will require an about-face in many cases from the opaque market-minded culture of the Bush administration. There's also the problem of a simple lack of information ¿ and technology and training ¿ the procurement workers need to get good value for taxpayers and head off waste and abuse and failed deals, he said.
"With deregulation in the last several years, the government has taken on a lot more risk. And we've seen a lot of very large expensive systems fail," Murphy said.
Angela Styles, former administrator of the Office of Federal Procurement Policy in the Bush administration, said many problems are to blame for the contracting system's ills.
"You have such a small workforce managing such a large dollar amount," said Styles, now a procurement lawyer at Crowell & Moring.
She also blamed procurement reforms of the 1990s. Though good in theory, those market-oriented reforms assumed the government could act like a private-sector entity when buying things. But the reforms did not include adequate measures to judge whether that was so. Those assumptions have led to inefficiencies and confusion over the years, as the government bought more with less accountability, she said. Overcoming that confusion will be a tall task for the Obama administration, she said.
"The right management, the metrics, were not put into place to make sure it was working as effectively as it could," she said.
Robert Burton, a former deputy administrator at the procurement policy office, agreed that addressing the procurement workforce will be crucial to the success of Obama's efforts. But he is skeptical about the ability of the government to hire its way out of the problem. That's in part, he said, because many people seem uninterested in taking on the demand of a procurement work.
"Even when the money is there and the need is there, they're finding it difficult to attract top talent to the government," Burton said, adding that he thinks the key is training. "That's where the emphasis has to be, is the quality of the workforce, not the necessarily the size. Because that's not going to happen. We need to be realistic."
Steve Kelman, the architect of procurement reforms during the Clinton administration, said the Obama team really has no choice other than following through on its promises. While he does not agree the system is near-broken, he said there's room for much improvement. Contracting has become a core endeavor of the federal government, he said.
"It's a challenging agenda. Difficult," he said. "Contracting is a key way the government does its business. If you want a high performance government, you need high performance contracting."