Obama To Overhaul Government Contracting

Barack Obama ran on a platform of changing the way the federal government does business and his latest venture is into the government contracting process. The government is not necessarily interested in changing the way contracts are awarded and though there might be new rules from The Evil One, the reality is Congress will do what it wants. When contracts are awarded using the appropriate procedures and the contract is not awarded to whom a particular politician wanted then there are calls for investigations and a do over.

The Democrats have cried for 8 years about sole sourcing contracts to Halliburton by the Bush administration while ignoring the fact that Bill Clinton sole sourced to the same company for the same reason. They were the only one large enough to handle what was needed. Obama stated the other day that the rules were going to be rewritten to save the country billions of dollars:

President Obama on Wednesday ordered his administration to change how government contracts are awarded to private businesses, saying he intended to reverse some practices of the Bush administration and do away with no-bid contracts that have cost billions and led to corruption investigations.

~snip~

“The days of giving defense contractors a blank check are over,” Mr. Obama said. “We need more competition for contracts and more oversight as they are carried out.” New York Times [emphasis mine]

I commend Obama for indicating that there needs to be competition in the contracting process. He should exercise caution though because he will not be able to eliminate no bids all together. There are some companies who are the only ones that do what they do and others will not be able to compete. However, the competition needs to be there when practicable. Lowest bids should not be the sole determination of awarding a contract but it should play a part.

Given Obama’s statement I have a challenge for him. Barack Obama, if you truly want competition then you need to eliminate the government set asides for special groups. The government sets aside contracts for small, minority, veteran or female owned businesses and this is not necessarily the way to get the best service for our money. These businesses should be able to compete but they should not be the only ones allowed to do so. From Small Business:

GSA, like all Federal agencies, has established goals for awarding contracts to small, minority-owned, women-owned, HUBZone, veteran-owned and service-disabled veteran- owned small business owners. To meet these goals, GSA uses “small business programs”?. These programs include contact with the small business community, both to inform them about what GSA has to offer, and to help in locating and working with GSA procurement offices. Some small business programs also have “set-asides”? under which certain contracts are reserved for competition among small businesses.

Some agencies are required to purchase from these entities even if a better price is available elsewhere. I have seen many purchases for items that cost quite a bit more than the item could have been purchased for from a local store. The answer to any question is always, we have to buy from this organization.

If Obama is interested in restructuring the process then he needs to ensure that all set asides are removed and the process is opened for every business that can provide the service and who wants to compete. The goal is to save taxpayer money and to be good fiscal stewards so keeping practices that do not save money should be out of the question. That would be business as usual which is not the change we can believe in.

One thing is intriguing though. No bid contracts are the focus of this though the larger picture is to improve the entire process. The article cites over runs in the no bid process:

A review of 95 military projects by the Government Accountability Office, the nonpartisan auditing arm of Congress, found that they [no bid contracts] exceeded the budgeted amounts by $295 billion over the course of several years.

This failed to mention how much over runs in competitive contracts cost but in any event the no bids are quite expensive. Or are they?

Given how much money the government spends on contracts this 295 billion over several years must represent only a very small percentage of the total cost.

Democrats say not to worry about pork in Congressional bills because the pork is a very small percentage of the entire bill. Harry Reid made that claim very recently and we have heard it a number of times. If the small percentage of pork does not matter and is no reason to overhaul the legislative process in DC then why is the small percentage of no bid over runs a good reason to overhaul contracting in the government?

I am all for making the contracting process more competitive and more cost effective but in total.

I am not in favor of window dressing and lip service which is generally what we get when government talks about change.

Big Dog

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3 Responses to “Obama To Overhaul Government Contracting”

  1. Ken Larson says:

    For an all-volunteer site, dedicated to small businesses who wish to succeed in federal government contracting, please see the above site:

    http://www.smalltofeds.blogspot.com/

    The federal government will contract in excess of $80B to small businesses in the next fiscal year.
    There are over 50 agencies or “Departments” in the federal government. Each of these agencies has a statutory obligation to contract from small business for over 20% of everything it buys.

    Contracting officers must file reports annually demonstrating they have fulfilled this requirement. Not fulfilling the requirement can put agency annual funding in jeopardy. Small business has a motivated customer in federal government contracting officers and buyers.

    Large business, under federal procurement law, must prepare and submit annual “Small Business Contracting Plans” for approval by the local Defense Contract Management Area Office (DCMAO) nearest their headquarters. These plans must include auditable statistics regarding the previous 12 month period in terms of contracting to small businesses and the goals forecast for the next year.

    The federal government can legally terminate a contract in a large business for not meeting small business contracting goals. Approved small business plans must accompany large business contract proposals submitted to federal government agencies. Small businesses have motivated customers in large business subcontract managers, administrators and buyers.

    There are set-aside opportunities available for small entities,veterans, disabled veterans, women and minorities. All it takes is navigating the system, persistence, asking questions, registering, marketing, teaming and working hard.

    Small Business America is good at that.

  2. Ralph says:

    Big Dog…I run a small business (of the type you are railing against) and believe me it is nothing like you say it is. Large businesses routinely DON’T meet their small business goals and nobody does anything about it. If you the FPDC database, you’ll see that the goals aren’t being met and, so far, nobody has been sanctioned. BTW, as it relates to “no bid” contracts…the biggest abusers are LARGE businesses. Booz Allen and Halliburton aren’t small businesses. Contract bundling has also hurt small businesses and the tax payer. Typically, small businesses are leaned more on by contracting officers than large businesses. I sat in a meeting where the Government customer literally said “We have to give Raytheon their quota…if not they won’t help us.” Can you imagine that! Yet no body ever mentions it. The other dirty little secret is that most of the Small Business offices in large businesses are the Government serve as a technical/legal dodge to PREVENT them having to seriously deal with small businesses. So “ENOUGH ALREADY”….large businesses have an internal bias built into everything the Government does…like Generals, Admirals and SES folks going to work for the largest businesses…then using their access or knowledge about what the needs are to create an unfair advantage…so please!

  3. Big Dog says:

    Ralph,
    I have nothing against small business. I am just saying that if there is to be overhaul then we need to get rid of set asides.

    I know about no bid contracts. Name one small business that could do what Halliburton does. They are huge and they are the only ones that do what they do. If there were competitors then they would not get the contracts (BTW< Clinton gave them no bids too). I know there are problems in the contract process because politics are involved. However, if we are to make it fair then we need to get rid of set asides. I am tired of governmental agencies having to buy supplies at a higher price from minority owned business (or vet organizations) when there are much less expensive alternatives. Hell, you can get office supplies cheaper at Staples but they have to get them from the Lighthouse for the Blind. There are plenty of unfair advantages. Set asides are one of those unfair advantages. Seems to me you want the big guys to have to follow rules so long as the little guys get breaks. Make it truly competative.