This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

OMB Makes Initial Progress Toward Better Sequestration Guidance

New guidance discourages agencies from entering into new contracts and encourages cutting back on existing contracts

WASHINGTON, Feb. 28, 2013 /PRNewswire-USNewswire/ -- In response to repeated requests from the American Federation of Government Employees, the Office of Management and Budget has supplemented its sequestration guidance to make it less one-sided and more consistent with prohibitions against illegal privatization.   

Federal agencies spend $300 billion annually on service contracts. Nevertheless, in guidance produced by OMB and the Pentagon, federal employees are singled out disproportionately for cuts. 

OMB's initial sequestration guidance, released Jan. 14, includes several recommendations for cutting spending on federal employees, including freezing hiring, firing temporary and term federal employees, incentivizing retirement, and planning for extensive furloughs. However, with respect to service contracts, OMB's guidance directed agencies to simply review contracts "to determine where cost savings may be achieved in a manner that is consistent with the applicable terms and conditions, remaining mindful of the manner in which individual contracts ... advance the core mission of the agency." 

OMB's new guidance, issued Feb. 27, discourages agencies from entering into new contracts or options unless they can be justified. The new guidance also encourages agencies to reduce the costs of current service contracts, using the methods recommended by University of Baltimore Professor Charles Tiefer in his recent and much-discussed paper, "Reducing Spending on Service Contracts in Order to Comply with Sequestration." Implicitly, this new guidance acknowledges that agencies retain significant discretion to retrieve service contract dollars, including those that have already been obligated, contrary to suggestions by service contractors and some senior acquisition executives.

This new guidance requires agencies to establish appropriate controls "to prevent the increased use of contractors" to perform work performed by federal employees. It is an important first step toward enforcing longstanding prohibitions against direct conversions.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG

Markets

DOW 18,132.70 -81.72 -0.45%
S&P 500 2,104.50 -6.24 -0.30%
NASDAQ 4,963.5270 -24.3630 -0.49%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs