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Posted at 11:39 AM ET, 02/ 3/2011

Government reports $15B in contract cuts, first reduction since 1997

By Ed O'Keefe

In what administration officials describe as a major milestone, the federal government cut $15 billion in contract spending between fiscal 2009 and 2010, the first year-to-year contracting cuts since 1997.

Contracts for products and services supplied to the government by private firms totaled $535 billion in fiscal 2010, down from $550 billion the year before, the White House said. With those cuts, the Obama administration is on course to achieve its two-year goal of eliminating at least $40 billion on contract spending, according to Office of Management and Budget Deputy Director Jeffrey D. Zients.

"We have reversed the trend of uncontrollable growth," Zients said in announcing the cuts. "We're saving money and making sure every taxpayer dollar is being well-spent. We certainly have much work to do."

Dan Gordon, the administration's top contracting official, said much of the cuts came from the cancellation of overdue information technology contracts at the departments of Homeland Security, Justice, Treasury and Veterans Affairs and by having agencies pool the purchase of costly software licenses.

"When agencies across the government are buying the very same software, but doing it through a series of individual contracts, we're not getting the benefit of being the world's largest customer," Gordon said.

In hopes of making deeper contracting cuts, President Obama's fiscal 2012 budget will call for a 10 percent reduction in professional and technical service contracts, a part of contract spending that has "grown disproportionately in the last decade," Gordon said.

Also, in a nod to the administration's pro-business job growth initiatives, agencies will be pushed to increase the number of small businesses hired for contracts, Gordon said.

"All too often, barriers to entry prevent us from getting those small business into the federal marketplace," he said. "Getting more federal business to small business can help them get the revenue they need to get jobs and drive our economy forward."

Leave your thoughts in the comments section below

By Ed O'Keefe  | February 3, 2011; 11:39 AM ET
Categories:  Administration, Contracting  
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;;by appealing the 1099 ;;what good is this;;now small buss.can keep their illgals under the table

Posted by: bbccmm | February 3, 2011 12:35 PM | Report abuse

The right recipe for an Egyptian pie here is cutting billions from spending in the people. Continue sending the 'savings' to dictators and giving it in welfare for war mongers and you'll have a Cairo in the USA very soon.

Why is it that elite and their lackeys don't learn from experience? Cut from the billionaires. They take our jobs and outsource them. They can't even claim that not paying their taxes help create jobs HERE. Maybe creates jobs in India but not here. MAKE THEM PAY TAXES. MAKE GOLDMAN SACHS PAY FOR WHAT HE HAS STOLEN.

Posted by: coqui44 | February 3, 2011 12:36 PM | Report abuse

The 15 billion saved through "insourcing" was spent plus another 30% on top of that to make these folks "civil servents" who instead of working for contractors work now for the government with far more pay and benefits. I had a contract with army to perform weather radar repairs. Contract required trucks, maintenance, and fuel. When I got through FOIA the government's reply on why they had not accounted for the vehicles, maintenance, and fuel in their cost estimate the answer was: Army vehicles and fuel will be used so there is not cost to the government. This is only a small example of how the government justified "insourcing" in most cases if have seen. One other small point (only cost the taxpayer a few billion) in the DoD insurcing process. The DoD decided that since they could not determine what a contractor might pay in benefits, they elected to assign the same benefit package to the contractor that the Government would pay. No contractor I ever met could afford to pay what the Government does. I my case, the Government estimated the cost of the work I did would be $27,000,000 wheras the cost the Government could do the work for was $24,000,000. The only thing they didn't do was look at the bids for the work from less than a year prior and they would have found they didn't have to "guess" at what the contractor's price would be because there were at least 4 bid for the same work and none was higher than $18,000,000. If you or I did accounting like the Government did with "insourcing" we will be in jail. There are very few examples of work the Government can do for less money than private contractors who bid against each other. The Government did not save $15,000,000,000 they just doubled down and moved the players around.

Posted by: gsigler1 | February 9, 2011 3:19 PM | Report abuse

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