Federal contract spending slowdown just beginning, OMB official says

There are about 50 percent fewer federal contract specialists today than there were in 2001 because for the past 15 years the government has failed to invest adequately in the federal acquisition workforce and its training, a senior official at the Office of Management and Budget told a meeting of contractors and government officials.

However, “we’re not in a situation where we face a nonfunctioning system,” Dan Gordon, director of OMB’s Office of Federal Procurement Policy, Thursday told members of the Association for Federal Information Resources Management. “On the contrary, our acquisition system works pretty well. People sometimes forget that.”

In an address titled “Mythbusting 101: How Government-Industry Collaboration Enhances Contracting,” Gordon laid out three priorities.

“Our No. 1 priority is strengthening the acquisition workforce,” he said, adding that recently there have been hiring increases in the Defense Department and civilian agencies “of between 7 percent and 10 percent.”

Gordon said his No. 2 priority is to strengthen fiscal responsibility because between 2001 and 2008 federal procurement spending more than doubled to over $500 billion spent annually on goods and services, which is an unsustainable path, he said.

“That has stopped. In fiscal 2010, the federal government spent less on goods and services through contracts than it did in 2009. And I cannot imagine that that trend is going to be reversed any time soon,” he said. “We simply cannot afford to increase our spending on contracts. We don’t have the money. You see it with DOD, you see it with civilian agencies. The picture is very similar across the federal government.”

“Putting that tsunami of spending” in the hands of a depleted workforce that wasn’t getting the needed investment in training “was a recipe for problems, and we’ve had a good number of problems,” Gordon said.

Among other problems, he cited the government’s too great reliance on cost reimbursement, sole-source and time-and-materials contracts.

But there are times when those types of contracts do make sense, Gordon said, urging the need for flexibility in contracting.

“Fiscal responsibility means spending less to the extent that we’re able to, and it means buying smarter whenever we can,” he said.

As an example, he said there are increasing opportunities for strategic sourcing on IT contracts.

Gordon said his No. 3 priority is to rebalance in the relationship between the government and the contractor communities, citing current issues within the federal acquisition workforce.

He derided what he called the many myths that continue to hamper better contracting, such as a false belief among many contracting officials that they should avoid contact with contractors for fear they will precipitate protests or jeopardize proprietary information.

“Partly because of that wave of demand for contracts hitting an unprepared and understaffed acquisition workforce, there have been too many situations where we’ve contracted out unthinkingly, including functions that need to be reserved for federal employees,” he said.

“There have been situations, including in contract shops themselves, but also in IT offices and in mission offices, where there is no federal employee that has oversight of what is going on,” Gordon continued.

“There are not enough federal employees so [that] the federal employees maintain control. That is an unbalanced, unhealthy situation,” he said.

Federal employees need to oversee federal contractors, he said, and that means there must be an adequate number of trained contracting officers “so that the federal employees maintain control of the federal agencies’ missions and operations.”

Acknowledging the federal government’s need for contractors, Gordon said, “But contractors support us in the federal government, which means that we have to be in charge.”