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Richard Beutel, a senior researcher for the Baroni Center for Government Contracting, says it’s time to renew share-in-savings legislation.
In his Commentary for Federal News Network, "For those of us with more grey hair than we care to acknowledge, the focus upon performance-based contracting ideas like shared in savings brings back memories of when Steve Schooner, the Nash & Cibinic Professor of Government Procurement Law at the George Washington University Law School, had more hair than beard."
Share-in-savings (SiS) contracts, where the government contracts with companies to implement cost savings initiatives and pays them a portion of the savings realized, have the potential to produce significant cost savings. This approach, however, has never been broadly embraced by government agencies. As Beutel notes:
By providing contractors a reasonable portion of the actual savings they generate, SiS contracts motivate contractors to identify and implement significant cost savings initiatives on government programs with relatively low government risk.
Such contracts are low risk because the government’s initial investment is minimal and the contractor bears the risk of generating cost savings, without which the contractor will not be paid. SiS contracts offer a seemingly ideal tool to help address current budgetary challenges.
His Commentary provides background and insights on SiS use. As his Commentary concluded, "Maybe it’s time to go back to the future?"