Public Sector Spend Management: A Return of Fiscal Discipline?

Whether you’re a Democrat, Republican, Libertarian, or Green Party member, we can all agree that Bush’s first term brought with it little fiscal discipline –- at least on the surface. From Halliburton’s now infamous “no-bid” contracts to the Administration’s “spend frequently and often” approach, Bush failed to live up to the expectations of those touting Spend Management discipline and restraint. In fact, during his first term, according to the Cato Institute, “Bush agreed to sign every piece of [spending] legislation [that crossed] his desk … [This is] in contrast, President Reagan [who] vetoed 22 spending bills during his first three years in office." Now that’s a record I would not want to have. In fact, if this blog were a Law and Order episode, we would all agree that there’s enough evidence to convict our President and congress of failing to adhere to basic Spend Management principles. Case closed. Jack wins again. However, I decided to dig below the surface to investigate what’s really going on behind the Spend Management scenes in the Beltway and beyond. I think you’ll be surprised at what I found. The news is better than you think. The seeds of a Spend Management culture are just beginning to sprout on both the Federal and State levels. Sure, we can all knock Bush for his free spending ways, but below the surface, there’s a layer of discipline I’ve never seen before in government procurement. And the really good news is that this discipline is goes beyond partisan politics. For example, the State of California, which is not traditionally known for fiscal discipline, is aggressively implementing a strategic sourcing program. Already, according to Supply and Demand Chain Executive the program is saving the state millions of dollars. And the Feds are getting into the act as well. You can find countless information on federal strategic sourcing and Spend Management programs on both the GSA and DODweb sites. This fiscal discipline appears to be making its way up to the Whitehouse as well. As many of you have no doubt already seen, Bush’s second term spending plans appear to embrace a far more disciplined approach to Spend Management. But after the Texan’s first term antics, I’ll have to see it to believe it because, according to Aberdeen Group, there’s much work to be done, given the beltway’s free spending past. For more information, check out their brief on the subject. Just as in the private sector, both the state and Federal governments do not have to go it alone on the Spend Management path. There’s much help and guidance out there, and in fact, a number of specialized consulting firms have emerged to tackle government Spend Management opportunities. Silver Oak has probably garnered the most publicity to date. I find their newsletter on government Spend Management useful and informative. Even AT Kearney has jumped on the government Spend Management bandwagon. But perhaps the most fast moving new firm to bring Spend Management discipline to government purchasing is Censeo Consulting, which recently won a significant DOD Contract. Later this week, I’ll interview one of Censeo’s Partners, Raj Sharma, on the ins and outs of Federal procurement, and what the DOD is doing to embrace Spend Management. Stay tuned. Throughout 2005, we’ll revisit the subject from time-to-time and check in on how both state and Federal Spend Management programs are working. -Jason Busch

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