Change You Can Procure With?

President-elect Obama has promised change. What should be expected in the area of government contracts?

According to an LA Times report, President-elect Obama has promised to reduce spending by $40 billion by using fewer contractors, "seek[ing] better deals with leveraging the government's buying power." This approach-- promising more exclusivity in exchange for deeper bulk discounts-- is analogous to the approach taken in the private sector by warehouse stores, such as Sam's Club and Costco:

A typical Costco store stocks 4,000 types of items, including perhaps just four toothpaste brands, while a Wal-Mart typically stocks more than 100,000 types of items and may carry 60 sizes and brands of toothpastes. Narrowing the number of options increases the sales volume of each, allowing Costco to squeeze deeper and deeper bulk discounts from suppliers.

But what effect would this "Costco approach" have on other policy aims? The LA Times reports that Obama's adoption of such a strategy would result in a "potential thicket of conflicting policy issues," such as the government's preferences for small businesses.

What else might be on the horizon?

Obama's transition website, change.gov, promises more oversight, more procurement officers, and an end to most no-bid contracts.

Obama's plans for defense contracting include developing a strategy for "determining when contracting makes sense, rather than continually handing off governmental jobs to well-connected companies." Obama's transition website also pledged to "rebuild[] our contract officer corps" and to order the Department of Justice "to prioritize prosecutions that will punish and deter fraud, waste, and abuse." The transition site promises elsewhere that nearly all contract orders over $25,000 be competitively awarded.

Now and future SecDef Robert Gates agreed that reform should be a top priority.

The transition website gives no indication as to how many new contracting workers would be required, but the LA Times reports that some specialists are estimating tens of thousands, if not a hundred thousand, new contract-related jobs. As of 2006, the Times reports, just over 58,000 federal officials worked in contract-related jobs specifications.

Obama's transition site also promises to streamline government procurement:

Streamline Government Procurement: Barack Obama will implement the GAO's recommendations to reduce erroneous federal payments, reduce procurement costs with purchase cards, and implement better management of surplus federal property. These initiatives will save $4.5 billion a year.

The GAO recommendations the site refers to appear to be GAO-08-160, the GAO's report to the Committee on Oversight and Government Reform, which recommended that the Office of Federal Procurement Policy "develop and oversight strategy or plan with milestones and reporting requirements."