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Obama Cracks Down On Government Contractors

STEVE INSKEEP, host:

The president also said yesterday that he's going to change one of the Bush administration's priorities - that's the huge number of contracts awarded to private industry.

President Bush more than doubled the amount of industry contracts to roughly $500 billion last year, and the government's own investigation showed that a lot of contracts were a disaster. Here's NPR's Daniel Zwerdling.

DANIEL ZWERDLING: Senator Barack Obama promised he'd reign in contracting back when he was running for president. Yesterday, he took a step toward doing it.

President BARACK OBAMA: There is a fundamental public trust that we must uphold. 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.

ZWERDLING: Here is some of what he meant by those words the public trust has not always been met. The Bush administration paid corporations to do the work for everybody from the Forest Service to the CIA, and they gave the majority of that contract money to companies that didn't even have to compete to get it -or at least they didn't have to compete much.

Agencies like Homeland Security depended so much on contractors that they hired contractors to supervise the other contractors, and federal investigators kept revealing that companies were bilking taxpayers hundreds of billions of dollars worth for work they didn't even do - a lot of it in Iraq.

The president said he's going to build the strongest military in the world…

Pres. OBAMA: 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.

ZWERDLING: So President Obama has ordered his staff to draft a new set of rules for government contracts. He says companies will have to compete much more to get them. There will be way more government oversight, and his administration will not hire private industry to do important work that public employees should really do.

Mr. RICHARD LOEB (Government Official): I'm in a state of rapture, although I imagine most government contractors are in a state of shock.

ZWERDLING: That's one of the officials who used to supervise contracts for President Bush, and he worked for Clinton and Reagan before him. His name is Richard Loeb. He says all those administrations gave far too much power to private industry. He says it sounds like President Obama's about to make history.

Mr. LOEB: Let's just say that this type of serious discussion about government contracting issues hasn't really been discussed by a president in the 30 years I've been doing this.

ZWERDLING: How much detail has President Obama given the public that tells you, okay, here's exactly what he is and isn't going to do?

Mr. LOEB: Well, obviously, the devil is always in the details. And this is a broad, overarching concept of what he's going to tell the rule-writers that he wants. Obviously, what they ultimately put out is going to determine how effective this will be.

ZWERDLING: President Obama says they'll roll out the new era of contracting by September 30th this year. Actually, some analysts say that deadline might be over-ambitious.

Professor CHARLES TIEFER (University of Baltimore Law School): Haste makes waste, sometimes, as they say.

ZWERDLING: Charles Tiefer teaches government contracts at the University of Baltimore Law School. He's also a member of the federal commission that's trying to monitor contracting at the Pentagon.

He notes there are all kinds of laws that govern government contracts. So if the president really wants to revamp the system, Congress will have to rewrite them, and Tiefer and other analysts wonder: Does the federal government really have enough employees to crack down on contractors?

Since 1990, Congress and the presidents have eliminated almost 400,000 jobs from the government. A lot of them were supposed to monitor what contractors were doing. Meanwhile, tens of thousands of current federal employees are getting ready to retire.

So Tiefer and others say the president's plans won't work unless he and Congress are willing to replace them, and that will likely trigger another battle over big government. Daniel Zwerdling, NPR News. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Daniel Zwerdling is a correspondent in NPR's Investigations Unit.