Obama again touches on procurement reform

President Barack Obama and Defense Secretary Robert Gates will soon offer more details on how to reform the federal procurement system, which will include an emphasis on Defense Department contracting, the president said during a news conference.

Obama said March 24 that he and Gates have been searching for ways to offset the more than $1 trillion in debt he and Congress have amassed in Obama’s 65 days in office. Obama said his administration has found ways to save as much as $40 billion through some reforms, a point he made in his speech March 4 when he called contracting reforms a priority for his administration.

Obama again provided no details on reforms in the recent televised news conference, except to say the acquisition changes are “pretty apparent to a lot of critics” yet hard to accomplish.

“I think everybody in this town knows that the politics of changing procurement is tough because lobbyists are very active in this area,” he said, adding that contractors build plants and create jobs across the country. Those plants often get support from House members and senators whose constituents hold those jobs.

Despite upset constituents and members of Congress, DOD and other agencies are losing a lot of money through projects with problems. Many defense contracts' costs increase above the initial estimates by as much as 50 percent while still not working as the projects should, Obama said.

On March 4, Obama discussed a general plan to reform the acquisition process, but many contractors and government officials are skeptical of any significant changes coming from the White House. Many of them have said new procurement policies may come, but changing how agencies' acquisition employees and program managers do their work is where Obama will find real reforms.

Obama has talked about shifting government work away from contractors and bolstering the acquisition workforce to do more government work in-house. He also wants to shift toward fixed-price contracts and increase competition for contracts.

He is intent on finding savings and reallocating agencies’ resources but wants "to make sure that we’re not simply fattening defense contractors,” he said March 24.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

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Reader comments

Sun, Apr 12, 2009 L.J. Andersen, CPCM, CPM Denver, Colorado

There have been many reforms over the last 40 years, both encumbering and beneficial to the federal aacquisition system, but the current focus on fixed price contracting as improvement to the system is being perceived, perhaps,as a naive, political gesture by those who have worked in this area for many years. Fixed priced contracting already has the status of the preferred type of contract in the Federal Acquisition Regulations (FAR), since it allocates risk to the contractor and in theory provides a contractual price limitation. What is oft times neglected in acquisitions is good requirements definition, business management and change control as key,integral components to acquisition success. Other types of contracts listed in the FAR (Part 16) are perfectly suited for the specific types of acquisitions, especially where non-recurring engineering or research & development is required. As determined by the Contracting Officer,a cost type contract may have to be used and even desirable. Taking a look back,a review of the history of the acquisition system reveals the "politicalization" of the system cultivated by newly elected administration or Congress attempting to create an immediate impact in federal spending or to change past practices as malpractices by past administrations or contractor abuses. In most cases these initiatives,"knee jerk" and restrict good business sense striping away the little empowerment that the acquistion officials have and dampen the ability to manage the acquisition The crux of the matter is how the Obama Administration will ever reform the system to "de-politicize" the process to allow the acquisition chain of command to make unfettered business decisions all in the oontext of the drain of experienced contracting personnel from the federal govenment. As the federal contracting community knows, the 1102 series is at a critical point. The real reform would be to energize federal contracting by focusing on the recruitment of new federal contract professionals with the ability to manage the complexities of the system and to bring improved business and contracts management to the federal acquisition process. a suggestion to the Obama Administration is to get more input by convening a joint conference of both government and contractors, including the small business community and understand past reforms, review the history of the reforms, their impact, success, and gain a consensus of reforms required for change.

Thu, Mar 26, 2009 Jaime Gracia

Although waste, fraud, and abuse are consistent problems with federal acquisitions, President Obama’s focus on reform does not seem to adequately address the inherent problems with the system. The reforms seem to center on shifting government work away from contractors and increasing the size of the acquisition workforce. Coupled with more fixed-price contracts and increase competition, these changes are assumed to encompass the $40 billion savings figure that the President has quoted. What seems to be missing is the reality of the acquisition process. The inherent issues are the lack of trained personnel, and the right mix of skills to perform the acquisition mission. Industry is providing critical skills to fill this gap, yet current procurement reform push wants to not only eliminate contractors, but remove the ability of industry to perform these tasks as inherently governmental. It would make more sense if the current acquisition reform initiatives would include a renewed focus on training government personnel in oversight responsibility, and to include industry in a holistic approach to strategic human capital management planning as part of the total workforce concept. This approach would ensure government has the right mix of resources, skills, and flexibility to perform acquisitions and help relieve the pressures on the besieged acquisition community.

Thu, Mar 26, 2009 cmunno

A message to President Obama and Secretary Gates: It is not the procurement process that needs reform. What needs to be reformed is who manages major acquisitions. There were not nightmare cost growths in the old days. When contracting officers were the true leaders as the person bringing business judgement to acquisitions, contracts were awarded to accomplish a specific design without hundreds of nice to have changes. Aircraft still flew, ships still floated, tanks rolled, and services were performed. The cost growth occurs today because the person who brings the business perspective is not in charge. The technical personnel who always see it possible to make it better keep the changes churning causing delays and growth (changes are nothing more than sole source additions) that generally result in awards with "get well" amounts built in them. Cost contracts do not grow much because of increased effort to accomplish what was in the original contract. They grow because of changes (guess what - so do fixed price contracts). The more restrictions you put on a Contracting Officer the more good common sense goes into a deep whole never to surface. Contracting Officers should be in a different chain of reporting that only has the President between them and the taxpayers. Once a project moves into the acquisitioon phase lets make the Contracting Officer make the decisions without coersion or political influence. Then you will begin to see better conntract results. Technical folks are like children going into a candy store - they like and want it all so they want some of everything. With that mentallity you cannot build a good product because the churn creates pieces that are no longer meant to work together and you have a low quality product that costs a lot more and took so long to build its nearly out of date when it is delivered. I would like nothing else but to be able to sit with either Secretary Gates or President Obama and explain in more detail and give them a blueprint for success. I am unencumbered with conflicts that would affect my judgement. I only have my more than fourty years of experience in Government Contracting.

Wed, Mar 25, 2009 Michael Lent Washington, DC

With the best of intentions, the White House still risks baring a real blind spot in its procurement reform thinking. The president rightfully has a very big problem with the usual big over-runs in defense programs, as well as the acquisition of unneeded, outdated, or technologically immature systems. Rather than target companies, the White House might also consider the flag officers, SESs, and the program offices that stoke demand. Recent example: the Air Force pledging to get more F-22s, no matter what. Luckily, Robert Gates quashed that unauthorized campaign. Or consider Congress's ability in many years to fund more C-130s than the Air Force requests. Tip to taxpayers--a program touted heavily as a jobs program may have less than highly compelling military need.

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