OMB reports contract spending stayed flat in 2011

Friday - 2/24/2012, 5:32pm EST

Federal procurement stayed flat in 2011 for the first time in 18 years.

The Office of Management and Budget reported Friday agencies spent $535 billion on goods and services last year, which is the same amount they spent in 2010.

"While there is much still to be done, we now can confirm what we've had good reason to believe for some time: that the promising results of FY 2010 demonstrated that we have moved in a sustainable way into an era of more accountable contract spending and getting a better return for every taxpayer dollar," wrote Danny Werfel, the OMB Controller in a blog post.

Werfel said the administration is optimistic agency spending on procurement will remain flat or reduce further in 2012 and beyond.

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Contract spending trends. (Image: White House).




















Werfel said agencies are well on their way to meeting the administration's goal to reduce contracts for management-support services by 15 percent by the end this fiscal year.

"With dedicated management attention, agencies already have reversed the costly growth in this area and have brought spending down by 7 percent, or $3 billion, in just the last fiscal year," Werfel wrote.

Reducing procurement spending

OMB also highlighted several examples of how agencies have reduced procurement spending.

The most recent is a new contract by the Commerce Department for desktops and laptops.

Under a new contract with Intelligent Decisions, Commerce expects to save $20 million to $25 million over the next five years by paying up to 40 percent less for computer hardware.

"[T] his contract maximizes the department's buying power by aggregating the purchasing power of all the Commerce bureaus to drive down costs," wrote acting Commerce Deputy Secretary Rebecca Blank in a blog post Thursday. "And, through smart contracting strategies such as strategic sourcing and better management of our information technology devices, we can make a difference to our bottom line."

Blank said Commerce received more than $50 million in savings in 2011, most of which came from "negotiating stronger pricing with vendors and reducing the size of contracts." Blank said the agency also expects more savings from reducing travel, printing costs and fleet management.

"Commerce is already well on its way to achieve $143 million in reduced overhead costs and administrative savings this fiscal year, and Commerce's fiscal 2013 budget proposes to increase that to $176 million," she wrote.

OMB also highlighted efforts by the Department of Health and Human Services and the Interior Department to reduce spending.

OMB said HHS saved or avoided spending $20 million by consolidating contracts for compliance-monitoring services for mission programs.

Interior saved or avoided spending more than $215 million "by conducting an across-the-board review of its market research and competition practices, seeking out vendor discounts, and negotiating more aggressively for a variety of requirements."

OMB pushes savings beyond 2012

Werfel said OMB will continue to focus on contract savings in 2012 and beyond by:

  • Reducing the costs of acquiring common products and services by strategically sourcing at least two new commodities or services and increasing the use of governmentwide strategic sourcing vehicles;

  • Pursuing additional reductions in management support services and other administrative expenses;

  • Continuing to monitor and reduce the use of high risk contract actions, such as cost-reimbursement and time-and-materials types;

  • Continuing workforce training with a focus on government performance, and developing a specialized IT acquisition cadres to increase the chance of successful program outcomes.

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