Obama takes aim at Government Contractors

Last year when the economy “tanked” many small businesses looked to the one customer that was still spending money, the Federal Government.   For the uninitiated, this can be a nightmare of rules and regulations.  For the experienced, it just got tougher too.  President Obama issued a Memo on March 4th of this year noting that there had been a drastic increase in government contracts from 2000 to 2008 that did not employ sufficient competition to award.  Further, he noted that cost reimbursable contracts created a “risk” for the taxpayer that was unwarranted.    As a result, the Office of Management and Budget (OMB) issued guidelines at the end of October to reduce by 10% the dollar amount of contracts that were issued with only one bid were cost re-imbursement contracts or were T&M type contracts.   While we can all agree that the number of non-competitively bid contracts should be reduced, I’m not sure we understand why a cost reimbursable or T&M type contract is not in the best interest of the taxpayer?  Normally these are the contracts that the DCAA will be sent out to audit and make sure that guidelines are being followed, not FFP contracts.  Also, with all of the turmoil at the DCAA in the last year, the audit standards are more strict than ever. 

So what does this mean for the small government contractor?  I guess it means that 1) it will be harder to win a contract because of increased amounts of competition being sought, 2) it will put more risk on the contractor because there will be increased pressure to use FFP type contracts , & 3) when the contractor does get a contract there will be increased scrutiny from the DCAA for performance.


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