Obama: Federal Contracts Need Overhaul After No-Bid Bush Era
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WASHINGTON — Blasting Bush-era government contracting, President Barack Obama on Wednesday ordered an overhaul designed to halt the delays, waste and blatant fraud that exasperate the public and politicians alike.
Whether his plan will produce the savings he promises is far less clear.
Denouncing an "era of fiscal irresponsibility," Obama took aim at the Bush administration without directly naming his predecessor. He noted that spending on government contracts has doubled to more than $500 billion since 2001 _ the same eight-year timeframe that Bush led the executive branch.
"Far too often, the spending is plagued by massive cost overruns, outright fraud, and the absence of oversight and accountability," Obama said. In fact, dozens of people have been charged with bribery and other contract fraud crimes as part of a Justice Department crackdown. More than 140 investigations are under way into allegations in Iraq, Kuwait and Afghanistan.
Obama's answers: dramatically cut the use of no-bid contracts, shrink outsourcing of government operations to private companies and keep a much closer watch. Under fire from Republicans for the sheer size of his own administration's spending plans, Obama is promising savings of as much as $40 billion each year.
"It starts with reforming our broken system of government contracting," Obama said. "There is a fundamental public trust that we must uphold. The American people's money must be spent to advance their priorities, not to line the pockets of contractors or to maintain projects that don't work."
The trim-the-fat message is an easy winner with the public. Politicians often target waste. Yet in practice, it has often proved more complicated to prevent.
Obama signed a presidential memo with two key parts.
The first orders his budget chief, with help from other agency heads, to come up with guidance by July 1 for how the entire government can review its existing contracts and identify ones that are wasteful or not essential. Those contracts would then be subject to being modified or canceled.
The other part directs the budget director, Peter Orszag, to issue even broader guidance to all agencies by Sept. 1. It will spell out improved oversight, including more limits on no-bid contracts, help agencies in putting together staffs to do that oversight and clarify when sending government work to private companies is OK.
Steven Schooner, a George Washington University law professor who monitors federal contracting, said more rules are fine, but not sufficient. He said Obama still hasn't been specific or aggressive enough in building up an oversight work force to weed out the very waste he is targeting.
"If you want the money managed better, let's get some people on the ground to plan, write better contracts, negotiate better agreements, and then manage the relationship after the contracts have been awarded," Schooner said. "Everybody who knows anything knows that we've broken the acquisition work force."
Angela Styles, a former director of federal procurement under President George W. Bush, had a different worry about Obama's plan. She said the new president undermined an otherwise substantive and positive proposal by lumping careful, accountable contractors with the ones who are not.
"Unfortunately, someone failed to realize that for this initiative to be successful, the administration will need the good contractors to lead the charge," she said. "By demonizing contractors that follow the law and successfully perform vital services for the United States, the administration lost a critical opportunity."
For his part, Obama said none of the changes would come easily. He predicted blowback.
"We'll have to end old ways of doing business," he said. "We'll have to take on entrenched special interests. We'll have to break bad habits."
He was joined on stage for his announcement by his former presidential rival, Republican Sen. John McCain of Arizona. Their appearance at a fiscal-discipline event was notable because of its timing. Just this week, McCain was on the Senate floor railing against Obama for going along with a spending bill packed with lawmakers' pet projects. "So much for the promise of change," McCain said then. He made no comments with Obama Wednesday.
Other Republican leaders suggested Obama was trying to have it both ways.
House GOP leader John Boehner of Ohio said if Obama really wanted to cut waste he would veto the pending $410 billion catchall spending bill and its more than 8,000 earmarks. The White House has indicated Obama will not. "We need to start seeing some semblance of fiscal discipline," Boehner said.
White House press secretary Robert Gibbs scoffed at that line of criticism. "I think what may be frustrating to many Republicans in Congress is they finally have somebody in town who's willing to address wasteful spending," he said.
Obama's new policy seeks to curtail noncompetitive contracts, saying they should be used only in special circumstances.
Much of the criticism of no-bid contracts has been directed at Halliburton, a giant oil services company once headed by Vice President Dick Cheney that was given noncompetitive work to restore Iraq's oil production during Bush's presidency.
Fraud also has been particularly prevalent following the invasions of Afghanistan and Iraq, where billions of dollars were spent quickly and often with little oversight. More than 140 investigations are under way into allegations of contract fraud in Iraq, Kuwait and Afghanistan.
Obama also declared a preference should be given to fixed-price contracts, not more flexible ones in which contractors are reimbursed for charged costs.
He cited a government study showing that 95 defense projects had overrun their budgets by $295 billion. He endorsed the work of lawmakers, including McCain, who are working on legislation to improve defense spending. Said Obama: "The days of giving defense contractors a blank check are over."
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BEN FELLER 03/ 4/09 06:04 PM ET Associated Press