Lawmaker, officials promote share-in-savings contracting

A contracting initiative that pays vendors from savings that their programs generate for the government could be an ideal vehicle for deploying new e-government services, but only if congressional objections to it wane and federal agencies can properly manage it, panelists said during a panel discussion on Thursday.

The share-in-savings programs require little or no upfront spending by government entities. The contractors are paid for services only from the savings the programs generate, thus the contractor assumes all the risk and has a great incentive to achieve results. A 2002 e-government law gave federal agencies the incentive to deploy the programs by allowing them to keep unused funds saved from the programs.

"The issue of constrained budgets will be with us for a long time," said Stephen Perry, head of the General Services Administration. "Share in savings gets contracts launched that otherwise would not see the light of day."

House Government Reform Committee Chairman Tom Davis, R-Va., said he is a great supporter of the program but added that the idea faces opposition from other lawmakers. "Some members don't like outsourcing [federal government services]," Davis said. "The unions don't like outsourcing. They don't like people making a profit."

The House and Senate Appropriations committees also do not like the new programs, he said. "They love having control of all contracts because share-in-savings contracts are not awarded through the usual process. They give agency heads flexibility."

Davis said he hopes Congress will change a provision in current e-government law that would end the programs and lift the cap limiting the number of the contracts that may be awarded. Davis noted that the Senate did not pass a procurement bill he introduced last year, but he remains "optimistic" that a similar measure could be passed during this session.

"I am a great believer that if we train procurement officials properly and give them the necessary tools, the federal government can save billions," Davis said. "Waste and fraud are not put in a neat, tight package. We waste tremendous amounts of money because we allow the [procurement] process to drive the outcome. Share in savings reverses that."

"I think this is a great way to save money and the leadership does, too," he added.

Karen Evans, e-government and information technology administrator for the White House Office of Management and Budget, said share-in-savings acquisitions offer federal agencies an opportunity to "really make a difference" and deploy programs they otherwise would not budget. "We all should be looking for opportunities to use this acquisition tool," she added.

Evans said her earlier experiments with performance-based contracting at the Energy Department were very positive. "When you really hold people accountable, the bottom line is that everybody benefits," she said.