Obama Cracks Down On Government Contractors President Obama announced Wednesday that he'll rein in the huge number of corporations that the Bush administration hired to do government work. Obama says controlling wasteful and fraudulent contracts could save up to $40 billion a year.
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Obama Cracks Down On Government Contractors

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Obama Cracks Down On Government Contractors

Obama Cracks Down On Government Contractors

Obama Cracks Down On Government Contractors

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President Obama announced Wednesday that he'll rein in the huge number of corporations that the Bush administration hired to do government work. Obama says controlling wasteful and fraudulent contracts could save up to $40 billion a year.

STEVE INSKEEP, host:

The president also said yesterday that he's going to change one of the Bush administration's priorities - that's the huge number of contracts awarded to private industry.

President Bush more than doubled the amount of industry contracts to roughly $500 billion last year, and the government's own investigation showed that a lot of contracts were a disaster. Here's NPR's Daniel Zwerdling.

DANIEL ZWERDLING: Senator Barack Obama promised he'd reign in contracting back when he was running for president. Yesterday, he took a step toward doing it.

President BARACK OBAMA: There is a fundamental public trust that we must uphold. The American people's money must be spent to advance their priorities, not to line the pockets of contractors or to maintain projects that don't work.

Recently, that public trust has not always been kept.

ZWERDLING: Here is some of what he meant by those words the public trust has not always been met. The Bush administration paid corporations to do the work for everybody from the Forest Service to the CIA, and they gave the majority of that contract money to companies that didn't even have to compete to get it -or at least they didn't have to compete much.

Agencies like Homeland Security depended so much on contractors that they hired contractors to supervise the other contractors, and federal investigators kept revealing that companies were bilking taxpayers hundreds of billions of dollars worth for work they didn't even do - a lot of it in Iraq.

The president said he's going to build the strongest military in the world…

Pres. OBAMA: But I reject the false choice between securing this nation and wasting billions of taxpayer dollars. And in this time of great challenges, I recognize the real choice between investments that are designed to keep the American people safe and those that are designed to make a defense contractor rich.

ZWERDLING: So President Obama has ordered his staff to draft a new set of rules for government contracts. He says companies will have to compete much more to get them. There will be way more government oversight, and his administration will not hire private industry to do important work that public employees should really do.

Mr. RICHARD LOEB (Government Official): I'm in a state of rapture, although I imagine most government contractors are in a state of shock.

ZWERDLING: That's one of the officials who used to supervise contracts for President Bush, and he worked for Clinton and Reagan before him. His name is Richard Loeb. He says all those administrations gave far too much power to private industry. He says it sounds like President Obama's about to make history.

Mr. LOEB: Let's just say that this type of serious discussion about government contracting issues hasn't really been discussed by a president in the 30 years I've been doing this.

ZWERDLING: How much detail has President Obama given the public that tells you, okay, here's exactly what he is and isn't going to do?

Mr. LOEB: Well, obviously, the devil is always in the details. And this is a broad, overarching concept of what he's going to tell the rule-writers that he wants. Obviously, what they ultimately put out is going to determine how effective this will be.

ZWERDLING: President Obama says they'll roll out the new era of contracting by September 30th this year. Actually, some analysts say that deadline might be over-ambitious.

Professor CHARLES TIEFER (University of Baltimore Law School): Haste makes waste, sometimes, as they say.

ZWERDLING: Charles Tiefer teaches government contracts at the University of Baltimore Law School. He's also a member of the federal commission that's trying to monitor contracting at the Pentagon.

He notes there are all kinds of laws that govern government contracts. So if the president really wants to revamp the system, Congress will have to rewrite them, and Tiefer and other analysts wonder: Does the federal government really have enough employees to crack down on contractors?

Since 1990, Congress and the presidents have eliminated almost 400,000 jobs from the government. A lot of them were supposed to monitor what contractors were doing. Meanwhile, tens of thousands of current federal employees are getting ready to retire.

So Tiefer and others say the president's plans won't work unless he and Congress are willing to replace them, and that will likely trigger another battle over big government. Daniel Zwerdling, NPR News.

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Obama Outlines Plan To Slash 'Wasteful' Spending

President Obama signed a directive Wednesday that changes the way government contracts are awarded and who can get them, a move he said could save as much as $40 billion a year.

The amount the government spends on contracting has ballooned over the past eight years, with outlays for goods and services increasing from $200 billion in 2000 to more than $500 billion in 2008. The president said his plan would make the contracting process more competitive and accessible to independent contractors — and more difficult for contractors to defraud taxpayers.

"It's time for this waste and inefficiency to end," the president said Wednesday morning at the White House. "It's time to invest only in what works."

Obama said his administration would stop hiring private contractors to perform work that government employees could handle. In addition, he pledged to open the process to small businesses and eliminate "unnecessary" no-bid contracts. The plan also strengthens oversight of contracts to cut overruns and fraud.

White House Budget Director Peter Orszag and Cabinet officials will have new guidelines for contracting ready by the end of September, Obama pledged.

On the hot topic of defense spending, the president said he would draw a line between spending that keeps Americans safe and money that largely enriches defense contractors.

Last year, a Government Accountability Office study of 95 major defense acquisitions projects found cost overruns of 26 percent, totaling $295 billion over the life of the projects. Obama said investing in proven technologies and increasing oversight would make the defense contracting system more efficient.

Cost overruns on defense contracts came up last week at the White House summit on the economy, when Arizona Sen. John McCain used the president's fleet of Marine One helicopters as an example. Obama said he had already spoken to Defense Secretary Robert Gates about the fleet of 28 helicopters costing $11.2 billion over budget.

Obama also endorsed a bipartisan effort by McCain and Sen. Carl Levin (D-MI) to change defense procurement and asked Gates to work with the two on legislation that would end the cost overruns common in defense projects.

"The days of giving defense contractors a blank check are over," Obama said.