Share-in-savings struggles for acceptance

Share-in-savings contracting is struggling to get off the ground, with no contracts awarded that use the procurement method authorized in the E-Government Act of 2002.

With share-in-savings, the contractor provides the initial money for the work and then is paid from the savings incurred by the project.

The share-in-savings provision in the E-Gov Act expires at the end of September, but with no contracts awarded, the Government Accountability Office said it could not evaluate the effectiveness of the law.

GAO identified several factors for the lack of IT contracts using the share-in-savings method. One reason is that the Office of Management and Budget has not issued a final rule and guidance on how to use share-in-savings for IT contracts.

GAO also found that despite efforts by the General Services Administration to train agency procurement officials, not enough of them know how to use the contracting method. Only 21 federal employees from across all the agencies took the training GSA offered, GAO said.

Agency officials also told GAO that they were reluctant to use the method because even though contractors would be required to provide up-front funding, agencies would still need available money to cover a potential cancellation or termination.

About the Author

Nick Wakeman is the editor-in-chief of Washington Technology. Follow him on Twitter: @nick_wakeman.

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