President Obama has asked the Office of Management and Budget to develop by Sept. 30 more stringent procurement guidelines to limit the use of sole-source and cost-plus contracts on federal projects. In a March 4 memo, Obama said use of sole-source and cost-plus contracts increased dramatically between 2001 and 2008. He contended that reliance on those contracts led to cost overruns and wasteful spending on federal projects during the Bush presidency, particularly in Iraq. The memo also says federal agencies should use sole-source contracts only in limited circumstances and rely more on fixed-price contracts. The White House estimates the changes
The market is generally healthy and steadily growing, and margins are up for large specialty contractors. Further, advances in design tools and owner demand for collaboration are giving subcontractors a seat at the table early on in projects.