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Tuesday, September 14, 2010

Federal agencies cutting, revising $337 million worth of IT contracts

The Office of Management and Budget on Wednesday plans to announce the cancellation or restructuring of three multiyear information technology contracts totaling $337 million, according to senior administration officials.


The changes are part of the Obama administration's budgetary and management reforms designed to cut billions of dollars in wasteful and no-bid government programs and contracts.

According to the OMB, the Environmental Protection Agency plans to save $180 million and the Department of Housing and Urban Development will pocket about $44 million by restructuring two long-term IT contracts. The Small Business Administration should save $113 million by canceling a contract.

The Department of Veterans Affairs in July canceled a similar multiyear IT project slated to cost as much as $300 million. Other agencies may cancel or rewrite similar deals in the coming months, the OMB said.

The cuts announced Tuesday are "a classic outcome of what we expected when we looked more closely at these projects," said OMB Controller Danny Werfel. Though they amount to a small fraction of the $80 billion in annual federal IT costs, they are part of a series of reforms announced since the spring that administration officials hope demonstrate the White House's resolve to curtail government spending as deficit concerns dominate midterm election campaigns.

The cuts - and their impact on several Washington-area contracting firms - come as the Senate plans to pass a multibillion-dollar package of loans and tax relief for small businesses. They also add to growing fears that the Washington region could face significant layoffs as the government slashes billions in contracting deals.

In an interview Tuesday, OMB Deputy Director Jeffrey Zients said: "Our job is to focus on making sure every taxpayer dollar is well spent. There are plenty of opportunities for us to spend dollars on IT projects that have very high returns for taxpayers. We're going to make sure that the dollars are spent on high-return projects."

By Ed O'Keefe and Marjorie Censer
Washington Post Staff Writers
Tuesday, September 14, 2010; 10:35 PM

ed.okeefe@washingtonpost.comcenserm@washpost.com Staff writer Dana Hedgpeth contributed to this report.

Find More:

Obama administration's IT Dashboard, a public Web site that compiles data on federal agencies' IT programs.

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