White House touts $20 billion reduction in drop in contract spending for government The White House budget office on Thursday reported the federal government had reduced contract spending by 4 percent in the past fiscal year, an accomplishment that it said was the largest drop for a single cycle on record. The Obama administration said it cut contract spending by more than $20 billion during fiscal 2012, largely by increasing coordination betweeen agencies - buying together instead of independently. Contracts accounted for about 14 percent of all federal government spending during the past cycle, representing the lowest level since 2003. President Obama issued a memo in November 2011 directing all government agencies to contract more efficiently, especially for management support services, which include engineering, program management and development of information-technology systems. The administration calculates that contract spending quad­rupled in that area during the previous administration. The budget office's director of management issued a memo Thursday telling all agencies to redouble their first-term efforts to continue lowering contracting costs. Joe Jordan, administrator for the White House Office of Federal Procurement Policy, said the government should be able to save billions through that initiative. Federal contract spending for fiscal 2012 was 6 percent below the fiscal 2009 level, representing a rare drop between the start and the end of a presidential term. The federal government's contract spending grew every year during President George W. Bush's administration, but the raw numbers never exceeded the heights reached during most of Obama's first term. "Things are going in a good direction, but they're still not in a good place yet," said Craig Jennings, manager of federal spending and contract policy for OMB Watch, a government-accountability group. The Defense Department accounted for slightly more than half of the reduction in contract spending for 2012, trimming about $13 billion compared with the previous year. All other agencies cut about $11 billion combined. Jennings said a decrease in war spending probably helped the ­Defense Department's numbers. The White House said the cost-cutting effort was government-wide. "This was a concerted and collective effort by all federal agencies to bend the cost curve," Jordan said. It's not from one impetus or one cause. It's a collective effort to spend smarter and buy less.