On March 4th, 2009, President Obama announced a major initiative to significantly reform the government contracting process and substantially reduce federal outlays. The President emphasized that his plan will change "how the government does business" and "end old ways of doing business." This reform is a part of the President's deficit reduction plan and the White House estimates that it will save up to $40 billion each year.

In a Presidential Memorandum and in his remarks, President Obama focused on eliminating waste, fraud, and abuse as well as cost overruns, failed oversight, and a lack of accountability. This reform initiative is aimed at curtailing no-bid and cost-plus contracts, maximizing the use of competitive procurement processes, and clarifying rules as to outsourcing.

Key elements of the President's procurement reform include:

  • New contracting guidelines. The Office of Management and Budget will work with cabinet officials and agency heads to draft tough new contracting guidelines by the end of September.
  • New outsourcing posture. The government will stop outsourcing services that should be performed by government employees.
  • Increased opportunities for small business. Federal procurement contracting will be further opened up to small businesses.
  • Curtail no-bid and cost-plus contracts. Unnecessary no-bid and cost-plus contracts will be ended.
  • Enhanced oversight. Reforms will strengthen oversight to maximize transparency and accountability.

As procurement reform progresses, Sonnenschein will closely monitor the latest developments and provide further updates.

For full text of the Presidential Memorandum and the President's remarks, visit http://www.whitehouse.gov/the_press_office/Memorandum-for-the-Heads-of-Executive-Departments-and-Agencies-Subject-Government-Contracting/.

For remarks by the President on Procurement, visit http://www.whitehouse.gov/the_press_office/Remarks-by-the-President-on-Procurement-3/4/09/.