The Final State of the Union
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Last week the President laid out the foundation of a new vision for our budget and the way government does business. It is a vision based not on ideology, but on the idea that we can and must invest boldly in our future while also making the hard choices and being vigilant to bring in a new era of fiscal responsibility.
Last week began with the fiscal responsibility summit, where the President and members of Congress came together to generate ideas to get the country on a sustainable long-term track. One of the exchanges that got the most attention was between the President and Senator John McCain, who discussed the idea of procurement overruns, in Defense Department contracts in particular.
Today Sen. McCain joined the President again to develop that idea further, along with Senators Carl Levin and Claire McCaskill and Representatives Edolphus Towns and Peter Welch. The President signed a Presidential Memorandum that will reform government contracting by strengthening oversight and management of taxpayer dollars, ending unnecessary no-bid and cost-plus contracts and maximizing the use of competitive procurement processes, and clarifying rules prescribing when outsourcing is and is not appropriate. The OMB will be tasked with giving guidance to every agency on making sure contracts serve the taxpayers, not the contractors.
In addition, the President endorsed the goals of the bipartisan effort on defense procurement reform led by Senators Carl Levin and McCain, and has asked Defense Secretary Gates to work with the Senators going ahead. In his remarks, President Obama made clear that while there are those who will try to protect contractor excesses behind cries of weakening our national defenses, there will be a bipartisan, firm stand to put those excesses to an end:
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.
Recently that public trust has not always been kept. Over the last eight years, government spending on contracts has doubled to over half a trillion dollars. Far too often, the spending is plagued by massive cost overruns, outright fraud, and the absence of oversight and accountability. In some cases, contracts are awarded without competition. In others, contractors actually oversee other contractors. We are spending money on things that we don't need, and we're paying more than we need to pay. And that's completely unacceptable.
This problem cuts across the government, but I want to focus on one particular example, and that is the situation in defense contracting. Now, I want to be clear, as Commander-in-Chief, I will do whatever it takes to defend the American people, which is why we've increased funding for the best military in the history of the world. We'll make new investments in 21st century capabilities to meet new strategic challenges. And we will always give our men and women the -- in uniform, the equipment and the support that they need to get the job done.
But I reject the false choice between securing this nation and wasting billions of taxpayer dollars. And in this time of great challenges, I recognize the real choice between investments that are designed to keep the American people safe and those that are designed to make a defense contractor rich.
Last year, the Government Accountability Office, GAO, looked into 95 major defense projects and found cost overruns that totaled $295 billion. Let me repeat: That's $295 billion in wasteful spending. And this wasteful spending has many sources. It comes from investments and unproven technologies. It comes from a lack of oversight. It comes from influence peddling and indefensible no-bid contracts that have cost American taxpayers billions of dollars.
