Federal Contracting: OMB's Acquisition Savings Initiative Had Results, but Improvements Needed
GAO-12-57
Published: Nov 15, 2011. Publicly Released: Nov 15, 2011.
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Highlights
In 2009, President Obama directed the Office of Management and Budget (OMB) to provide guidance to the 24 largest agencies to save $40 billion annually in contracting by fiscal year 2011 and reduce the share of dollars obligated under new high-risk contracts by 10 percent in fiscal year 2010. Agencies were to submit plans for meeting these goals to OMB's Office of Federal Procurement Policy (OFPP), which implemented the initiative. GAO was asked to assess (1) the extent to which the OMB initiative yielded the intended savings from contracting, (2) how effectively agencies reduced obligations on new high-risk contracts, and (3) the savings and risk reduction strategies to identify those that have the potential to yield long-term savings or improve acquisition outcomes. GAO reviewed agencies' savings and risk reduction plans and agency-reported data, and met with OFPP and senior procurement officials at each agency..
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Office of Management and Budget | To build on agencies' fiscal year 2010 achievements and leverage the momentum gained to date, the Director of OMB should clarify and convey the administration's continued focus on the acquisition savings initiative for fiscal year 2011 and beyond, and address how it is expected to align with other initiatives, such as OMB's new undertaking to reduce the use of professional and management support contracts and Department of Defense's (DOD) efficiencies and other savings initiatives. |
In November 2011, the Office of Management and Budget issued guidance to agencies reinforcing the Administration's continued commitment to contract savings, and to focus their attention on management support services, such as engineering and program management, where spending has grown at an accelerated pace with a disproportionate reliance on high-risk contracts. The guidance identifies the lessons learned from the acquisition savings and high-risk contract reduction initiative and noted that planning reductions in spending within an agency are a shared responsibility between program, financial management, acquisition, and information technology offices.
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| Office of Management and Budget | To build on agencies' fiscal year 2010 achievements and leverage the momentum gained to date, the Director of OMB should report no later than the time of the fiscal year 2013 budget proposal submission to Congress on the dollar savings resulting from the agencies' initiatives and the cumulative high-risk contract reduction efforts for fiscal years 2010 and 2011. The results should be reported in a manner that can be easily compared with the administration's announced savings and high-risk reduction goals. |
In February 2012, the Office of Management and Budget (OMB) released an update of federal agencies' savings for fiscal years 2010 and 2011 under a scenario where contract spending continued to grow hypothetically at the average rate of spending growth during the period 2000 - 2008. However, the savings reported was not consistent or comparable with the savings goals identified in OMB's July 2009 memorandum which directed agencies to develop plans to reduce by 3.5 percent baseline contract spending in fiscal year 2010 and a further 3.5 percent in fiscal year 2011. Further, OMB has not announced agencies' cumulative high-risk contract reduction efforts for fiscal year 2011.
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| Office of Federal Procurement Policy | To enhance agency implementation of the acquisition savings and high-risk contract reduction initiative, and to promote improved reporting and outcomes, the Administrator of OFPP should clarify guidance and criteria as to: (1) what constitutes appropriate agency baseline reductions, (2) how savings (or cost avoidance) initiatives are defined and reported, and (3) how actual savings resulting from agency initiatives should be validated. |
In July 2009, the Office of Management and Budget (OMB) instructed agencies to reduce contract spending on management support services by 15 percent by the end of fiscal year 2012. This initiative became the predecessor to OMB's acquisition savings and high-risk contract reduction initiative. Based on our recommendation, in Novmever 2011 OMB issued a memorandum to the chief financial officers, chief acquisition officers, and senior procurement executives of federal agencies outlining the steps that should be taken to ensure that the goals for spending reductions on management support services are clear, and the methodologies used to determine baseline spending data and savings are consistent and measurable.
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| Office of Federal Procurement Policy | To enhance agency implementation of the acquisition savings and high-risk contract reduction initiative, and to promote improved reporting and outcomes, the Administrator of OFPP should determine OFPP's informational needs to effectively manage and oversee implementation of the savings initiative, including whether OMB's MAX Information System (MAX) is the appropriate tracking and information-sharing mechanism. If MAX continues to be the designated system, develop the appropriate quality-control measures to improve agency-reported data. |
The Office of Federal Procurement Policy evaluated its informational needs for subsequent contract savings initiatives and determined the Federal Procurement Data System - Next Generation (FPDS-NG), rather than the MAX Information System, will be used to track and gauge agencies' progress in meeting their savings goals.
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| Office of Federal Procurement Policy | To enhance agency implementation of the acquisition savings and high-risk contract reduction initiative, and to promote improved reporting and outcomes, the Administrator of OFPP should revise the focus of the high-risk reduction effort to include all high-risk contracting actions and not just new awards. |
Commencing in early fiscal year 2012, agencies included in their reporting of high-risk contract reductions to the Office of Federal Procurement Policy information on all contracting actions, such as task and delivery orders and contract modifications, and not just new awards.
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