Obama To Overhaul “Broken” Procurement System (An earlier version of this story was available to online subscribers on March 5.) The Obama administration will impose new controls on sole-source and cost-plus contracts and contract oversight by September 30. In announcing the overhaul, President Obama denounced a “broken system of government contracting.” Speaking March 4 at the White House, he declared, “We are spending money on things that we don’t need, and we’re paying more than we need to pay. And that’s completely unacceptable. “We will stop outsourcing services that should be performed by the government, and open up the contracting process to small businesses. We will end unnecessary no-bid and cost-plus contracts that run up a bill that is paid by the American people. And we will strengthen oversight to maximize transparency and accountability.” Expanding on themes he sounded during the campaign, Obama said his reforms would save taxpayers up to $40 billion a year. He named the director of the Office of Management and Budget, Peter Orszag, to lead the overhaul effort. The chairwoman of the House Small Business Committee, Rep. Nydia Velazquez, D-NY, urged the administration to add contract bundling to its no-no list. She said bundling is “one of the biggest obstacles preventing small businesses from effectively competing.” In a memorandum to agency heads, Obama wrote, “It is the policy of the Federal Government that executive agencies shall not engage in noncompetitive contracts except in those circumstances where their use can be fully justified and where appropriate safeguards have been put in place to protect the taxpayer. In addition, there shall be a preference for fixed-price type contracts. Cost-reimbursement contracts shall be used only when circumstances do not allow the agency to define its requirements sufficiently to allow for a fixed-price type contract.” He ordered OMB to issue new guidance by July 1 “to identify contracts that are wasteful, inefficient, or not otherwise likely to meet the agency’s needs, and to formulate appropriate corrective action in a timely manner.” By Sept. 30, the administration will issue new policies to maximize competition and define government functions that are and are not appropriate for outsourcing. The president also ordered an assessment of the capabilities of the acquisition workforce. Focusing on defense contracting, which accounts for almost two-thirds of procurement dollars, he said, “If a system isn’t ready to be developed, we shouldn’t pour resources into it. And if a system is plagued by cost overruns, it should be reformed. No more excuses, no more delays. The days of giving defense contractors a blank check are over.”