December 21st, 2009
11:31 AM ET
11 months ago

Obama: Government contracting reforms will save $19 billion

Washington (CNN) - A government plan to reduce contracting costs will save $19 billion in 2010, President Barack Obama announced Monday.

The savings come from terminating unnecessary contracts, strengthening acquisition management, ending the over-reliance on contractors and reducing the use of high-risk contracts across government, according to documents released with Obama's announcement.

Obama noted government spending on federal contracts more than doubled from 2002, totaling about $540 billion in 2008.

His goal is to cut contracting costs by $40 billion in 2011, the documents said, and the $19 billion savings in 2010 would meet the first-year goal for the program.

At a briefing for journalists before Obama's announcement, a government official outlined one of the ways that contracting costs have been reduced. The U.S. Energy Department's National Nuclear Security Administration has launched a contracting tool in which contractors enter prices, with the lowest price winning the bid, said Jeff Zients, chief performance officer and deputy director of management at the White House Office of Management and Budget.

According to Zients, the program allows contractors to see competing bids and has saved an average of 18 percent per contract. He described it as "eBay in reverse." eBay is an online marketplace where sellers post items for sale in hopes of attracting the highest bid.

Asked if the contract cost savings could affect quality of service, Zients said: "I believe we can save money and improve quality of services we procure."

–CNN's Jennifer Liberto contributed to this story


Filed under: President Obama
soundoff (41 Responses)
  1. The Republican't Party is the Biggest Loser

    I'm sure the neo-can'ts will have ignorant comments to make about this, too. However the reasonable among us herald this a much needed reform!

    December 21, 2009 01:48 pm at 1:48 pm |
  2. Monica, SA TX

    Let's just "...get-'er-done" It is not all that many of us wanted but it is a place to start. Progressives should lighten up, this is the beginning not the end. Even Dr. Dean seems to be softening his criticism knowing the glass is half full when previously it was totally empty....

    December 21, 2009 02:00 pm at 2:00 pm |
  3. Whiz Kid

    The only problem is, it'll probably cost 35 billion to put the agencies/bureaucracies in place to save the 19 billion. Therefore, costing the taxpayer an additional 16 billion.

    But, anymore, unless we're talking TRILLIONS, it's not really BIG money.

    December 21, 2009 02:04 pm at 2:04 pm |
  4. Jim

    Lets see, the government will take an action to save $$. I'm curious to see what the GOP will find wrong with this.

    December 21, 2009 02:05 pm at 2:05 pm |
  5. Jeffrey

    Here's another novel idea. If the government contracts for an item, say a fighter jet, and the company gives a deadline, then expect them to deliver the jet within the bidded amount and on time.

    If the company misses the deadline, they still need to provide the jet, but they pay for the cost overruns, they pay the workers to get the jet done. If the company doesn't deliver the jet, then they get to pay back the full amount of the contract. For too many years, government contracts have been easily bilked for cost overruns and missed deadlines. Let's raise the bar on expectations.

    December 21, 2009 02:08 pm at 2:08 pm |
  6. midwest liberal

    Somehow, the GOP (Grumpy Old Poops) and their minions (Teabaggers, etc.) will find a way to twist this into their socialist agenda conspiracy theory.

    December 21, 2009 02:14 pm at 2:14 pm |
  7. mjm

    $540 billion in 2008?

    That's chump change to Obama and the libs.

    December 21, 2009 02:17 pm at 2:17 pm |
  8. Fitz in Texas

    I'll believe it when I see it. Obama has said and promised more things that have not happened. Now if only Obama would stop flying all over GOD'S creation at the drop of a hat we could save $19 billion there.

    December 21, 2009 02:27 pm at 2:27 pm |
  9. aware

    You are not believable or trustworthy BO, and the large majority of Americans are nauseated by your manipulative, arrogant lies! :(

    December 21, 2009 02:36 pm at 2:36 pm |
  10. rs

    Cutting Halliberton off at the knees alone would save more than that. Good move!

    December 21, 2009 02:41 pm at 2:41 pm |
  11. Chas in Iowa

    In simpler terms Darth's cash cow "Halburton" is done!

    December 21, 2009 02:42 pm at 2:42 pm |
  12. Old Contracting Warrior

    I could swear the Air Force created that very system in the 90's – then one of the developers moved to DOE (and got an award for creating this system in 1996 again). Now DOE is again developing it?????
    Good grief, do we ever learn from history? Check back with Steve Kellman, who headed OPM in the 90's – he and his people were involved with this back then.....I wonder what we have spent on this so far..GATEC lives....

    December 21, 2009 02:52 pm at 2:52 pm |
  13. Jason

    This is great news. Unfortnately, Dick Cheney's Haliburton and KBR were able to take millions of tax payers money from the Government prior to President Obama's Administration doing something to reduce contracting expenses. Wasn't the Bush Administrations whistleblower scilenced during the Republican Controlled Congressional Investigation? True. Poor contracting Director was told by Rumsfield to bypass Haliburton's and KBR's contract bill so he would sign off on in for Dick Cheney. Lovely.. Many Americans forget about those major details or party loyalist are in denial.

    December 21, 2009 02:55 pm at 2:55 pm |
  14. Peter s

    First dismantle contractors like Black water!! or whatever their name is!

    December 21, 2009 02:56 pm at 2:56 pm |
  15. ab from MN

    Money to contractors nearly doubled since 2002 under George Bush? How is that possible, I thought Bush was a conservative? How did the Republican congress allow this if they're conservative too? Someone on the right please explain this to me.

    December 21, 2009 02:59 pm at 2:59 pm |
  16. gt

    ponzi book keeping....

    December 21, 2009 02:59 pm at 2:59 pm |
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