Dear President Obama,
As spend management advisors and taxpayers, we were highly encouraged by your commitment to make federal procurement reform a top priority for your administration. Your acknowledgement that "the [federal] procurement system right now doesn't work," impressed us. We applauded your call for more diligent oversight of large federal contracts, which, in your estimation, were showing "cost overruns of 30 percent or 40 percent or 50%, and then still don't perform the way they're supposed to". And when you claimed your team had already "identified potentially $40 billion in savings just by some of the procurement reforms that are pretty apparent to a lot ... And we are going to continue to find savings," we held out hope that your spend management discipline would help fund (and offset) a chunk of the economic stimulus package.
Yet, our optimism is waning. Nearly five months after you announced your procurement reform plans, only one of the top federal procurement seats have been filled -- and that's at the Defense Department, where budget is declining. Leadership seats at the other two major federal procurement groups -- the Office of Federal Procurement Policy (OFPP) and the General Services Administration (GSA) -- remain unfilled.
Now in your defense, Martha Johnson, your GSA nominee, is held up in the Senate. But given that this is not a highly controversial nomination and the Democratic Party controls the Senate, her approval should not take 4 months. The OFPP on the other hand, does not even have a nominee and it has been reported that it may take another two months for your administration to put a name forward. Why the delay when these critical agencies control such large budgets?
Collectively, these two agencies oversee more than $375 billion in spending on external goods and services annually. They also set the government's policies for sourcing, contracting, and governance of supplier agreements. Driving the types of procurement policy and governance reforms you call for is tough enough. Doing so in today's uncertain economic environment is even more challenging. And attempting it without an experienced captain at the helm is downright dangerous.
In these tight economic times, commercial enterprises have made spend management a top priority in order to maintain profits. And taxpayers are tightening their belts at home to just pay the bills -- let alone save for the future. As the watchdogs of our tax dollars -- and increasingly our economy -- it is only prudent that the federal government apply the same fiscal discipline to its own spending.
Moreover, it's time to call the public's attention to the billions of dollars in savings your Presidential tenure could bring us. But Washington is currently making hay over pennies (e.g., $2 million in savings from changing Coast Guard maintenance schedules) vs. targeting the bigger picture. In procurement, we like to say it's important to focus on the 20% of the things that will bring 80% of the returns (this is the classic Pareto principle). Pinning this message to your staffer's walls would go a long way to driving home a plan to focus everyone's attention on the types of initiatives necessary to get significantly more in return for every dollar of Federal spending.
We think that we'd all agree that the type of oversight and direction needed for federal agencies to spend tax dollars more wisely requires strong leadership. Until such leadership is posted at the OFPP and GSA, the chances of the type of federal procurement reform and spend management discipline you propose -- and this nation requires -- will be more hope than reality.
We strongly encourage your administration to waste no more time. Appoint federal procurement leadership now. Focus the nation on the massive savings opportunities that are possible to create excitement. And get on with the business of spend management reform and economic recovery.
Tim A. Minahan, CMO Ariba, Inc.
Jason Busch, Founder & Editor Spend Matters
Justin Fogarty, Editor Supply Excellence