On February 18, the Office of Management and Budget (“OMB”) director Peter Orszag issued guidance to agencies regarding the administration of federal Stimulus funds. Just this past week, on March 4, President Obama signed a memorandum designed to reform federal government contracting. These directives mark the beginning of reform in the world of government contracting, and reflect the greater accountability and transparency the new administration promises to American taxpayers.
The OMB memo requires agencies to submit spending and performance data to their website on a regular basis. The website is a web portal that demonstrates exactly how the Stimulus funds are being spent, and it calls itself the “centerpiece” of efforts to implement the American Recovery and Reinvestment Act with “accountability and transparency.” In a video message to Americans on the website, President Obama pledges greater accountability and transparency in government spending. In his address, he notes that the “size and scale of this effort demand unprecedented efforts to root out waste, inefficiency and unnecessary spending,” and he refers to the Stimulus as a “significant investment in our country’s future.”
The OMB memo also increases the requirements for those doing business with the federal government. Starting on March 3, agencies must submit weekly reports breaking down how they have spent Stimulus funding. They must also summarize any major actions taken as well as any future activities. Beginning May 1, they must provide recovery plans outlining their individual agency goals and any coordinating efforts. By May 8, they must being submitting monthly financial reports detailing their obligations, expenditures, and other pertinent financial information.
Under the new requirements, agencies are now required to post pre-solicitation and award notices for any task and delivery order acquisition contracts on FedBizOpps, a clearinghouse for federal government contracting opportunities. Any Stimulus-related prospects must be specially formatted to differentiate them from regular projects. For any contracts or orders over $500,000, the agencies must summarize the contract or order, provide a description of the particular goods or services required, and then post that information to the recovery.gov website, making it available to the public.
Agencies are also urged to use fixed-price contracts wherever possible and appropriate. Several types of fixed-price contracts exist. They are designed to facilitate proper pricing under varying conditions. Generally, they place more cost responsibility on the contractor than on the Government, and encourage greater efficiency in contract management. According to Orszag, these kinds of contracts “expose the government to the least risk.” Fixed-price contracts are outlined in more detail in Subpart 16.2 of the Federal Acquisition Regulation (“FAR”). More detailed instructions will be provided to agencies in the coming months.
Obama’s presidential memo comes out of the recent government responsibility summit and calls for massive overhaul in government procurement. In his announcement regarding this memo, President Obama noted that, “last year, the Government Accountability Office, looked into 95 major defense projects and found cost overruns that totaled $295 billion…That’s $295 billion in wasteful spending.”
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