Federal contract spending dropped $20 billion in FY12

The federal government reduced its contract spending by $20 billion in fiscal year 2012 from the previous year, the White House announced.

Joseph Jordan, administrator of the Office of Management and Budget’s Office of Federal Procurement Policy, said the drop is part of a larger three-year trend: FY12’s total contract spending was $35 billion less than the amount spending in FY09.

This comes after an eight-year period from FY00 to FY08 that saw contracting grow approximately $300 billion over that time.

“Since the beginning of the Administration, President Obama has challenged Federal agencies to strengthen their acquisition and contracting practices by eliminating inefficiencies and buying smarter,” Jordan said. “In response, agencies have cut unnecessary contracts and launched new efforts to pool the government’s buying power to deliver a better value for the American people.”


Jordan said the reductions have come in a variety of ways.

For instance, the government reduced spending on support services by $7 billion the past two years, reaching the Obama administration’s goal of cutting spending in that area by 15 percent by the end of FY12.

Another way is strategic sourcing. Jordan said the government has already saved $200 million on things like office supplies and domestic shipping services since FY10. The Department of Homeland Security, Jordan said, saved over $386 million last year by pooling purchases for a wide range of products – everything from canines to surveillance equipment – across the Federal Emergency Management Agency, the Coast Guard, Customs and Border Protection, and other components.

“This progress is remarkable, and we are pleased that we have not only stemmed but reversed the unsustainable growth in contracting under the previous Administration,” Jordan said.

Office of Management and Budget Director Jeff Zients issued a memo on Thursday calling for increased use of strategic sourcing to help the government continue to avoid unnecessary costs.


The guidance calls on the largest buying agencies to identify and develop at least 15 new government-wide strategic sourcing solutions that their agencies will commit to using over the next two years.

The agencies will analyze savings opportunities across the government, in areas such as desktops and laptops, IT software, janitorial and sanitation supplies, office furniture, building maintenance and operations services, and other professional and technical services.

“The initiative announced today builds on the successes that agencies have already had in this area, and will serve as the foundation for driving agencies to set new and bold goals for saving money and improving the acquisition and management of goods and services,” Jordan said. “The President will ensure that agencies move quickly to adopt new strategic sourcing solutions, increase their use of existing vehicles, and achieve even more savings for the American people over the next four years.”

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