Share-in-savings not catching on at agencies

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.

The E-Government Act of 2002 allows for 10 share-in-savings IT projects in 2004 and 2005, and it lets agencies keep the extra savings they realize, as long as they spend it on IT.

Under share-in-savings contracts, a vendor pays for developing an IT system and is compensated from the savings it generates for the agency.

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 in the lack of IT contracts using the method. One 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.

“It’s extremely frustrating that the [implementing] regulations still have not been issued, merely one month before the authority to use these contracts is set to expire,” House Government Reform Committee Chairman Tom Davis, sponsor of the E-Gov Act, said in a statement. “Share-in-savings contracting could have resulted in massive savings on IT projects for the federal government.”

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

Nick Wakeman is the editor of Government Computer News’ sister publication, Washington Technology.

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