OMB Targets Management Support Contracts The Obama administration has ordered agencies to cut spending on management support contracts by 15% during the current fiscal year. In a memo, the Office of Management and Budget targeted a wide range of contract spending, including IT, program management, technical assistance and systems engineering. OMB said the cuts would amount to $6.7 billion. “Over the past decade, agency spending for management support functions has quadrupled, far outpacing the already fast growth in contract spending generally,” the OMB memo says. “In addition, a review of historical buying trends indicate that agencies are twice as likely to buy these services using high-risk contract types, especially ‘time-and-materials’ contracts, which put the agencies—and therefore the taxpayers—at greater cost risk than when fixed prices are used.” It said the contracts create “a potential risk of overreliance on contractors.” OMB suggested several strategies for identifying ways to meet the 15% goal, including: •sampling contracts to determine if there are effective internal controls in place to reduce the use of high risk contracts; •reviewing planned acquisitions to see if more cost-effective labor mixes are possible; •considering if there is significant redundancy in contracts awarded by specific agency components and the management benefits of consolidating some of these contracts to save administrative resources; and •offering training on how to use management support contractors. “This initiative is not meant to discourage use of contractors,” OMB said. “We fully expect agencies to continue to make good use of the expertise, innovation, and capabilities of contractors for a wide range of management support activities, such as program evaluation—investing in what works, and ensuring we have the data, evaluations, analyses, and other studies we need to ensure we are spending taxpayer dollars wisely.” Agency chief financial officers and chief acquisition officers will be responsible for finding the cuts, with regular reports to OMB.