Spending on contracts and supplies is the second-largest of the federal government’s major spending groups, according to usaspending.gov. More than $1.1 trillion was spent on deals negotiated by the government to hire contractors. This category has grown by 19% compared to five years ago.
“We’re looking forward to massive cuts to all federal contractors and others who are overbilling the federal government,” DOGE co-leader Vivek Ramaswamy said on FOX Business’ Sunday Morning Futures. said.
Contracting out government goods and services to private companies dates back to the late 1700s. Over the years, legislation has streamlined the process and made contracts more competitive.
“We are on the side of change,” said Horacio Rozanski, CEO of Booz Allen Hamilton. “We started by helping people do things better.” “Right now, we’re the biggest player in AI and cyber in the federal government, and we’re very proud of that whole history. But it’s a whole history of change. My sense is that we’re going to change. I feel like we’re ready. The country voted yes.” It’s going to happen and we need to see it happen. ”
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Elon Musk and Vivek Ramaswamy will head the Ministry of Government Efficiency. (Photo by Anna Moneymaker/Getty Images)
Booz Allen Hamilton is one of the largest government contractors. As of 2024, the company had more than $8 billion in contracts from agencies such as the Department of Defense, General Services Administration, and National Science Foundation.
“One of the things we’ve been talking about for years is the concept of results-based contracting.Instead of trying to figure out how much everything costs and how to do it, governments can really Let’s define the outcomes we want, and let private industry compete for them,” Rozansky said.
Federal agencies are responsible for negotiating the best deals for the government, but contractors have a history of overcharging. In 2014, a report by the Department of Defense Inspector General found that the Pentagon was being charged 831% more for spare parts. Another recent audit found a 7,943% markup on soap dispensers sold to the Air Force.
Military contractors are only required to explain their prices if the value of the contract exceeds $2 million. If a product is labeled as “commercial,” businesses don’t have to justify the price.
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In 2023, Booz Allen Hamilton agreed to pay $377.45 million to resolve allegations that the company improperly charged commercial and international fees for government contracts. .
“I think part of the challenge is the system. The system is built to manage risk and do things with the least amount of risk possible. It’s not built for speed.” said Rozanski. “We need DOGE to successfully transition to efficiency, effectiveness. That’s what our clients want and that’s what we want. Are there winners and losers? Of course. “I want Booz Allen to be a winner.”But at the end of the day, we need to compete.” ”
The Department of Defense is obligating about $550 billion in government contracts in 2024, representing more than half of all government spending on contractors. Some analysts estimate that the department could save millions of dollars by streamlining negotiations.
“They’re about cutting down on some of the bureaucracy, but they’re also about understanding that there’s a difference. It’s unfair to have a huge DMV to fill the entire federal government,” Rozansky said. Ta. “There is so much more we can do to get things done, to do them faster, do them better, or not do them at all.”
Some small businesses say DOGE is unlikely to impact their operations.
“From a sort of efficiency standpoint, we all need to operate at optimal levels of efficiency,” said Dave Barnhart, co-founder of Arkisys. “I don’t really know if that’s going to have an impact, because we’re basically already operating as quickly as possible within the U.S. government.”
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Arkisys has a contract with the Space Development Agency, which is part of the Space Force. (Alkisis)
Arkisys has a contract with the Space Development Agency, which is part of the Space Force. The port will provide a permanent station for service providers performing repairs in space to deliver cargo and supplies. The federal government has special contracts for small businesses that help level the playing field.
“This particular area of space, and most especially the services we’re talking about, which is doing something to a spacecraft after launch, has never been done before. This is a wide-open area of research. . All have the potential for some kind of innovation to occur,” Barnhart said.
Other small business owners said they believe DOGE will help speed up the contracting process.
“One day you just have an idea, you have to raise money and develop it,” said Abbas Haider, co-founder of Appet. “You submit a white paper, that’s Phase 1 funding, then Phase 2 funding, then Phase 3 funding. It takes a few months to get into Phase 2. Maybe other Someone else will have already copied your idea or already done something.” Similarly, why should I go to the government to get that funding? ”
Appet sells high-tech military body products to various agencies within the U.S. government in exchange for applying for specific government contracts.
“In our case, we’re going to take the risk and raise the money ourselves because it just makes things go a lot faster,” Haider said.
Aspetto manufactures bulletproof clothing, women’s body armor, and K9 bulletproof vests. The company has contracts with the Department of Defense, Department of State, and NASA. The FBI is also equipping U.S. Border Patrol agents with Aspetto products.
“I believe they will focus on innovation. If you want to compete with countries like China, you have to focus on innovation,” Haider said.
NASA gives most of its funding to contractors who develop innovative products for space travel. In 2024, the agency allocated more than 76% of its budget to contracts.
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“With the right incentives, private industry can also bring existing technologies that have already been proven in the private sector to government and make them happen more quickly,” Rozanski said. “I really believe there’s a significant opportunity to save money and do it faster.”
Bret Baier currently serves as Anchor and Special Reports Editor-in-Chief for FOX News Channel (FNC), and is the network’s chief political anchor and co-anchor of the network’s election coverage. (6:00-7:00 p.m. ET) and serves as editor-in-chief. Baier is also the host of FOX News Audio’s “Bret Baier Podcast,” which includes Common Ground and the All-Star Panel. He joined FNC in 1998 as the inaugural reporter in the Atlanta bureau and is currently based in Washington, DC.
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