Obama to tout $19B in contract savings

The Obama administration says it has saved $19 billion by streamlining federal contracting spending that doubled under the Bush administration.

President Barack Obama said Monday that his administration has saved $19 billion by streamlining federal contracting spending that doubled under the George W. Bush administration.

Obama touted the savings during public remarks at the White House with his budget director, Peter Orszag, and Secretary of Veterans Affairs Eric Shinseki.

The savings were part of a push to reduce federal contracting costs by 3.5 percent in fiscal 2010 and by $40 billion annually by 2011.

Obama is pushing deficit reduction in the run-up to his first State of the Union address in January. Obama oversaw a record $1.4 trillion deficit in 2009 and the House last week approved a $290 billion jump in the nation’s debt limit.

Obama has come under fire from Republicans over spending, which is expected to be a key issue in the 2010 midterm elections.

Obama hailed the savings, saying that during times of financial crisis, "business as usual in Washington just won't cut it."

The president railed against lawmakers whom he said in the past have treated the tax dollars of hardworking Americans "like Monopoly money."

While the president is under pressure to reduce spending, that effort is complicated by calls for the administration to do everything it can to lower 10 percent unemployment. Both the House and Senate are looking at new jobs bills that could be paid for with funds left over from the bailout of the financial sector.

The effort to reduce contracting spending includes a plan to reduce high-risk contracts by 10 percent and implement new “pilot projects” at each government agency to test whether the use of outside contractors is hurting government performance, said Jeffrey Zients, the White House chief performance officer.

Zients said much of the blame for the increased government spending on contracts belongs to the Bush administration. Federal contracting spending doubled from 2002 to 2008, to $540 billion, he noted.

“At the same time, the workforce remained relatively flat,” Zients said, calling it a “rush to outsource.”

“This is a situation that would never exist in a business,” Zients added.

The Pentagon saved $10 million this year by eschewing contractor designs on repairs for the Javelin shoulder-fire missile and instead using the work of Defense Department engineers, according to a report on the federal contracting savings that the White House released Monday. The Department of Homeland Security expects to save $87.5 million over six years by standardizing its office computer system and reducing software contracts, according to the report.

Sam Youngman contributed to this report.