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OMB Director Touts Contract Spending Reductions

OMB Director Jack Lew

In a blog posting on the Office of Management and Budget website, OMB Director Jack Lew hailed the recent announcement that the government was “turning the tide” on contract spending.

“This administration is doing what has been so elusive in the past:  cutting wasteful spending on contracts and getting better value for the taxpayer dollar,” he wrote.

OMB officials said last week that, for the first time since 1997, government spending on contracted goods and services had declined.

Lew said it was evidence of a “new sense of fiscal responsibility” taking hold.

“Agencies are thinking more carefully about what they buy and how they buy it. They are ending contracts they cannot afford or no longer need,” he added.  “They are taking greater advantage of buying strategies that are more appropriate for the world’s largest purchaser – pooling their buying power to negotiate better prices and deeper discounts.”

But, industry groups representing the private sector have said it’s too early to be backslapping over the reduced contract spending. Often, contracted goods and services are essential to fulfill an agency’s mission, they argue, and unilaterally cutting contract spending could risk putting “the horse before the cart,” as Professional Services Council President and CEO Stan Soloway put it.

Industry groups also said contracting cuts could disproportionately affect small businesses.

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