Budget Bullets: Procurement

We Can Cut up to $400 Billion from the Budget Over the Next 10 Years by Buying Smarter

SOURCE: AP/J. Scott Applewhite

The U.S. Treasury Building as seen in Washington, D.C. Congress can cut between $25 billion and $54 billion a year from the federal budget by changing the way it buys and manages goods and services.

By John Griffith | June 22, 2011

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Congress can cut between $25 billion and $54 billion a year from the federal budget by changing the way it buys and manages goods and services. The cost-saving strategies below have been proven to work in the private and public sectors. Taken together, they represent a fundamental overhaul of how the federal government plans, coordinates, and monitors its purchasing activities.

We can avoid wasteful spending through better procurement planning

• The government should regularly assess its needs so it doesn’t buy too much.
• It should generally buy "off the shelf" products instead of expensive custom-made ones.
• Officials must coordinate their purchases across government to get volume discounts and negotiate better deals. We can cut costs through smarter negotiation and contract management.
• We must eliminate bureaucratic hurdles to attract more bidders and increase competition.
• We must better train procurement officials, so they are skilled negotiators with extensive knowledge of bidders and the costs associated with products and services.
• We must keep pushing for cost savings even after a contract is signed.

We can save more than $1 billion a year by ramping up contract auditing

• Every federal dollar spent on procurement auditing saves the government more than $5, according to the Defense Contract Audit Agency.
• And yet even as federal procurement spending more than doubled over the past decade, the number of full-time contract auditors rose by less than 20 percent.
• The audit agency’s annual budget should be increased to $840 million to match the growth in procurement spending. This will generate net savings of more than $1 billion.

John Griffith is a Research Associate with the Doing What Works project at American Progress.

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