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