In March 2009, President Obama issued a memorandum to the heads of
executive departments and agencies concerning government contracting. The
President stated that the federal government should consider terminating
existing contracts that are "wasteful, inefficient or not otherwise likely to meet
the agency's needs." The Office of Management and Budget (OMB) was
directed to issue a governmentwide guidance by July 1, 2009 to create
processes to take corrective actions that may include modifying or canceling
such contracts.
The President followed up this memorandum in May 2009 with his proposed
2010 budget. In it, approximately $1.5 billion in existing construction programs
are to be eliminated. Cuts are proposed for construction programs with the
Army Corps of Engineers, EPA, Department of Transportation, etc.
On July 29, 2009, OMB issued a memorandum titled "Improving Government
Acquisition." Each federal agency was instructed to develop a plan to save 3.5
per cent of contract spending in FY 2010 and another 3.5 per cent in FY 2011.
OMB specifically targeted certain "high risk" contracts. These include cost
reimbursement contracts, time and material contracts and noncompetitive
contracts. Each agency is to aim to reduce spending on such contracts by 10
per cent. Joseph C. Kovars of Ober|Kaler explains what this means for the building industry.
Please see full publication below for more information.
