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S. Hrg. 111–467 

ACHIEVING THE PRESIDENT’S OBJECTIVES: 

NEW OMB GUIDANCE TO COMBAT WASTE, 

INEFFICIENCY, AND MISUSE IN FEDERAL 

GOVERNMENT CONTRACTING 

HEARING 

BEFORE THE

AD HOC SUBCOMMITTEE ON CONTRACTING 

OVERSIGHT 

OF THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

OCTOBER 28, 2009 

Available via http://www.gpoaccess.gov/congress/index.html 

Printed for the use of the Committee on Homeland Security 

and Governmental Affairs 

( 

(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

JOSEPH I. LIEBERMAN, Connecticut, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

ROLAND W. BURRIS, Illinois 

PAUL G. KIRK, JR., Massachusetts 

SUSAN M. COLLINS, Maine 

TOM COBURN, Oklahoma 

JOHN MCCAIN, Arizona 

GEORGE V. VOINOVICH, Ohio 

JOHN ENSIGN, Nevada 

LINDSEY GRAHAM, South Carolina 

ROBERT F. BENNETT, Utah 

MICHAEL L. ALEXANDER, Staff Director 

BRANDON L. MILHORN, Minority Staff Director and Chief Counsel 

TRINA DRIESSNACK TYRER, Chief Clerk 

AD HOC SUBCOMMITTEE ON CONTRACTING OVERSIGHT 

CLAIRE MCCASKILL, Chairman 

CARL LEVIN, Michigan 

THOMAS R. CARPER, Delaware 

MARK L. PRYOR, Arkansas 

JON TESTER, Montana 

PAUL G. KIRK, JR., Massachusetts 

ROBERT F. BENNETT, Utah 

SUSAN M. COLLINS, Maine 

TOM COBURN, Oklahoma 

JOHN MCCAIN, Arizona 

LINDSEY GRAHAM, South Carolina 

MARGARET DAUM, Staff Director 

MOLLY WILKINSON, Minority Staff Director 

KELSEY STROUD, Chief Clerk 

(III) 

C O N T E N T S 

Opening statements: Page 

Senator McCaskill ............................................................................................ 1 

Senator Bennett ................................................................................................ 3 

Senator Coburn ................................................................................................. 13 

Senator Collins ................................................................................................. 16 

Prepared statements: 

Senator McCaskill ............................................................................................ 23 

Senator Collins ................................................................................................. 25 

Senator Bennett ................................................................................................ 28 

Senator Kirk ..................................................................................................... 30 

WITNESS 

WEDNESDAY, OCTOBER 28, 2009 

Jeffrey D. Zients, Deputy Director for Management and Chief Performance 

Officer, U.S. Office of Management and Budget: 

Testimony .......................................................................................................... 5 

Prepared statement .......................................................................................... 31 

Post-hearing Questions for the Record from: 

Mr. Zients .......................................................................................................... 42 

(1) 

ACHIEVING THE PRESIDENT’S OBJECTIVES: 

NEW OMB GUIDANCE TO COMBAT WASTE, 

INEFFICIENCY, AND MISUSE IN FEDERAL 

GOVERNMENT CONTRACTING 

WEDNESDAY, OCTOBER 28, 2009 

U.S. SENATE, AD HOC SUBCOMMITTEE ON CONTRACTING OVERSIGHT, OF THE COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, Washington, DC. 

The Subcommittee met, pursuant to notice, at 2:37 p.m., in room 

SD–342, Dirksen Senate Office Building, Hon. Claire McCaskill, 

Chairman of the Subcommittee, presiding. 

Present: Senators McCaskill, Bennett, Collins, and Coburn. 

OPENING STATEMENT OF SENATOR MCCASKILL 

Senator MCCASKILL. Thank you for being here today, and I appreciate the other Committee Members who are here, particularly 

Ranking Member Senator Bennett, and it is always good to see 

Senator Coburn. 

The purpose of today’s hearing is to examine the future of government contracting in this Administration. On March 4 of this 

year, President Obama announced that he was going to try to reform the way government does business. The President said, ‘‘We 

will stop outsourcing services that should be performed by the government, open up the contracting process to small businesses. We 

will end unnecessary no-bid and cost-plus contracts that run up a 

bill that is paid for by the American people. And we will strengthen 

oversight to maximize transparency and accountability. Altogether, 

these reforms can save the American people up to $40 billion each 

year.’’ 

The President directed the Office of Management and Budget 

and Federal agencies to work together to develop new guidelines to 

achieve these goals. Yesterday, OMB released guidance instructing 

agencies to bolster competition and improve the use of high-risk 

contract types like cost-plus and time and materials contracts. 

OMB also released guidance relating to the critical need to 

strengthen the acquisition workforce. 

Let me say, I commend the President for his concern about contracting. I think it is well founded. And I want to congratulate your 

staff for all of the hard work they have done in preparing for this 

hearing today. 

2 

The guidance that was issued yesterday follows three previous 

memoranda issued by OMB in July of this year. First, OMB directed agencies to make a 7 percent reduction in overall contract 

spending by 2011 and a 10 percent reduction in dollars spent on 

non-competitive or cost-plus contracts by 2010. 

Second, OMB told agencies to improve the management of multisector workforce, the blend of government employees and contractors who work for government agencies. 

And finally, OMB told agencies how to improve how agencies collect, report, and use information about how contractors have performed on Federal contracts. Taken together, these actions are expected to amount to approximately $40 billion in savings per year. 

At today’s hearing, we are going to assess OMB’s new guidelines 

to find out whether they will meet the President’s bold vision for 

reform. 

I was proud to be standing with President Obama during his announcement in March and was encouraged by his commitment to 

eliminate the waste, fraud, and abuse in government contracts. 

Today, however, I have serious concerns. There are parts of OMB’s 

guidance that make a lot of sense. OMB has called for agencies to 

develop long-term plans for the acquisition workforce. They have 

also directed agencies to develop procedures to collect and report 

past performance information and to create pilot programs to improve their management of contractor employees. 

But also, there are some significant concerns. As we will hear 

today, OMB has tasked government agencies with developing their 

own plans for improving contracting, yet OMB has provided very 

little concrete guidance as to how to achieve these necessary reforms. 

For example, OMB’s guidance on increasing competition gives 

agencies guidelines with questions for agencies to address and a set 

of considerations for agencies to use in answering those questions. 

I accept that agencies have different needs and obligations, but it 

is important that OMB’s guidance provide a clear way forward for 

these agencies. 

Another serious problem may be the lack of accountability. OMB 

is committed to setting a few targets and reviewing agencies’ 

progress towards these targets. But the guidance sets out only a 

handful of specific dates and deliverables. I think dates and 

deliverables are very important for accountability. And even the 

dates and deliverables that are in the guidance are vague. OMB 

has not said how it will review progress for agencies or what 

metrics and benchmarks the agency will use. 

A third problem is OMB’s failure to address other key problems 

with government contracting. For example, OMB’s guidance does 

not address the need for improved planning for government contracts and OMB has announced that its guidance on service contracts and inherently governmental functions has been delayed indefinitely. 

I am also concerned that the lack of an Administrator for the Office of Federal Procurement Policy (OFPP) was not announced until 

this month, several days after OMB’s contracting guidance was already supposed to be completed. I once again commend the President on his nominee and look forward to his confirmation hearing 

3 

next month. However, in the absence of a confirmed OFPP Administrator, that may be an additional obstacle in the path of the 

President’s plan for aggressive contracting reform. 

Finally, OMB’s lengthy delay in meeting the President’s schedule 

for issuing this guidance is not a good omen for the future of contracting oversight. Government contracting is an enormous challenge. To achieve lasting reforms, we need definite goals and detailed plans on how to meet those goals. We need to be able to 

measure progress and hold agencies accountable every step of the 

way. And we need very strong leadership from OMB. Otherwise, 

government contracting is just going to be business as usual. 

I look forward to the testimony of Jeffrey Zients, OMB’s Deputy 

Director for Management and Chief Performance Officer and thank 

him for being here today. 

Senator Bennett, do you have any statement you would like to 

make? 

OPENING STATEMENT OF SENATOR BENNETT 

Senator BENNETT. Thank you very much, Madam Chairman. I 

have a formal statement that I would like submitted for the record, 

but I would like to make a few more informal kinds of observations. 

I am delighted, Mr. Zients, that you come out of the private sector. You worked with Bain and Company, which means you are a 

Mitt Romney guy at some point, even though you are not working 

for him as President of the United States, as some of us hoped 

might be the case somewhere along the way. 

Senator MCCASKILL. We will have to agree to disagree. [Laughter.] 

Senator BENNETT. I understand that, Madam Chairman. 

To put it on the lowest possible personal level, when I served in 

the Army, I served on KP like every private E–1 did at one point 

or another, peeling potatoes and helping prepare meals and so on. 

When I go back to the Army now, I discover that all of that is being 

done by contractors and it strikes me as a really good idea. We 

urge people to join the military. We train them in military skills. 

And we should not dilute that training and their time in the military by having them peel potatoes when we can hire somebody else 

to do it, probably more cheaply and more efficiently than the military. 

So the sergeant, the specialist, and the airman is focusing on the 

warfighting or the training connected with the warfighting mission 

and somebody else is peeling the potatoes. It is a good deal for the 

military. It is a good deal for the country. And it is a good deal for 

the contractor. 

The world from which you and I both came prior to entering government, we would call that outsourcing instead of contracting, 

where people say, I am no longer going to have my employees 

sweep out the factory at the end of the day. I am going to hire a 

cleaning service to do it. And it maximizes the productivity you get 

out of the people performing the mission, and if you make the right 

buy, it is cheaper. 

Now, I put it in that folksy kind of way because, in my view, that 

is basically your mission, to maximize the productivity of the FedVerDate Nov 24 2008 10:13 Jun 08, 2010 Jkt 053851 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 P:\DOCS\53851.TXT SAFFAIRS PsN: PAT
4 

eral worker by releasing him and her from duties that can be 

outsourced more cheaply. But the challenge is to see that you make 

the right deal, when you do the outsourcing, you hire the right people, and you monitor how well they are doing. 

And to repeat a theme I have been on before, but I have discovered since I have come to the Senate there is no such thing as repetition—every statement by a Senator is treated as if it is brand 

new—the thing I worry about more than waste, fraud, and abuse 

is inertia. The law of motion is not just Newton’s law that applies 

to physics. It applies to agencies, and an agency set in motion 

tends to stay in motion in the same direction. And what was a good 

contracting decision 5 years ago then gets the benefit of inertia and 

becomes the same contracting decision now because that is the way 

we always did it. 

We need to review the inertia as much as we do the waste, fraud, 

and abuse, because many times, inertia can lead us in the wrong 

direction more powerfully than somebody who is trying to rip us off 

and we end up wasting more money out of inertia than we do in 

other areas. 

My colleague, Dr. Coburn, is an expert on this, because he keeps 

hammering on us on the Appropriations Committee, well, you are 

just doing this because you did it last year and that is not an acceptable reason to keep doing it. He has made a dent sometimes 

and he has not other times, but I am convinced that his inertia will 

keep him doing it and that is a healthy thing. 

That is the challenge that you face and that is the focus that I 

would like to get out of this hearing. Again, how do we maximize 

the productivity of the employees of the Federal Government by 

outsourcing duties that could be done more cheaply and more efficiently with somebody else, and at the same time stay on top of 

that outsourcing function—I am deliberately using the language of 

private industry because that is where you come from and those 

are the people who have discovered how to do this, maybe better 

than we have—how do you make sure that the outsourcing that is 

done produces the best value and is the right place to go, or is 

there a new contractor or a new service that the old contractor 

hasn’t offered you that you can turn to? 

The biggest barrier to get there from here that I have observed 

is, again, the inertia of the process of screening contractors. We are 

so sure that anybody who comes to the Federal Government with 

something to offer is really going to try to rip the government off 

that we spend so much time putting up so many barriers, so many 

hoops that the contractor has to go through in order to get the job, 

that we see far too many contractors say, just forget it. I am not 

going to bid for government work even though I could do it better 

and I could do it cheaper than the contractor that they have got 

because the process of bidding is so impenetrable. I will just stay 

where I am. It is not worth it. 

So that is my summary of the challenges we face and the kinds 

of things I am looking forward to out of this hearing. Thank you, 

Madam Chairman. 

Senator MCCASKILL. Thank you. 

Since this is a one-witness hearing and we only have one of our 

other Members here, I would certainly use the Chairman’s prerogaVerDate Nov 24 2008 10:13 Jun 08, 2010 Jkt 053851 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 P:\DOCS\53851.TXT SAFFAIRS PsN: PAT
5 

1The prepared statement of Mr. Zients appears in the Appendix on page 31. 

tive to offer you the opportunity to make any kind of opening remarks you would like to, Senator Coburn. 

Senator COBURN. Thank you, Madam Chairman. I will defer. 

Thank you. 

Senator MCCASKILL. OK. Let me introduce our witness today. He 

is the Deputy Director of Management at the Office of Management 

and Budget. He is also the Chief Performance Officer for the Administration. He has 20 years of business experience as a CEO, 

management consultant, and entrepreneur. He most recently 

served as Managing Partner of Portfolio Logic, an investment firm 

focusing primarily on business and health care services companies. 

Prior to founding Portfolio Logic, Mr. Zients served as CEO and 

Chairman of the Advisory Board Company and Chairman of the 

Corporate Executive Board. Mr. Zients began his career in management consulting at Bain and Company and Mercer Management 

Consulting, where he focused on developing strategies and improving operations of Fortune 1000 companies. He also cofounded the 

Urban Alliance Foundation, a nonprofit organization that partners 

with corporations to provide economically disadvantaged youth 

with year-round paid internships, adult mentors, and job training. 

It is the custom of the Subcommittee to swear in all witnesses 

that appear before us, so if you don’t mind, I would ask you to 

stand. 

Do you swear that the testimony you will give before this Subcommittee will be the truth, the whole truth, and nothing but the 

truth, so help you, God? 

Mr. ZIENTS. I do. 

Senator MCCASKILL. Mr. Zients, we welcome your testimony. 

Your written testimony will be printed in the record in its entirety. 

We would ask you to try to hold it to 10 minutes, although I don’t 

think we are going to be too strict today. Mr. Zients. 

TESTIMONY OF JEFFREY D. ZIENTS,1 DEPUTY DIRECTOR FOR 

MANAGEMENT AND CHIEF PERFORMANCE OFFICER, U.S. OFFICE OF MANAGEMENT AND BUDGET 

Mr. ZIENTS. Thank you, and I will beat the 10-minute mark. 

Chairman McCaskill, Ranking Member Bennett, and Senator 

Coburn, I appreciate the opportunity to appear before you today to 

discuss OMB’s implementation of the President’s Memorandum on 

Government Contracting and our shared interest in improving Federal acquisition practices. 

The President has charged the government with cutting waste 

and saving taxpayers’ dollars. He has committed to putting the Nation on sound fiscal footing, investing in programs that work and 

fixing or ending those that don’t. Addressing the chronic problems 

in government contracting is a key part of this effort. 

OMB has developed a three-prong approach to improve the results of our acquisition process. First, we will meet the President’s 

goal of saving $40 billion annually through better acquisition practices. 

6 

Second, we will clarify the rules and practices to determine the 

proper roles of both the public and private sectors to best serve the 

American people. 

Third, as recommended by this Subcommittee on a bipartisan 

basis, we will provide for a strong, well-equipped acquisition workforce to achieve the best long-term results from government contracting activities. With respect to the first goal, saving $40 billion, OMB has directed agencies to take two actions to achieve immediate results: 

Develop plans to save 7 percent of contracting spending by the end 

of fiscal year 2011 and to reduce high-risk contracts by 10 percent 

in fiscal year 2010. 

There are many ways in which agencies will address the 7 percent cost savings goal. For example, an agency may end contracts 

that do not meet goals or support for projects that are no longer 

needed. An agency may transition from a cost reimbursement contract to a fixed-price contract, where the incentive to perform in a 

cost effective manner is greatest. An agency may switch from a 

stand-alone contract to a strategically sourced contract that uses 

the government’s collective purchasing power to get lower prices. 

These agency savings plans are due November 2, and they must 

lay out the specific steps that each agency is taking to achieve the 

7 percent minimum. 

In addition to the 7 percent cost savings, we have targeted a 

minimum of 10 percent reduction in non-competitive cost reimbursement and time and materials contracts because each of these 

high-risk authorities carries the potential risk of overspending taxpayer resources. 

Earlier this week, OMB issued guidelines for the ongoing review 

of high-risk contracting. The guidelines pose three key questions. 

First, how is the agency maximizing the effective use of competition in choosing the best contract type for the acquisition? Second, 

how is the agency mitigating risk when non-competitive cost reimbursement or time and material contracts are used? Third, how are 

agencies creating the opportunities to transition away from these 

high-risk contracting vehicles to better contracting vehicles? 

The guidelines lay out a number of considerations agencies 

should use for addressing these questions. We will work with agencies to do a mid-year and end-of-year review of their progress in reducing the reliance on these authorities by a minimum of 10 percent, and those agencies which are experiencing challenges or not 

meeting the goals will take appropriate corrective actions to improve these results. 

Regulatory actions are also addressing the use of high-risk contracting. Earlier this month, the Federal Acquisition Regulation 

(FAR) was amended to prohibit the use of rollover and award fee 

contracting. This practice, which actually allowed contractors to 

earn fees in subsequent performance periods after having failed to 

earn them initially, has repeatedly been cited as contributing to the 

waste of taxpayer dollars. This waste has been stopped. 

This summer, FAR changes were made to require the use of past 

contractor performance in source evaluations. This motivates contractors to perform well and reduces the likelihood that taxpayer 

resources will go to waste. The FAR now requires agencies to subVerDate Nov 24 2008 10:13 Jun 08, 2010 Jkt 053851 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 P:\DOCS\53851.TXT SAFFAIRS PsN: PAT
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mit electronic records of contractor performance into a single government-wide repository, and OMB will conduct compliance assessments and quality reviews beginning in February to make sure 

that this database works. 

With respect to management of the multi-sector workforce, we 

are taking a number of steps to improve rules and practices and 

to provide agencies with useful tools. As one step, each major agency identified one of its organizations where it has concerns about 

a potential over-reliance on contractors. This will be the subject of 

a pilot. Using cross-functional teams with human capital, acquisition, and program officials, each agency is developing a plan that 

determines the best mix of skills and workforce size for the organization. These plans, combined with assessments of how the organizations are performing, could lead to in-sourcing, adding resources 

to contract management, or hiring new employees. Agencies will 

apply the insights from these initial pilots to other organizations 

with similar needs. 

We have also developed guidance to help agencies implement 

new statutory requirements concerning in-sourcing. These provisions require agencies to give special consideration to in-sourcing 

work where there is either a particular risk that prior practices 

have resulted in an over-reliance on contractors or performance of 

the work by Federal employees could be more cost effective. This 

guidance will help agencies to strengthen their sourcing decisions 

and fix situations where they are too reliant on contractors and establish sufficient internal capacity to maintain control of their operations. 

Additional OMB guidance is under development to address the 

ongoing confusion in how the boundaries are drawn between the 

Federal and private sectors. We must reconcile differences in the 

definition of ‘‘inherently governmental’’ and clarify the meaning of 

different terms used in connection with non-inherently governmental functions, such as ‘‘critical functions.’’ These issues will be 

addressed over the next several months and we will seek public 

comment before the rules are promulgated. 

This brings us to our third and final goal, to strengthen the acquisition workforce, the backbone of our system. We are committed 

to a sustained management focus on growing both their capacity 

and their capability to improve acquisition outcomes and agency 

performance. 

This week, OFPP released an Acquisition Workforce Development Strategic Plan to help civilian agencies align their workforce 

needs with their acquisition profiles to determine capacity and capability needs over the next 5 years. OFPP concluded that an increase in the acquisition workforce of 5 percent is needed at most, 

if not all, civilian agencies. The plan calls for agencies to take immediate steps to increase their contracting workforce and establishes an annual process led by OFPP to focus on long-term planning that addresses the growth and development needs of the 

broader acquisition workforce, including program managers and 

contracting officer technical representatives. 

Across all of our efforts, we are focused on achieving tangible results. Agencies are identifying savings of 7 percent and have already begun saving money through better sourcing decisions. AgenVerDate Nov 24 2008 10:13 Jun 08, 2010 Jkt 053851 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 P:\DOCS\53851.TXT SAFFAIRS PsN: PAT
8 

cies have initiated pilots to determine their multi-sector workforce 

needs so they can make reasoned choices to rebuild a critical capacity and potentially save money. Agencies are building workforce capacity and capabilities to support and sustain better acquisition 

outcomes. Regulations have been enacted to prohibit rollovers and 

to require collection of data on contractor past performance. 

Overall, while we have made progress across the last several 

months, much work remains to be done. We have a lot of work to 

do. Agencies must implement changes and achieve results. OFPP 

needs to issue further guidance and provide implementation assistance and strengthen its oversight of agency progress and performance. We look forward to hearing your feedback and working with 

the Committee to build a stronger acquisition system to better deliver results to our taxpayers at a lower cost. 

I am happy to answer any questions you have. Thank you. 

Senator MCCASKILL. Thank you. 

Let me just start with this observation. I have a quote here from 

a GAO report in 2000 commenting on the acquisition workforce. 

‘‘The Government’s hiring, training, and retention practices have 

not been oriented towards maintaining a balanced, stable workforce and ensuring adequate emphasis on career development, 

training, and orderly succession planning.’’ That is one quote we 

picked out, and frankly, we had volumes of them that we could 

have picked out from so many different IG, GAO reports over the 

years, particularly a great number of them in the aftermath of the 

contingency in Iraq and even in Bosnia dealing with the contracting issues and problems as it related to contingency contracting. 

I have got to tell you, I smell the sincerity, I sense it, but what 

is it about the way you are going to do this—what are you bringing 

to the table that is going to actually bring about the pressure for 

results? I mean, if you had to identify how you are going—I mean, 

this is a mammoth organization to reform on every topic you have 

talked about, whether it is the blending of contracting employees 

with government employees in ways that sometimes is appropriate, 

that sometimes is not; whether it is figuring out how we make contracts more competitive and how we make contractors perform well 

and reward good behavior and punish bad behavior. Any one of 

those is huge. 

What are your strategies that you can tell us today that when 

we come back and talk about this a year from now and 2 years 

from now and 3 years from now, that you will look back on your 

testimony and say, see, I told you so. We have an idea. We have 

tools that we are going to put in place that are going to require 

that we move this giant battleship in this ocean of contracting 

problems. 

Mr. ZIENTS. Yes. I agree it is mammoth, so it is a big challenge, 

and it is not something that is going to be resolved in 6 months. 

It is a multi-year effort. I believe we have done a good job of getting going, of jump-starting the effort, and I think putting the 

stake in the ground that we are going to save $40 billion is very 

clarifying. So we are starting with the major result first. And by asking every agency to find their share of the $40 billion 

by November 2, and then reviewing those plans and tracking those 

9 

plans to ensure that they are real, that they have the appropriate 

detail, and that agencies are making progress against those plans, 

and will achieve it by the end of fiscal year 2011, is, I think, the 

major step to initiate these efforts. It is not the only step, but it 

is the major one. 

The second one is to recognize that there is a category of contracts—cost reimbursement contracts, non-competitive contracts— 

that are disproportionately risky for the government. They are disproportionately likely to lead to bad outcomes in terms of fraud and 

abuse and waste. So we have said, in a similar fashion, you need 

to reduce it by 10 percent. You need to do it in fiscal year 2010, 

and we are going to track your progress against it. We are going 

to look at it mid-year, and we are going to look at it at the end 

of the year. 

Based on those results, based on what we learn, we will set future targets for further reductions to ensure that we are reducing 

our reliance on cost reimbursement contracts, and that we are increasing competition and optimizing competition across the government. 

Third is the workforce itself. There has actually been decent 

progress on building the size of the workforce, which I think is only 

one part of the equation. People tend to focus on the size. I think 

it is important. It probably does need to increase. But it has actually increased at about 6.5 percent the last couple of years. We believe there is some growth in fiscal year 2010. We don’t know that 

yet because we just entered fiscal year 2010. And you couple that 

with our very strong guidance that there be a minimum increase 

of 5 percent in fiscal year 2011 and you have an acquisition workforce that has grown by 20-plus percent in fiscal year 2011 versus 

the prior 3 years benchmark, if you will. 

That is only half of the equation. We have to build their capabilities. We have to figure out what competencies they don’t have, and 

we need to figure out how to train them and certify in those competencies. And we need to consider that we have the challenge of 

some of our most experienced, best people being likely to retire relatively soon, so we have to do appropriate succession planning 

there, too. 

So I think we have jump-started efforts. I think we are headed 

in the right direction. I think we are going to have tangible management results. I think we have a lot more to do. We have made 

some policy changes through the FAR. There is more policy work 

to be done. We have not yet done guidance explicitly on ‘‘inherently 

governmental.’’ That is an unbelievably complex terrain, and we 

will have guidance out by the end of the year. But that is a terrain 

that I would imagine we will have to take several shots at. We are 

not going to do it all at once, but we are going to start making 

progress on it. 

So there is a lot of work to be done. A lot of what you talked 

about in your opening statement, I agree with. We are not where 

we want to be ultimately. I think we are in a pretty good spot 6 

months in, post-March 4, but we have a lot of work ahead; and I 

look forward to getting your feedback on what that work should entail. 

10 

Senator MCCASKILL. Well, you have got some low-hanging fruit, 

that you can do quickly. I think the hard work is something that 

you are going to have to really stay on. Let me ask you about the $40 billion number. Is there going to 

be another number for the following year? I mean, is there a plan, 

that there will continue to be an actual number goal of savings for 

these agencies throughout the 4 years of the Administration? 

Mr. ZIENTS. As you have seen in each one of these activities, I 

am a big believer in putting a stake in the ground and driving results to that number, or hopefully beating that number. So I think 

we will learn a lot from the $40 billion exercise, and I think we will 

then be in a very good position to determine what the next stake 

in the ground is. 

Senator MCCASKILL. Yes, and I can’t—I think it is really important that we have measurables. You know this well, because in the 

private sector, there is the ultimate measure: Is the company making money? For government, that is much harder, because there is 

no bottom line. It is about performance, and it is about effectiveness and efficiencies. 

I think from this Subcommittee’s standpoint, I am confident that 

the more stakes in the ground that you can plant, the more 

measurables and deliverables that we can measure you against in 

terms of progress you are making, I think the more responsive 

these massive agencies are going to be to your direction. 

Mr. ZIENTS. I agree 100 percent. The President, with you at his side, put a $40 billion stake in the ground. That is very clarifying. 

And I believe we need to make sure each agency contributes its 

share. On high-risk contracting, the first stake in the ground, a 10 

percent reduction. There will be additional stakes in the ground. 

Acquisition workforce, we need to grow it. We are. There is a stake 

in the ground as to a minimum there. 

So I think that the basic philosophy here is a management philosophy of setting a goal and driving organizations through monitoring against those goals, sharing best practices, coming up with 

corrective action plans, where appropriate, to get us there. But we 

are going to learn a lot through this process—— 

Senator MCCASKILL. Yes. 

Mr. ZIENTS [continuing]. As to regulatory changes and other 

things that we need to contemplate. 

Senator MCCASKILL. There are not probably very many people in 

Washington that are looking forward to November 2. I am. I want 

to see these plans. I want to see what these agencies say. I want 

to see—now, are they going to be available to the public, what they 

submit in terms of their November 2 plans for the $40 billion? 

Mr. ZIENTS. I believe that on November 2, we will be seeing them 

for the first time, too, in that form. We have been working along 

the way. I think we need to have a period of time where we have 

a deliberative process and work with the agencies as to the agency’s areas that they are going to address, their progress and how 

they do. That, we will make transparent and public. 

Senator MCCASKILL. OK. Well, just as quickly as it can be transparent and public, the happier I know that the Members of this 

Subcommittee will be, and I think it is important that we remain 

mindful of the President’s commitment to transparency, that there 

11 

is a new era of everybody seeing how the government is doing and 

we want to be able to look over your shoulder. As painful as that 

is sometimes, I think it is important—— 

Mr. ZIENTS. I think you have the combination of the $40 billion, 

which is a commitment from our President, and transparency, so 

the combination will lead to the result that you are hoping for. 

Senator MCCASKILL. Senator Bennett. 

Senator BENNETT. Thank you, Madam Chairman. 

Where did the $40 billion number come from? 

Mr. ZIENTS. It is seen as based on some of the research that was 

done prior to my arrival as a realistic goal for a couple-year period 

of time. I think that—as the Senator asked—we will learn from 

this. I hope we can beat $40 billion in this round, and based on 

what we learn, if it really is truly low-hanging fruit, then we will 

have a $40 billion or greater goal in the next round. If we are more 

efficient and there aren’t as many low-hanging fruit, then the goal 

will be determined based on what we learn through this. So it was 

seen as a goal that was a worthy goal, i.e., it will require a lot of 

hard work, a lot of focus, and at the same time, if we do have good 

execution, or arguably great execution, it is a goal that we believe 

we can achieve or exceed. 

Senator BENNETT. So you make reference to research that was 

available to you that was done previous to your coming in. Help me 

understand it a little more. What went into the decision that, OK, 

$40 billion is really the number? Was there an analysis of excess 

fat that you think you found in various agencies? 

Mr. ZIENTS. Yes, I think there was—again—— 

Senator BENNETT. You can see where I am going. I want to avoid 

a completely arbitrary number. 

Mr. ZIENTS. Understood. And I think that given that it was set 

out relatively early in the Administration, it is not as rigorous in 

terms of its analytics as it will be going forward, when we are 

deeper in. That said, it was based on talking to industry experts, 

talking to contracting officers across government, across the whole 

acquisition terrain, looking at GAO reports on waste and other contracting insights. So it was triangulated, but it was not based off 

of benchmarks. The way we would have done it in the private sector, clearly, would have been to benchmark it—— 

Senator BENNETT. Right. 

Mr. ZIENTS [continuing]. And we would have looked at other competitors and understood how they are doing. Unfortunately, there 

aren’t those types of competitive metrics. There was some internal 

benchmarking. 

I feel good about the number. It is a number that, as I have gotten deeper in, feels like it is not a pipe dream, because I think if 

you set a number that is unrealistic, people do not rally behind it. 

At the same time, if you set a number too low, you don’t push yourself. You don’t find the incremental creative idea. 

So I think it is set at that level that is going to require a lot of 

hard work, some sleepless nights, and at the same time, it is a 

number that we can achieve. 

Senator BENNETT. OK. Now, the 7 percent of baseline spending, 

is that tied to the $40 billion? Is there a connection there? 

12 

Mr. ZIENTS. That is what it is. That is the math of the $500 billion plus—— 

Senator BENNETT. I see. You did the baseline spending and the $40 billion popped up? 

Mr. ZIENTS. The baseline spending was—the analysis we did was 

based on what were we spending, going back to your previous question. The $40 billion is 7 percent of the roughly $530 billion that 

we were spending in fiscal year 2008. 

Senator BENNETT. Yes. OK. 

Mr. ZIENTS. The baseline part of it is to adjust for certain onetime events and to create more of a baseline, so to take off one-time 

events. 

Senator BENNETT. All right. I am the Secretary of Interior. I get 

this directive from you. What do I do? 

Mr. ZIENTS. You pull together a cross-functional team, as I think 

we have addressed contracting too many times in a stovepipe. And 

the contracting officer is responsible for the procurement, but is not 

responsible, or solely responsible for developing the requirements 

or ensuring the implementation of the contract. So you pull together your senior team. You say, we have a goal. We have a goal 

that is probably multi-billion dollars, given the size of Interior. We 

need to pull together how we are going to do this. 

Where are we contracting out services that we are not getting a 

good return for? To your point earlier, where have we been sitting 

on a contract for 5 years and just renewing it the sixth year? 

Where do we need to compete because the marketplace has 

changed? Where can we pool our purchasing power with the purchasing power over at Agriculture and really, truly leverage the 

government’s purchasing power and get a better price? 

Senator BENNETT. That sounds wonderful, but I don’t see the 

Secretary of Interior and the Secretary of Agriculture talking about 

that unless they get a little nudge from you. 

Mr. ZIENTS. Well, the nudge has come. I think it is actually the 

deputies that are the point people here. 

Senator BENNETT. OK. 

Mr. ZIENTS. They are my colleagues through government. I chair 

the President’s Management Council, which meets monthly. The 

Secretaries, as all of you know, have forward or external—— 

Senator BENNETT. So you chair a council that consists of all of 

the deputies? 

Mr. ZIENTS. All the deputies across. 

Senator BENNETT. Good. 

Mr. ZIENTS. But I think you are right. I would hope the Secretaries are cognizant and aware and are supporting their deputies 

in this. But the deputies own this, and it is being driven down in 

the organization through cross-functional teams. 

Senator BENNETT. All right. Now, I discover something that, in 

order to meet your goals, I would cut out or make a change and 

everything will be wonderful, except that I become convinced from 

a management point of view that we shouldn’t be cutting that, that 

we are, in fact, getting the value that I spoke of where it is. Do 

I have an avenue for an appeal on this one. And say, look, in my 

department—and now I am no longer Secretary of Interior—but 

whatever mythical department I am Secretary of, I say, we have 

13 

a different circumstance, and we think that 7 percent, in fact, will 

end up creating problems that will end up costing money. Do I 

have the right to appeal from the 7 percent? 

Mr. ZIENTS. Well, I guess my going in is given how much money 

we spend, how fast it is growing—— 

Senator BENNETT. You are just saying that won’t exist? 

Mr. ZIENTS. No. I mean, I am skeptical—— 

Senator BENNETT. I think you may well be right—— 

Mr. ZIENTS. Well, I am skeptical, given that we have doubled our 

contracting across the 8 years, given, as you pointed out, we don’t 

leverage the government’s purchasing power very effectively, given 

that we have an acquisition workforce that is over-stretched and 

under-trained, that people can’t do 7 percent better. So I am extremely skeptical, and I think I would push back and say, go do 

it again. 

Bring forward the best possible way to get there. If it is a genuine exercise and going from 6 to 7 percent really requires cutting 

to the bone, I guess we have to reevaluate. I come into it with a 

lot of skepticism that we can’t be 7 percent—— 

Senator BENNETT. Yes, and I would, too, and I think that is a 

healthy attitude on your part. But there are differences between 

departments. There are departments where outsourcing or contracting makes more sense than others, and I guess by taking 7 

percent, you say, well, you start wherever you are. But there may 

well be a circumstance where, as I get into this, I discover and say, 

wait a minute, here is an area where we probably should be contracting more that we have just discovered that we didn’t realize. 

Mr. ZIENTS. Well, presumably that would have an offset to your 

private sector example. You would be saving money relative to the 

sweeping of the factory floors. 

Senator BENNETT. Yes. I see. 

Mr. ZIENTS. That has an offset. 

Senator BENNETT. OK. Yes. 

Mr. ZIENTS. But just to clarify, there is, the business expression, 

a real 80/20 here. 

Senator BENNETT. Yes. 

Mr. ZIENTS. I mean, there is a handful of agencies—DOD is twothirds—— 

Senator BENNETT. Right. 

Mr. ZIENTS [continuing]. Or maybe closer to 70 percent. You add 

about six more agencies on—— 

Senator BENNETT. A target—— 

Mr. ZIENTS [continuing]. We are at 90 percent. So this is not a 

150-agency-equal exercise. This is a handful of agencies—everyone 

is doing it. There are 23 CFO Act agencies that matter most here. 

Senator BENNETT. I see. I think you are right on that. Thank 

you, Madam Chairman. 

Senator MCCASKILL. Senator Coburn. 

OPENING STATEMENT OF SENATOR COBURN 

Senator COBURN. Thank you, Mr. Zients, for your service. I am 

really very happy where you are. I have sat up here for 5 years 

working on these issues and been, quite frankly, very frustrated 

during the Bush Administration that much was not accomplished. 

14 

I would like for you to talk a little bit more. The problem I see 

in contracting—there is no question, you have a shortage of contract officers and—— 

Mr. ZIENTS. Yes. 

Senator COBURN [continuing]. Procurement officers. But the biggest problem is you have a shortage of experienced contract officers 

and procurement officers. What are the plans to train them up to 

the level where they can actually run the projects, be responsible 

for the contract, look at not just cost and performance, but also accomplishment? In other words, there has to be a plan with this. 

Mr. ZIENTS. Yes. 

Senator COBURN. We have spun the wheels for the last 7 years 

and not accomplished that. 

Mr. ZIENTS. I agree, and I think in the last 7 years, it has gotten 

a lot worse because I think if you were experienced in the contracting sector, you probably weren’t that happy coming to work 

each day, and you had plenty of opportunities to jump to the private sector. So I think it is a bad situation. It is why I believe that 

it is not just the number of contract officers. 

Senator COBURN. Right. 

Mr. ZIENTS. It is really the capabilities and the experience. So 

there has been a successful program, an internship-type program, 

to bring people in at the entry level. We are now repeating that 

mid-career. So there is an opportunity, I believe, given how interested people are in serving and the state of this economy, to bring 

in people who are more experienced. That will help. It is not the 

majority of the strategy, but I think it is a significant contributor. 

The majority has got to be better training, and we have done 

competency surveys to figure out what the most important competencies are. We have to get much more targeted in our training 

and our certification, and I think we just need to invest more 

money in it to ensure that we have the seniority and the set of capabilities that we need. Further, we have to make sure we retain 

those that we have, and do the right succession planning. 

But you are right. There is a huge return on our investment. 

How do we get to 7 percent? How do we get to numbers beyond 7 

percent? We get great people doing this, and it is not just the contract officers. It is the project managers. It is the technical representatives. They have to work as a team, and we have training 

needs across the whole spectrum. 

Senator COBURN. I was very impressed to see past contractor 

performance used in evaluating future contracts. As you know, the 

Defense Department, just out of stimulus money, $30 or $40 million to contractors who were under investigation for fraud, and yet 

we gave them contracts. So you have put into place something that 

should cure that illness, and I am glad to see that is there. 

One other question that I had deals with competitive biding. According to the Government Executive Order on October 20, $7.8 billion of the more than $16 billion in Federal contracts awarded 

under the stimulus had not been competitively bid or fixed price. 

What is the guidance to the agencies on when to make that decision? 

Mr. ZIENTS. Well, I think on the $7.8 billion you reference, the 

majority of that is not your first category of competition. It is your 

15 

second category of cost reimbursement and disproportionally. That 

is DOE, unfortunately, not because of what they do, what they do 

is very important, but given the nature of their work, it leads to 

more cost reimbursement-like contracts. 

Senator COBURN. Right. 

Mr. ZIENTS. So the competition overall on recovery benchmarks 

favorably versus our normal baseline spend. 

Senator COBURN. OK. 

Mr. ZIENTS. That said, do I believe we need more competition in 

all of what we do? Absolutely. 

Senator COBURN. Yes. 

Mr. ZIENTS. So recovery is actually doing a little better, not a little worse. You have to dig a little deeper to see what is going on. 

But competition across the government needs to be enhanced. 

Senator COBURN. Are you working specifically any with extra 

guidance to GSA? I would just note that your staff might want to 

go back to past hearings that we have had over the last 4 years 

on GSA. We are the biggest purchaser in the world of everything. 

The testimony that this full Committee has had before us, specifically the Federal Financial Management Subcommittee, is that 

GSA doesn’t get the best prices, and that even the best price for 

the same quality, agencies aren’t forced to use, so they will buy 

something higher. There is a tremendous amount of money that is 

bought through GSA that could be received and could be a source 

for saving you money. I would recommend to you looking at that. 

Mr. ZIENTS. Having been in the private sector at medium-sized 

firms, trying to flex our muscles on purchasing power, it is lovely 

to be here as the world’s largest purchaser—— 

Senator COBURN. Nobody should be able to buy cheaper than this 

government. 

Mr. ZIENTS. For example—and it is good we did this—but overnight delivery, which is the ultimate commodity, we consolidated in 

the private sector a decade or two, because it is the same thing to 

have FedEx or its competitors. You go to one and get the economies 

of scale. We just turned to that in the U.S. Government in 2005. 

Better late than never, but just in 2005. And we still, to your point, 

haven’t fully consolidated. 

How many of those opportunities exist across government, to leverage our position as the world’s largest purchaser and get better 

prices and better service? I think that is tremendously exciting. Is 

that baked into some of the 7 percent? Of course. But across the 

next several years, we have got to position ourselves consistent 

with that purchasing power. 

Senator COBURN. Use that leverage, yes. 

I want to go to one other point and then I will finish up. Senator 

Bennett talked about an agency where there was a, maybe we don’t 

need to, but let us say it is just a blank, and that we are getting 

a good value now. We assess we are getting a good value. There 

is great value in competitively bidding that again anyway, because 

it makes the person who has the contract want to keep the contract, which it gives you a great way to lower the cost. Even if you 

don’t think you are going to get a lower price, you are going to get 

a lower price. 

16 

1The prepared statement of Senator Collins appears in the Appendix on page 25. 

Mr. ZIENTS. When I think about what we did in the private sector 5 years ago and how technology and other advances have driven 

productivity, we can do it for a lot less money—— 

Senator COBURN. Right. 

Mr. ZIENTS [continuing]. Whatever it might be, and we can do it 

better for a lot less money. So the idea of sitting on a contract for 

5 or 6 years, and being content with it, given all the advances in 

those contractor communities, doesn’t make any sense. 

Senator COBURN. Right. I agree. Thank you, Madam Chairman. 

Senator MCCASKILL. Senator Collins. 

OPENING STATEMENT OF SENATOR COLLINS 

Senator COLLINS. Thank you, Madam Chairman. 

First of all, let me ask unanimous consent that my opening statement be inserted in the record.1

Senator MCCASKILL. Without objection. 

Senator COLLINS. Thank you, and thank you for calling this 

hearing. I think this kind of oversight is so important. 

I worked with many Members of this Subcommittee to author 

legislation that required OFPP to produce an Acquisition Workforce 

Development Strategic Plan. The law specifically requires the plan 

to have an actionable, specific 5-year implementation plan to increase the size of the acquisition workforce and to operate a government-wide acquisition internship program. 

Similarly, the President’s March memorandum identifies the development of the acquisition workforce as a pillar for strengthening 

procurement practices. After all, we can pass all the laws and reforms in the world. You can issue through OFPP and through OMB 

directly all of the guidance. But if we don’t have a well-trained and 

sufficiently-sized workforce, our efforts are not going to succeed. 

And with that background, I have to tell you that I am very disappointed in the report that OFPP and OMB put out yesterday on 

the acquisition workforce. This is pursuant to the law that we 

wrote and pursuant to the President’s memorandum, and it lacks 

adequate analysis and substance, in my view. It really is 

boilerplate. It is standard materials. It reiterates a list of general 

human capital planning guidelines. It creates various interagency 

working groups. I am tired of studies. I am tired of working groups. 

I want to see action, and in my view, this plan simply delegates 

to each agency what the law required OFPP to do itself. 

So I know that is not a happy note to start on. I know you are 

working hard and there is a lot that is good that is coming out of 

your effort. But if we don’t solve the workforce issues, it is not 

going to matter that we have good guidance. There is not going to 

be anyone to do the oversight, to better define the requirements— 

go ahead. 

Mr. ZIENTS. I agree 100 percent, and we talked about it, I think, 

before you came in, that central to all of this is the acquisition 

workforce. Without it, none of this is going to happen. 

Let me take what I think are the two pieces. One is the size of 

the workforce, and the second is the capability. On the size, the 25 

percent number that was recommended—— 

17 

Senator COLLINS. By us. 

Mr. ZIENTS. I am a little wary, and this is going to be part of— 

this might be a philosophical difference or a different approach— 

too many efforts being across the whole government, sort of a sense 

of one-size-fits-all because each agency is so different in terms of 

what it does day to day on the contracting front, what is the current status of its acquisition workforce, what the gaps are between 

what it is today and what it should be. So that is part of the philosophy of making sure that this planning is primarily done at the 

agency level rather than at the macro government level. 

That said, on the 25 percent, that 25 percent was articulated before we understood the growth in 2008. The growth in fiscal year 

2008 was 6.5 percent. The growth in fiscal year 2009 looks like it 

is going to be about the same: 6.5 percent. So we are up to 13 percent increase. We think there will be growth in fiscal year 2010. 

We are asking for a minimum growth of 5 percent in fiscal year 

2011 as part of that guidance. We are somewhere north of 20 percent growth since that 25 percent stake in the ground. 

So, again, I am wary of whether each agency needs 20 percent, 

but overall, the government will have grown its acquisition workforce, if this math is correct, by about 20 percent by fiscal year 

2011. That is a good increase. 

I believe that on the capability side—I am coming back to Senator Coburn’s question—we have a lot to do. We need to bring people in not just at the entry level, we need to bring people in midcareer. We need to retain individuals who are experienced for 

longer and have them not retire or go to the private sector. And 

then we have to train. And we have been doing competency studies 

to figure out where our gaps are. We have created functional advisory boards to figure out what the most targeted, most important 

training is. 

So I think we are doing a lot. We are not there. We have a lot 

more to do. I would be interested in getting more of your feedback 

on where you feel like we really haven’t done enough. But I think 

it is fair to say the train has left the station. I think it is moving 

pretty fast. But trust me, I am going to have the pedal to the metal 

and try to move it even faster to get more done. 

Senator COLLINS. Your point that a one-size-fits-all approach 

should not be taken is a good one. However, I would note that in 

your report, you say the analysis led us to conclude that an increase in the acquisition workforce of at least 5 percent, except in 

unusual circumstances where analysis shows that it is not to be required, is needed at all civilian agencies—— 

Mr. ZIENTS. Agreed. But then the main planning exercise of what 

level of people we need, and how many we need, we believe is done 

at the agency level; that it is not an academic exercise. It is a modeling exercise if you try to do it across the board. It becomes real, 

it needs to be tied to budgets; and it needs to be implemented, and 

that I believe needs to be done at the agency level. 

Senator COLLINS. I agree with you that there are some agencies, 

DOD is an example, where there has been such a diminution of the 

acquisition workforce that probably more than 5 percent—— 

Mr. ZIENTS. Yes. 

18 

Senator COLLINS [continuing]. Is needed, given the huge increase 

in contract dollars and contract actions. So I am not arguing for 

one-size-fits-all, but I believe that you need to understand that 

there will be resistance to this in some agencies despite their evident need because they are going to want to spend the money on 

other things. 

Mr. ZIENTS. Just to clarify, this guidance that you are referring 

to only applies to the civilian agencies. 

Senator COLLINS. Right. 

Mr. ZIENTS. So DOD has its own workforce plan, as you 

know—— 

Senator COLLINS. I do know that. 

Mr. ZIENTS [continuing]. And they are massively ramping up in 

terms of number of people and training, and they have a very good 

training facility right now. So we are talking about the 30 percent. 

I am sorry, I missed the second part of—— 

Senator COLLINS. Well, I have been at this a long time and I 

have been on this issue for a long time, and I know for a fact that 

it is not a priority in many agencies to build up the acquisition 

workforce. 

Mr. ZIENTS. Agreed. 

Senator COLLINS. It is far more fun and interesting and pressworthy to put the dollars into program people, or to launch some 

new initiative. 

Mr. ZIENTS. It is similar to training across the board. It is the 

favorite thing to cut, because you don’t see the instant return. We 

are receiving the first piece of the acquisition workforce plan November 2 with the 7 percent savings plan. We will incorporate that 

into the budget process for fiscal year 2011, which is ongoing at 

OMB right now. In the future, acquisition workforce plans, the annual plan of how many people do you need, will be completed in 

March or early April, and that will then dovetail with the following 

year fiscal year budget planning process. And so we at OMB will 

make sure that it is front and center and part of agencies’ budgets 

the President recommends to Congress. 

Senator COLLINS. I appreciate that commitment and I can assure 

you we are going to hold you to it because it is important. 

Senator MCCASKILL. I am going to do one more round, so if 

you—— 

Senator COLLINS. OK. 

Senator MCCASKILL [continuing]. If you want to hold and we will 

do another round. 

Senator COLLINS. Sure. 

Senator MCCASKILL. OK. Great. A couple of things I wanted to 

bring to your attention. First, will we at least know on November 

2 who has submitted on time and who still hasn’t submitted? Is 

there any kind of public accountability of who is going to make the 

mark of November 2? Have you made that decision? 

Mr. ZIENTS. I don’t think we have made a formal decision on 

that, but my bias would be that we tell you, or give people a little 

bit of a grace period, not long, and we report who has reported. I 

would anticipate everybody will be in. I would be disappointed if 

we don’t have everybody in. 

19 

Senator MCCASKILL. As an old auditor, the more people know 

when someone is not doing it—— 

Mr. ZIENTS. Yes. 

Senator MCCASKILL [continuing]. The more likely you are they 

are going to do it the next time. So even if you want internal time 

to look at what they have submitted before we have a chance to 

look at it, I certainly would hope that we would know quickly if we 

have any agencies that are lagging behind in terms of making this 

a priority in terms of planning. 

Mr. ZIENTS. Will do. 

Senator MCCASKILL. There are a couple of things that are really 

irritating to me about the way agencies behave. One is the rush to 

spend money by the end of the fiscal year. That means that sometimes contracting officers are really pushed by management at 

these agencies to put through contracts very quickly at the end of 

the year to buy stuff because there is an existing contract that they 

can pull off of. 

Do you have anything in the works to plan for identifying this 

when it happens? It seems to me with today’s technology, you 

ought to be able to pull up a report near the end of the fiscal year 

and see the rush that all Federal agencies have to spend their 

money, because they don’t want any of us to think they don’t need 

every dime they have gotten because that means we might not give 

them as much next year. And so there is this whole thing, spend 

what you get, because if you don’t, you won’t get as much the next 

time, and it really brings about so many bad decisions in purchasing and contracting in the last 90 days of the fiscal year. 

Mr. ZIENTS. Yes. I think the things that we have talked about 

here to increase competition and reduce high-risk contracting is important. We have not done a special focus, and I think it is a good 

idea, on how do you ensure that, given that mad rush, you don’t 

have lack of competition or higher-risk contracts as a result. So I 

think paying special attention there makes a lot of sense. It is not 

something we have yet addressed, but we will. 

Senator MCCASKILL. I have worked in a lot of government buildings in my career and I always know when it is the end of the fiscal year, not by the change in weather and not by the month on 

the calendar, but rather by glancing around the building to see all 

of the boxes that start arriving. It is as certain as the sun coming 

up that this happens, and it is in the category of low-hanging fruit. 

Mr. ZIENTS. I think it is a very good point, because if you take 

a stretched workforce and then try to have them work even harder 

in a compressed period of time, inevitably, you are not going to be 

as rigorous. So I think that is an area that we should pay special 

attention to. 

Senator MCCASKILL. And in some ways, I know the contracting 

workforce doesn’t have to be separated out from these agencies. 

But in some ways, they should begin to get some kind of IG-like 

protection around them. And by that I mean I would hope you 

would look at ways to catch them being good. 

Contracting personnel that are doing the right thing, despite a 

pressure from their agencies to do other things, to me, you should 

seek out those contracting people that are trying to hold the line 

and say, no, we are not going to do that because we don’t have 

20 

enough time to really bid the contract appropriately. Or, no, we are 

not going to renew that contract just because we can and just because it is easier and just because it has always been done that 

way. I don’t know what you have got out there to reward that kind 

of professionalism and that willingness to kind of show some independence as it relates to contracting processes. 

Mr. ZIENTS. I think there are some recognition vehicles or 

awards today. There are not enough. This is a group that, I think, 

has not been—has not enjoyed a glory period of time in the last 8 

years and I think we need to help lift them up and celebrate their 

victories, and I think some of those victories will be around driving 

acquisition savings, to your point. Some of it will be on holding the 

line. So I think recognition is very important here and it is something that we have jump-started some efforts on already. 

Senator MCCASKILL. One of the guidances is a requirement that 

government agencies select the candidate organization for pilot programs to analyze whether the agency has relied on contractors too 

much. Have these agencies made these candidate selections and 

can you give us any information about how these selections are— 

have they reported what the selections are? 

Mr. ZIENTS. They have. To your earlier question about November 

2, with an, I believe, October deadline; everybody has selected. I 

think it is very important here that we maintain some confidentiality during the deliberative process because you don’t want to 

open up to the world what is being examined for potential insourcing or change—— 

Senator MCCASKILL. Right. That would not be good although we 

might get a lot of lower contract prices. 

Mr. ZIENTS. It is interesting, though, in that IT tends to be an 

area where a lot of people are focused right now. About a third 

were in the IT terrain. And a significant number were actually in 

the acquisition workforce itself, so people having contracted out 

help for acquisition and thinking, that is—— 

Senator MCCASKILL. Contractors watching contractors. 

Mr. ZIENTS. Absolutely. Well, actually, contractors helping to 

make—— 

Senator MCCASKILL. Contract decisions. Right. Both. 

Mr. ZIENTS. So you can see how that would fall in the category 

of potential over-reliance and something that should be looked at 

carefully. 

Senator MCCASKILL. And finally, another discovery I made when 

I got here that I still shake my head about, and I would hope that 

you would work this into the reforms that you are doing in contracting and with these acquisition workforces, is this phenomena 

we have in the Federal Government that you can buy stuff from 

other agencies and the other agencies make money on it. I mean, 

I was shocked when I found out in a very early oversight hearing 

I attended that they were actually advertising. One agency was advertising, buy your stuff here, to another Federal agency because 

they were getting a cut because of the contract they had. Well, 

there is something very wrong about that—— 

Mr. ZIENTS. Right. 

Senator MCCASKILL [continuing]. Just fundamentally wrong, that 

somebody had the time to try to advertise to another part of the 

21 

government that you should be buying your stuff from another part 

of the government because then they got money from that that 

they added to their budget. 

Wherever there is a good price, everybody in government ought 

to access it. This is—it was bizarre. And to my knowledge, nothing 

has been done about it, that it is still happening. 

Mr. ZIENTS. Well, it is bizarre and it should not be happening. 

Strategic sourcing, leveraging the government’s purchasing power, 

should be happening. So agencies should be purchasing together 

where there are opportunities to do it—— 

Senator MCCASKILL. Yes, but one agency shouldn’t be making a 

cut off of—— 

Mr. ZIENTS. I completely agree. 

Senator MCCASKILL. Yes. 

Mr. ZIENTS. And I think that is an area that GAO and others 

have reported on. I think it is an area, and I don’t have the details 

here today, where OFPP has spent some time, and with the new 

Administrator it will spend more time. I agree with you. It is bizarre—at best, bizarre. 

Senator MCCASKILL. I want to warn you that it won’t be soon, 

but I am sure that we will have another hearing that we will actually look at not the buying of contractors for doing government 

work or the securing of contractors to build things for the government, but rather just buying stuff—— 

Mr. ZIENTS. Yes. 

Senator MCCASKILL [continuing]. How that is occurring and what 

the positives and negatives are about that. And I would hope by 

the time we have that hearing, probably sometime next year, that 

you would have somebody begin to look at this issue of are we 

leveraging the volume that we have in the Federal Government to 

drive price. 

Mr. ZIENTS. Oh, I think it is our biggest opportunity, so we will 

have a big effort behind it and I look forward to the hearing. 

Senator MCCASKILL. Great. Senator Bennett. 

Senator BENNETT. Thank you. Senator Collins had to leave and 

left behind a question that is in the same area as the ones you are 

asking about, the blanket purchase agreements (BPAs). She is 

quoting a September 2009 GAO report that says the Federal agencies obligated as much as $7.9 billion under schedule blanket purchasing agreements, and in about half of the sample BPAs reviewed, they found no evidence that an agency sought discounts 

when establishing these blanket purchasing agreements and suggests that such opportunities were missed when the estimated 

amount was in the hundreds of millions of dollars. 

Then the heart of her question, I understand the competition 

guidance issued yesterday did not specifically address BPAs. Would 

you consider taking actions to ensure this contracting tool is not 

misused? Or, I would add my own comment, not ignored, because 

apparently that is the bigger problem. 

Mr. ZIENTS. That is a significant problem. I think we believe the 

GAO report is correct and it is something that we will address. 

Senator BENNETT. All right. Fine. Thank you, Madam Chairman. 

Senator MCCASKILL. Thank you. 

Senator BENNETT. I have nothing further. 

22 

Senator MCCASKILL. I think the President has made a wise selection when he selected you to do this job. I think you have got the 

right combination of experience in the private sector and a really 

weird passion for this stuff. [Laughter.] 

Mr. ZIENTS. Very strange. 

Senator MCCASKILL. It is strange. I completely relate to it. 

Mr. ZIENTS. Maybe bizarre. 

Senator MCCASKILL. Yes, maybe bizarre. I think you are excited 

about making this government more efficient and effective and 

more cost conscious, and I think you know how badly we need that 

kind of passion. Let me just tell you, I will not predict success unless you hold on to that passion because this is a really big monster 

to move. It is going to take you being cheerfully enthusiastic every 

single day and giving all the people that work with you almost a 

zeal, a missionary zeal for the kind of reforms that are necessary. 

There is a lot of low-hanging fruit and it is not going to take a 

huge effort to do a little bit better than we have been doing. But 

it will take a lot of effort to make the kind of reforms that I know 

that you see as possibilities because of the massive problems that 

you face. 

So I am glad you are there. We are going to continue to look over 

your shoulder. 

Mr. ZIENTS. Please. 

Senator MCCASKILL. It is important that we ask tough questions. 

This may be the easiest hearing you have in front of this Subcommittee over the next 4 years, because we will be looking to see 

if these benchmarks have been met and if enough deliverables and 

hard, fast goals are being set for these agencies and that you are 

staying on them, and we will continue to press to make sure that 

all the information that is out there is available to the public as 

quickly and as efficiently as possible. 

I thank you very much, and I want to once again thank your 

staff. I know that there was around-the-clock work. There is good 

news and bad news about that. The good news is, the staff was 

willing to work around the clock to get ready for this hearing. The 

bad news is they had to. And hopefully, as time goes on and you 

have been there longer and the staff can prepare a little bit more 

ahead of time so we have a little more time—— 

Mr. ZIENTS. Yes. 

Senator MCCASKILL [continuing]. Prior to the hearing to be able 

to digest the materials that we want to go over. But I appreciate 

how hard everyone worked and I certainly appreciate your time 

here today. 

Mr. ZIENTS. I appreciate your support, and your staff has been 

great. 

Senator MCCASKILL. Great. OK. Thank you very much. 

This hearing is adjourned. 

[Whereupon, at 3:45 p.m., the Subcommittee was adjourned.] 

(23) 

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