March 4th, 2009
08:45 AM ET
9 years ago

Obama to sign contract reform memo

WASHINGTON (CNN) - President Barack Obama will sign a memorandum Wednesday morning designed to save the Federal government $40 billion a year by reforming what the White House calls the "broken system of government contracting."

The reforms call for the head of each federal agency to work with Obama's budget director to develop "tough, new guidance" for federal contracts by the start of the next fiscal year on October 1, according to a list of talking points released by administration officials.

Obama's memo will call for a reduction of outsourcing services that the Federal government should perform itself, the talking points said.

The changes would also open up the contracting process to small businesses, end unnecessary no-bid and cost-plus contracts, and strengthen oversight "to maximize transparency and accountability," it said.

The goal is to make sure federal dollars would not go to "line the pockets of contractors who have figured out how to work the system, or to maintain projects that don't work," it said.

"Over the last eight years, government spending on contracts has doubled to over half a trillion dollars," the talking points release said. "Last year, the Government Accountability Office looked into 95 major defense projects, and found cost overruns that totaled $295 billion over the life of the projects."

Obama is scheduled to sign the memorandum at 10 a.m. Wednesday.

–CNN's Suzanne Malveaux contributed to this report.

Filed under: Obama administration
soundoff (42 Responses)
  1. Had It

    It's about time. Can we get back any of the Money Bush/Cheney got from kickbacks from Haliburton?

    March 4, 2009 10:00 am at 10:00 am |
  2. Dawn

    I do hope so, I went on I went into my own state, impressive. If you want to know do that, please. Did Dubya ever do this?

    March 4, 2009 10:02 am at 10:02 am |
  3. cnnnewser

    This bill needs signed immediately.
    Bush and Cheney's buddies made a fortune in no bid contracts...their gift for their support.

    March 4, 2009 10:10 am at 10:10 am |
  4. Jon

    "The changes would also open up the contracting process to small businesses, end unnecessary no-bid and cost-plus contracts, and strengthen oversight "to maximize transparency and accountability," it said."

    1. The contracting process is already open to small business, with most large contractors being required to give a certain percentage of the work to small businesses as subcontractors.
    2. End unnecessary no-bid contracts??? Nothing will change here except all future no-bids will be just be labeled as "necessary."
    3. Ending cost-plus contracts will just result in more re-opener clauses in fixed price contracts and more requests for equitable adjustment when contractors overrun their initial proposals.

    Bottom line is that the large contractors employ incredibly smart people (and former Government people) who will find ways to work any system to their advantage.

    March 4, 2009 10:16 am at 10:16 am |
  5. S Callahan

    Well, in these troubling times, it's just as important for the Government to look for ways to save while maintaing service as it is for the consumers/public.

    Go get 'em Presdient Obama!

    March 4, 2009 10:18 am at 10:18 am |
  6. Tom in S.A.

    The gov't went to contracting because it's cheaper. Go ahead and make all these jobs gov't jobs and then you can't fire worthless employees because they'll belong to a union, we'll be paying more in the long run. Once they scam the gov't they'll be eligible for benefits for the rest of their lives and pensions we'll have to pay for eventually. Contracting companies offer great benefits but they can actually fire the worthless which is a good thing.

    March 4, 2009 10:20 am at 10:20 am |
  7. cj

    Finally getting to the point of a main problem. Pork. Less is more.

    March 4, 2009 10:20 am at 10:20 am |
  8. Colin, RI

    Another common sense move. I wonder why anyone would anything negative to say about this one... The cons are far outweighed by the pros here.

    March 4, 2009 10:22 am at 10:22 am |
  9. Angie in Pa

    Go President Obama CLEAN HOUSE,Clean Up the Bush/Cheney DISASTERS I know its not Easy But so far your Doing a good Job!

    March 4, 2009 10:29 am at 10:29 am |
  10. Dutch/Bad Newz, VA

    Now this is a President. He knows what spending is wasteful. He is holding up his prmose to go through the federal budget line by line.

    March 4, 2009 10:29 am at 10:29 am |
  11. Kevin in Ohio

    If this works, good for him. But I bet he'll meet resistance from Pelosi and Reed and cronies......

    March 4, 2009 10:32 am at 10:32 am |
  12. Making lemonade out of a lemon-y government

    I'm sure the Republicans will find some way to put a negative spin on it and try to convince us that our children will suffer..

    March 4, 2009 10:37 am at 10:37 am |
  13. Debra Hasan

    Good job, Mr. President. Those in the private should stay in the private sector. Love the job you are doing.

    March 4, 2009 10:40 am at 10:40 am |
  14. walleye

    Its about time. Halliburton and all the other Bush/Cheney pals got enough of our money. Hopefully we wont see contracts for $5000 toilet seats and $1000 wrenches any more.

    March 4, 2009 10:42 am at 10:42 am |
  15. Brian Crooks

    It's about time! I don't understand how all of these conservatives have been yelling about waste in government and blah blah blah but haven't said JACK about no-bid contracts! I work in sales and I've never had a client call me and say "charge whatever you feel like, I'm not even going to look around for anybody else."

    March 4, 2009 10:42 am at 10:42 am |
  16. Doug

    My president Obama is a fraud, no details on this plan being formulated to late Sept. Nobody is charged or going to jail who did these things. So why can't O stop the congressional earmarks today when he says he has inherited all these bad things? Why not just STOP them, That would be Change I can believe in. I worked to elect him in multiple states, I am a democrat who is TIRED of the new President NOT DOING HIS JOB, but he knows whats wrong?

    March 4, 2009 10:45 am at 10:45 am |
  17. katiec

    Am so happy to read this. Our government needs to held accountable for it's spending and our President is making it so. How long has it been since this waste was addressed?
    President Obama, we are so thankful that we now have a President that is working to correct all the wrongs, lack of ethics and lobby, special interests controlled government.

    March 4, 2009 10:47 am at 10:47 am |
  18. Ray Fisher

    It's about time these no-bid contracts come to an end, the were licenses to steal!!!

    March 4, 2009 10:55 am at 10:55 am |
  19. Thank you

    Thank you, Mr. President! Send Halliburton packing.

    March 4, 2009 10:56 am at 10:56 am |
  20. Franky

    Finally!! Now we can have a contract on these bastards...and nope, I'm talking about the bad contract, not good, LOL!!

    March 4, 2009 11:00 am at 11:00 am |
  21. flybyshoeing

    Uh Oh, some contractors are not going to be happy. Remember this?

    The Pentagon paid a small South Carolina parts supplier about $20.5 million over six years “for fraudulent shipping costs, including $998,798 for sending two 19-cent washers to an Army base in Texas. The company also billed and was paid $455,009 to ship three machine screws costing $1.31 each to Marines in Habbaniyah, Iraq.”

    March 4, 2009 11:07 am at 11:07 am |
  22. Ghost

    Good deal.

    No details? Doug, did you not see what they did? Saw some places to save some money and the man is holding each federal agency responsible. Ending no-bid contracts, etc. What more do you need?

    March 4, 2009 11:07 am at 11:07 am |
  23. thomas

    What happened when the government outsourced corrections?
    – The US got 264 private prison facilities in just the last 20 years.
    – The US created the largest prison population in the world.
    – The national prison population rose from 300,000 to 2,3000,000 in just 30 years.
    – State prison costs increased from $10.8 billion to $49 billion.
    – California judges declared prison conditions unsafe and unhealthy and ordered the release of up to 50,000 inmates due to overcrowding.
    – Judges in Pennsylvania took kickbacks to sentence innocent juveniles to private detention centers at the expense of their parents.
    – Private prison operators like CCA and The GEO Group were major contributors to the American Legislative Exchange Council (ALEC), a Washington, D.C. based public policy organization that develops model legislation that advances tough-on-crime legislation and free-market principles such as privatization.

    March 4, 2009 11:07 am at 11:07 am |
  24. jimmy-ohio

    how can anyone other than a crooked contractor be opposed to this?the idea is so simple that it is strange it hasn't been done decades is how contracting works outside of government:if i hire a guy to build my house and he says that it will be ready on jan 1st at a cost of 100,000,every day past jan 1st that it isn't done cost him money,only in gov contracting do we reward guys for not getting the job done on time and on budget.i honestly believe that the only way to get corruption out of gov contracting is to adopt this philosophy.

    March 4, 2009 11:08 am at 11:08 am |
  25. FreeNLovIt

    Yes, for eight years, Daffy Duck, Darth Vader and the Sith was running the show. There was no accountability or responsibility. I'm glad that we're sanitizing our government. Glad to see McCain is on board with this!

    March 4, 2009 11:17 am at 11:17 am |
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