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The Democratic Strategist

Political Strategy for a Permanent Democratic Majority

An Unhappy Day For Government Contractors

The ever-vigilant Spencer Ackerman alerts us today in the Washington Independent that the President today issued a memorandum ordering the Office of Management and Budget and executive agencies to “restrict no-bid contracts; to rein in outsourcing of ‘inherently governmental activities’; and to, if necessary, cancel wasteful contracts outright.”
Ackerman notes in particular that Obama focuses on the Defense Department:

[Obama called for] processes for ongoing review of, existing contracts in order to identify contracts that are wasteful, inefficient, or not otherwise likely to meet the agency’s needs, and to formulate appropriate corrective action in a timely manner. Such corrective action may include modifying or canceling such contracts in a manner and to the extent consistent with applicable laws, regulations, and policy.

Cost overruns are, of course, endemic at DoD. Thus, says Ackerman:

If I was a lobbyist for Lockheed or Boeing, I’d be dialing my contacts in the Pentagon and the Hill to figure out what the prospective damage to my company was. And then I’d come up with a strategy to fight this forthcoming Office of Management and Budget review.

The announcement of a new general approach to government contractors raises as many questions as it answers. It’s not always obvious what constitutes “inherently governmental activities,” and contracting sometimes saves a lot of money without corruption. Often the big question isn’t “public versus private,” but how much genuine competition exists among potential providers of services or materials.
But after many years of pro-privatization assumptions in public service delivery at every level of government, it is time to deal with these questions upfront. So Obama’s memo can and should become the beginning of a very big debate.

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