Changes Coming to Government Procurement

It is a great idea and the time for it is ripe: Rebuild the nation’s government procurement process to make it leaner, less expensive, more efficient and more fair. President Obama is going to have Peter Orszag, Director of the White House Office of Management and Budget, work with cabinet and agency officials to create a new way for the government to buy what it needs and he estimates that by doing so, he can save the taxpayers some $40 billion a year. According to the White House, the new contracting rules, which will have to be developed by the end of September, would make it harder for contractors to cheat taxpayers while making some half-trillion dollars in federal contracts each year more accessible to independent contractors.

The Take for Small Business

That last part, making some half-trillion dollars in federal contracts each year more accessible to independent contractors, hints that small businesses will receive a larger piece of the federal procurement pie. Obama has also said that he will open more contracts to small business and eliminate "unnecessary" no-bid contracts. On the other hand, he also intends to steer outsourced work away from the private sector and back to government employees.

These changes were stimulated by demands by legislators for more financial accountability. During a meeting between administration officials and legislators on Capital Hill, the administration was bluntly told that costs were out of control and that they needed to do a better job. The case in point: President Obama’s fleet of helicopters.

It was Arizona Sen. John McCain, Obama's Republican rival during last year's election, who summed it up best when he dryly told Obama, "Your helicopter is now going to cost as much as Air Force One." A review of 95 defense projects by the Government Accountability Office, the auditing arm of Congress, found that the projects went over budget by $295 billion over the course of several years.

The Bottom Line

The embarrassment of that exchange led to the changes in procurement procedures that are currently under consideration and, overall, it seems that what was lacking for small business in the stimulus bill is now being addressed here. However, the real question is this: Since the stimulus for this review and change was the problem of cost overruns in defense spending, will these new rule, once they are developed, be spread across the entire spectrum of government procurement or will they be focused on the Department of Defense and related agencies? More than that, there is no mention of ensuring that small business contracts will go exclusively to small businesses, a glaring omission that puts the rest of the plan in doubt.

Small business has a great deal to offer the government in terms of goods and services, and this is a good time for the Obama Administration to put the energy and expertise of American Small Business to good use. That, however, can only happen if the President leads on this issue and ensures a real and significant place at the table for small business. If he does not, then it will be all hope and no change and that is no recipe for success.