That's the message behind the following federaltimes.com piece on US Federal procurement contracting.
How some agencies are cutting contract costs
President Obama took aim at the growth in noncompetitive and cost-reimbursable contracts last year, telling OMB Director Peter Orszag and other top officials in a March 2009 memo to come up with guidelines to "maximize the use of full and open competition."
Figures released in the July 7 report show an overall slowdown in new contracts, increased use of competitively awarded contracts and fixed-price contracts, and decreased use of sole-source contracts.
While the administration has made some headway, its progress is not as impressive as it may seem, said Ray Bjorklund, a federal contracting expert with the market research firm FedSources. It's true that spending via sole-source and cost-plus contracts went up from fiscal 2000 to 2008, but the increases were roughly commensurate with the overall explosion in contract spending during that time. Similarly, the decline in the use of those types of contracts in fiscal 2010 corresponds with a general decrease in spending, Bjorklund said.
"It's a recognition that perhaps the executive branch has not been following all of the principles and the policies that are already documented" in the Federal Acquisition Regulation (FAR), he said.
The FAR encourages increased competition and instructs contracting officers to pick the type of contract that will offer the best results and least risk, Bjorklund said.
"[Obama's] memo says, let's step back and recognize those fundamentals," Bjorklund said. "Agencies are taking that to heart and being more conscientious."
Bjorklund said he thinks the administration's message has by now trickled down to the federal acquisition work force. However, moving to increased competition and fixed-price contracts is difficult and time-consuming for a career field widely acknowledged as understaffed and overworked.
Joseph Waddell, the National Nuclear Security Administration's (NNSA) senior procurement executive, acknowledged that switching gears is a strain on his staff.
"It is more difficult," he said. "It's more work up front. It's easier to just take the existing contract and repackage it and send it out for re-bid."
Stan Soloway, president and CEO of the Professional Services Council trade group, said he supports the administration's push for smarter contracting but worries about unintended consequences for contracting officers.
"I think we have to guard against pushing people to make contract-type decisions based on some overarching policy rather than what's right in the circumstance," he said.
Soloway said his organization has heard from government procurement officials who said they feel they're being pushed to use fixed-price contracts "even where they're not sure it's the right answer."
When the Environmental Protection Agency went to clean up the Tower Chemical Co. site, an abandoned pesticide plant about 25 miles west of Orlando, Fla., it had a fairly good idea what it was getting into.
The agency wanted to remove dirt that was full of hazardous chemicals, to reduce contamination of soil and groundwater at the Superfund site.
"We knew what was in the ground and how much of it was in the ground," said John Bashista, director of EPA's office of acquisition management.
Armed with this information, EPA was able to integrate into the Tower Chemical project a key element of the Obama administration's push for contracting reform: fixed-price contracts. EPA incorporated another administration goal by pushing hard for multiple vendors to bid on the project
Because the agency could clearly define the project's requirements before asking contractors for bids, EPA was able to avoid a "cost reimbursable" contract that left the door open for cost increases down the road. EPA also was able to get more than 20 companies to compete for the cleanup work.
The agency ended up with a $5.2 million contract, 65 percent below its initial estimate for a cost-reimbursable deal.
Obama didn't talk about reverse auctions in his memo, but they appear to be a crucial part of OMB's reforms. Dan Gordon, administrator of OMB's Office of Federal Procurement Policy, mentioned reverse auctions in congressional testimony July 15 when asked about the administration's most important contracting initiatives.
"Agencies are now routinely driving down prices by conducting electronic reverse price auctions," Gordon said.
OMB's report said the Department of Homeland Security alone ran more than 2,500 reverse auctions in fiscal 2009, resulting in savings of more than $40 million.
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