GAO challenges administration on contract savings

Administration procurement officials and Government Accountability Office auditors are at odds over the administration's claimed savings from contracting reform initiatives.

Did government agencies save $15 billion from fiscal 2009 to 2010 through the administration’s savings initiative or did officials overstate the numbers? A recent GAO report questioned the Office of Management and Budget's calculations.

OMB reported recently fiscal 2010’s contract spending was lower than the previous year for the first time in the past 13 years. Agencies spent $15 billion less than they did in fiscal 2009, according to OMB. Further, administration officials said agencies saved $80 billion over what they would have spent if spending had continued at the same rate it was under the George W. Bush administration.

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Officials predict spending will be roughly same amount as fiscal 2010, although fiscal 2011’s figures aren’t finalized yet.

But GAO said the savings weren’t based on the administration’s savings initiatives. In fact, the extent of savings resulting from OMB’s initiative is unclear.

In July, OMB introduced an initiative to reduce spending on professional and management services contracts, but it is unclear how this effort will affect the savings initiative.

GAO also found that “agency officials were confused about what constitutes a savings due to OMB’s broad and changing guidance.” They were even unsure whether the savings initiative would continue in future years.

While OMB reported the savings, “this analysis was based on governmentwide spending trends and not solely due to the savings initiative,” GAO reported.

GAO said it found billions of dollars in overstated and questionable savings, reported by civilian agencies in early fiscal 2011. One agency reported about $1.9 billion in savings that represented total contract obligations rather than savings. NASA reported $660 million in savings resulting from a 2004 decision to retire the space shuttle. The Defense Department chalked up some savings numbers, which stemmed from a broader, ongoing effort to reduce the department’s budget. The savings were not necessarily tied to contract savings, GAO reported.

Dan Gordon, administrator of the Office of Federal Procurement Policy, responded to GAO, saying that he disagreed. A decrease in spending can be a contract savings, he said, arguing that GAO focused too much on the process, and not on how much was saved.

“The report highlights methodological issues related to measuring the amount of the savings that agencies have achieved,” he wrote. He added he was troubled that GAO’s concerns “obscure the importance of the very real progress made.”

But Gordon also said OMB is committed to improving how it measures.