Spending on federal contracts was around $400 billion in 2006, nearly double what it was in 2000 ($207 billion).*
Why not create an internal consultant corps instead of hiring so many consultants? It can modeled on the FBI's Special Advisor Program:^
The FBI Special Advisor Program is an internal consulting and leadership development rotational program at the Federal Bureau of Investigation. The group consists of recent graduates from the top MBA programs. The FBI Special Advisors are primarily responsible for serving in an advisory capacity to the FBI Senior Executive team and completing "management" type of issues.
Instead of going through the bidding process and getting yet another contractor to do a project, agencies could turn to this "army of problem solvers" to get things done in less time and with lower costs.
^ http://en.wikipedia.org/wiki/FBI_Special_Advisor_Program - Note: this author has no relationship to the FBI or this program.