President Obama announced his Presidential Memorandum, which is intended to change the processes through which the U.S. Government obtains goods and services. The Presidential Memorandum directs the Director of the Office of Management and Budget to collaborate with the Secretary of Defense, the Administrator of the National Aeronautics and Space Administration, the Administrator of General Services, the Director of the Office of Personnel Management and others to develop procurement reform guidance. The requirements imposed in the Presidential Memorandum are as follows:

By July 1, 2009 – OMB will issue government-wide guidance to assist executive agencies in reviewing and creating processes for ongoing review of existing contracts with the goal of identifying wasteful or inefficient contracts and/or contracts that are not otherwise likely to meet the agency’s needs.

By September 30, 2009 – OMB shall issue government-wide guidance to:

  • Govern the appropriate use and oversight of sole-source and other types of noncompetitive contracts
  • Maximize the use of full and open competition and other competitive procurement processes
  • Govern the appropriate use and oversight of all contract types, in full consideration of the agency’s needs, and to minimize risk and maximize the value of government contracts generally
  • Assist agencies in reviewing the capacity and ability of the Federal acquisition workforce to develop, manage and oversee acquisitions appropriately
  • Clarify when governmental outsourcing for services is and is not appropriate.

The stated goal of the Presidential Memorandum is to cut as much as $40 billion in federal spending by strengthening oversight and management of federal contracts, ending the outsourcing of work that should be performed by federal government workers and end “unnecessary” no-bid, sole source contracts. Further, President Obama stated that, as part of this goal, it is his objective to invest in proven, cost-effective technologies to keep America safe. President Obama flatly rejected the notion that the U.S. government should invest in, or continue to invest in, defense systems that are not technologically ready.

Analysis

The Presidential Memorandum could indicate a sea change in executive agency procurements. On the other hand, executive agency procurements could slide back under the radar with business being conducted “as usual.” As President Obama clearly recognized in his announcement, there are many loopholes in the federal contracting system that permit federal agencies to avoid lengthy, competitive procurements. Such loopholes include, for example, the issuance of task orders under broadly defined, existing contract vehicles. In the past, we have seen actions taken by government officials that were clearly intended to reduce, and certainly not increase, competition. Such procurement actions, and selections, ensured awards to favored contractors under a variety of innovative legal theories. We are actively providing Congressional oversight committees with examples of such practices as well as assisting current clients oppose such practices through the administrative and judicial processes available. We invite you to share with us your favorite story of procurement abuse or your best example of a pristine, and expertly managed, procurement.