Government Contracting

This March 4, 2009 memorandum directs the OMB Director, in collaboration with other agency heads, to develop government-wide guidance by July 1, 2009 and September 30, 2009 to reduce noncompetitive and cost-reimbursement contracts, increase fixed-price contracts, strengthen contract oversight, and clarify when outsourcing of inherently governmental functions is inappropriate. It responds to sharp increases in sole-source and cost-reimbursement contracting since 2001 and aims to improve value for taxpayers.

Federal Register Open PDF 74 FR 9755

Impact dates

Sep 30, 2009
Government-wide guidance on competitive contracting, contract types, acquisition workforce, and outsourcing
Jul 1, 2009
Government-wide guidance on reviewing existing contracts and corrective action

Key directives

Develop and issue by July 1, 2009 government-wide guidance to assist agencies in reviewing existing contracts and formulating corrective action including modification or cancellation
Develop and issue by September 30, 2009 government-wide guidance on: (1) appropriate use and oversight of sole-source/noncompetitive contracts with maximized competition, (2) appropriate use and oversight of all contract types to minimize risk and maximize value consistent with section 864 of Public Law 110-417, (3) assessing federal acquisition workforce capacity, (4) clarifying appropriateness of governmental outsourcing consistent with section 321 of Public Law 110-417

Who is ordered

Timeline

Immediate

OMB Director authorized to publish memorandum; agencies directed to carry out provisions to extent permitted by law

Near term (90d)

July 1, 2009 deadline for guidance on reviewing existing contracts for waste/inefficiency and corrective action
September 30, 2009 deadline for guidance on competitive contracting, contract types, acquisition workforce capacity, and outsourcing appropriateness

Long term

Implementation of new government-wide contracting guidance across agencies
Potential structural changes to federal acquisition workforce capacity
Ongoing review processes for existing contracts
Clarification of inherently governmental vs. commercial activities boundary

Risks & tensions

Tension between push for competition/fixed-price contracts and agency need for flexibility in exigent circumstances
Implementation depends on OMB collaboration with multiple agencies; coordination risk
No enforcement mechanism specified beyond guidance issuance
Vague standard for 'inherently governmental' activities may create implementation uncertainty
Potential contractor pushback on contract cancellations/modifications