U.S. Efficiency Push: Boon Or Bane for American Businesses?

Last month President Obama issued an Executive Order titled “Delivering an Efficient, Effective and Accountable Government.” In it, the President promised to cut waste and streamline government operations. Among the steps identified to achieve these goals: deploying fraud detection tools, leveraging the government’s purchasing power, reducing high-risk contracting practices, and identifying alternatives to the use of consultants.

Clearly, taxpayers benefit when government is run as efficiently as possible. That’s especially true given the $14.3 trillion national debt. “Budgets have been tight in the past,” says Janet Hale, director with Deloitte Consulting LLP and former undersecretary for management with the Department of Health and Human Services. “But, this is a new normal.”

Issuing an Executive Order is a “terrific first step,” Hale says. However, gaining efficiency is a complex journey, she adds. Federal agencies need to “set up the right structure, and get the right people and performance metrics,” in place, she adds. “It’s a complex journey.”

‘Too Little, Too Late’

Margot Dorfman, chief executive officer with the U.S. Women’s Chamber of Commerce, is less sanguine about the move. “It’s a little too little, a little too late,” she says. One particular area of concern is ensuring that smaller- and women-owned businesses have reasonable access to government contracts. Currently, many smaller contracts are bundled into larger ones, which put them out of reach of smaller companies, and reduce the number of potential bidders, Dorfman says.

According to a 2010 report by the Government Accountability Office, 44% of government contracts either were noncompetitive, or received only one offer. Given that the value of government contracts awarded in 2010 totaled $537 billion, and topped $4.5 trillion from 2000 through 2010, according to USASpending.gov, the potential for overspending is huge. “When you’ve got less competition, you’re not going to get the best bang for your buck,” Dorfman says.

Another area of concern, not surprisingly, is regulation. According to the U.S. Chamber, Federal agencies currently are implementing 500-plus required or suggested rules as a result of from Dodd-Frank Act, and 159 new agencies, commissions and other groups are being established as a result of the new health-care reform law. To counter this, the Chamber has initiated a “Project on Regulatory Reform.” Among its goals: obtaining independent evaluations of the economic and employment impact of major rules, as well as a periodic review of current regulations in order to sunset those found to be ineffective or unnecessary.

Regulation also is a concern for the businesses who are part of the National Federation of Independent Businesses (NFIB), says Chris Walters, senior manager for legislative affairs with the organization. Many view their relationship with the government as one of complying with regulations, whether it’s tax, safety or the environment, he says. “They really see this as threatening their ability to grow jobs.”

More than an Order Is Needed

In January, the White House issued an Executive Order focused on improving regulations — stating that agencies must propose regulations based only on “a reasoned determination that its benefits justify its costs,” and “impose the least burden on society.” In addition, Agencies were instructed, when possible, to specify performance objectives rather than specifying the behavior required.

To be sure, the Executive Orders begin a process — signaling the Administration’s recognition of some obstacles hampering efficiency in government spending and operations, and hurting growth in the private sector. Even so, “an Executive Order is not enough,” says Walters of the NFIB.

Instead, Congress and the White House need to work together, Hale says.

That may be happening, at least when it comes to regulatory reform. In March, Sen. Olympia Snowe (R-Maine.) introduced the Small Business Regulatory Freedom Act of 2011. The bill would “reform the regulatory process to ensure that small businesses are free to compete and to create jobs, and for other purposes.” The bill currently is with the Committee on Homeland Security and Governmental Affairs.

A small start, but a start.