Progress on Wartime Contracting

When the Administration took office, it was clear to us that for too long there was not adequate oversight of contractors, leading to wasted taxpayer dollars, repeated delivery delays, and unacceptable contractor performance. Nowhere has this been more apparent than in wartime contracting during the last decade. That’s why this Administration has focused on cutting waste in contracting, boosting oversight, and strengthening accountability of contractors. And more broadly, earlier this summer the White House launched the Campaign to Cut Waste, a government-wide drive to crack down on fraud, waste, and abuse.

Today, the Commission on Wartime Contracting released a report on these challenges. We welcome the report and commend the Commission for shining a spotlight on waste in contracting, on the need to strengthen the contracting function at agencies, on the value of increasing competition in contracting, and on the importance of holding contractors accountable for their performance.

The Administration already has made significant progress addressing each of the issues raised in the Commission’s report, in many cases reversing more than a decade of problems. Whether it is reducing improper payments to contractors and grantees, closing down redundant data centers, or cracking down on nonperforming contractors, we cannot tolerate the wasting of hard-earned taxpayer dollars.

There is a lot in the report, and I want to highlight the main issues raised in it and how the Administration is working on them.

Cutting Waste and Reducing Overreliance on Contractors
On March 4, 2009, the President issued the Memorandum on Government Contracting, which called attention to the rapid growth in contracting spending, and raised concerns about contracts awarded without adequate competition. The memorandum also addressed issues with contractors performing functions that should be performed by public-sector employees. Agency efforts to reduce waste and demonstrate fiscal discipline are producing results. We cut contracting spending for the first time in 13 years in fiscal year 2010; agencies spent nearly $80 billion less than they would have if contract spending continued to grow at the same rate it had under the prior Administration.

Expanding Competition and Strengthening Contract Management and Oversight
Over the past two years, significant progress has been made in reducing the use of high-risk contracting methods – including cutting $5 billion in spending on so-called “no bid contracts” last year. Consistent with the Commission’s recommendations, the Administration is strengthening the acquisition workforce by increasing training and certification requirements for those with a key role in oversight of contractors, including those working in Iraq and Afghanistan. The Department of Defense has made improving the defense acquisition system a top priority, and is tracking metrics on cost overruns, schedule delays, competition, the acquisition workforce, and acquisition employee training certifications.

Strengthening the Suspension and Debarment Process for Bad Actors and Improving Contractor Accountability
Where there are bad actors in the contracting community, agencies have increased their use of suspension and debarment and other tools to deal with irresponsible contractors, consistent with the Commission’s recommendations.  For example, in the last 18 months alone, USAID has taken more than 40 suspension or debarment actions – almost double the number of actions taken in the prior seven years combined. OMB has worked closely with the Interagency Suspension and Debarment Committee (ISDC) to review current agency suspension and debarment practices and to identify opportunities where these practices can be strengthened.

The Commission’s report recommends improving the recording and use of contractor performance data, so that contracting officers have ready access to useful information about vendors’ past performance, and can take this information into account in decisions to award contracts. This Administration has made unprecedented progress in improving the collection of contractor performance data and in making this information publicly available, as part of our commitment to transparency. For the first time, contractor performance data is posted online to help ensure that the government does business with reputable companies. Data is now available on suspensions and debarments, terminations, and criminal activities of contractors. Data on where contractor dollars are being spent is now posted on www.USASpending.gov – including down to the sub contract or sub award level for the first time this year. Finally, the Office of Federal Procurement Policy issued guidance to agencies to enter meaningful assessments of contractor performance into a central database to ensure that the government awards to vendors that can perform.

Our agreement with the broad contours of the Commission’s report and with many of the specific recommendations does not, of course, mean that we agree with all details of the Commission’s recommendations, but we welcome the focus the report brings to the need to continue improving contracting. We simply cannot afford to continue to tolerate the waste of taxpayer dollars that we saw in the past. We look forward to continuing to work with Congress and all concerned citizens in addressing the Commission’s legislative recommendations, as we continue to make strides toward boosting accountability and cutting waste in contracting.

Daniel Gordon is Administrator of OMB’s Office of Federal Procurement Policy