President Barack Obama yesterday announced plans to overhaul the way the government does business with the private sector, but government contracts lawyers say they’re not yet convinced the guidelines will have an impact.
In a presidential memorandum, Obama calls for an end to unnecessary no-bid contracts and a clearer definition of when it’s appropriate to outsource work to the private sector. He also wants more contracting opportunities opened up to smaller businesses. He’s given Peter Orszag, his director of the Office of Management and Budget, until Sept. 30 to fill in the details and issue new government-wide guidance on procurement to the heads of executive agencies. The president projects that stricter oversight of the procurement process will save taxpayers as much as $40 billion a year.
“The American people’s money must be spent to advance their priorities – not to line the pockets of contractors or to maintain projects that don’t work,” said Obama during a speech debuting the plans yesterday morning.
But lawyers who sit across the negotiating table from the government say they’re not worried the new rules will mean a slow down in business for their clients.
“It doesn’t look, on the basis of the memo itself, like it’s going to mean much at all,” says Rand Allen, the chair of Wiley Rein’s government contracts practice. “They’re not saying anything that isn’t already required by law. In some respects, it’s just a summary of existing law.”
According to campaign finance disclosures compiled by The Center for Responsive Politics, Allen donates consistently to Republican candidates. But an Obama supporter agrees with him. George Ruttinger, chair of Crowell & Moring’s government contracts group, gave $1,750 to Obama throughout his primary and general election campaigns, but he, too, says the memo is “really nothing terribly new.”
Allen and Ruttinger both say they have yet to field any concerns or questions from contractor clients on the proposed rules. That might be because Obama has laid out only the broad outlines. Contractors won’t know how Obama plans to implement the changes until Orszag rolls out the more detailed guidelines in September.
And if the guidelines call for new, enforceable regulations, establishing those will take months longer, says Robert Burton, a Venable partner who served as deputy administrator of the Office of Federal Procurement Policy in the Executive Office of the President. Burton says new regulations will be necessary to get both public and private contracting officials to follow the rules. “To the extent there’s actual, real reform, it has to be regulatory in nature. It can’t just be guidance,” he says.
At least one lawyer considers the president’s proposal “a major shift.” Kenneth Weckstein, a government contracts partner at Brown Rudnick, says Obama’s promise to be more selective about the work that gets contracted out will cause an uproar among contractors. “Contractors are going to be very much opposed to that. And the president is going to see a massive lobbying campaign opposing that between now and September, when he’s talking about implementing these rules,” he says.
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