According to the Office of Management and Budget (OMB), for the third year in a row, Federal contract spending decreased. While spending $537 billion in contracts in fiscal year 2011, the government spent just $513 billion in fiscal 2012, marking the largest single-year dollar decrease on record. The decreases are a result of a “concerted and collaborative effort on behalf of all the agencies,” said Joe Jordan, administrator of the Office of Federal Procurement Policy. Recent actions indicate the government has undoubtedly moved away from the increasing period between 2000 and 2008. The Federal government even surpassed its goal of reaching a 15% reduction on management and support services by the end of fiscal 2012.
The OMB has created a leadership council in which all agencies will have a designated official responsible for the new cost cutting initiatives. Within the agenda the OMB has also developed the Interagency Strategic Sourcing Leadership Council whose first task is to recommend to the administration management strategies that will ensure government procurement of the best possible pricing and quality goods, services, commodities, and contracts. Though concerns exist on whether the newfound council will be more bureaucracy, the OMB should now be a willing partner in the legislative reform effort in which progress is finally being made to resolve the inefficient and wasteful government contracts.
The drop in Federal spending will only increase with sequestration looming. If the government is not able to solve this fiscal cliff the spending decrease for FY2013 will be even greater. That being said, the possibility of sequestration and the lack luster economy are not completely to blame for the decrease in spending. Some of it has to do with more agencies seeking cost savings with enterprise wide technology deployments, and switching some applications to the cloud. FY2013 will be an interesting year to watch for with Federal spending.
Kevin Lancaster leads Winvale’s corporate growth strategies in both the commercial and government markets. He develops and drives solutions to meet Winvale’s business goals while enabling an operating model to help staff identify and respond to emerging trends that affect both Winvale and the clients it serves. He is integrally involved in all aspects of managing the firm’s operations and workforce, leading efforts to improve productivity, profitability, and customer satisfaction.