In FY2012, federal agencies reduced contract spending by $20 billion from the previous year, according to figures released by the Office of Management and Budget (OMB).
In an OMB website blog, Joseph Jordan, Office of Federal Procurement Policy (OFPP) Administrator, said these results show that agencies have “reversed the unsustainable growth in contracting.”
From FY2000 to FY2009 contract spending rose every year for a total increase of $308 billion. Since FY2009 contract spending has declined by $35 billion.
Jordan identified a number of areas where agencies have successfully reduced contract spending. Management support services, especially IT systems development and program management and engineering, is an area that “has been plagued with inefficiency and where costs have quadrupled,” he said. Agencies’ efforts here have produced reductions of $7 billion over the past two years, according to Jordan, meeting the target set by the administration of cutting spending in this area by 15 percent by 2012.
Strategic sourcing (agencies pooling their purchases) of office supplies and domestic shipping services has saved the government $200 million since 2010 and “strategic sourcing of goods like IT and medical equipment have saved millions more,” Jordan said. He cited savings of $386 million achieved just last year by the Department of Homeland Security as a result of strategic sourcing.
Jordan said that for the future agencies are setting “new and bold goals for saving money and improving acquisition management of goods and services.” He also noted that using small businesses in federal contracting remains a top priority. OMB will continue to press agencies to “adopt new strategic sourcing solutions, increase their use of existing vehicles, and achieve even more savings,” he said.