Insourcing: Headache for the Ins and the Outs

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Is the Defense Department poaching brigades worth of contractor employees in a bid to pull back work from contracted services?

No, but the so-called insourcing question hasn’t received a full enough airing in the greater IT community. Presuming Daniel I. Gordon is confirmed as administrator of the Office of Federal Procurement Policy, insourcing-outsourcing would be a good issue over which he could assert some strong guidance. The Professional Services Council (PSC), which represents some 330 services contractors, called in the press last month to point out problems it sees with the way the government is dealing with Obama administration directives on insourcing. It got a little ink, but that’s about it.

Here’s the rub: A series of memos from the White House, OMB , the Defense Department; plus language in the 2009 omnibus federal spending law and in the 2008 Defense Authorization have been interpreted by some agency managers as a call for massive retreat from outsourcing, in particular from the Bush administration OMB’s emphasis on and approach to the Federal Activities Inventory Reform (FAIR) Act, which seemed to ask agencies to outsource as much as possible. Here’s a sample of the new talk: The 2008 Defense Authorization requires the undersecretary of Defense for Personnel and Readiness to create guidance “to ensure that consideration is given to using, on a regular basis, DOD civilian employees to perform new functions and functions that are performed by contractors and could be performed by Department of Defense civilian employees.” The 2009 Omnibus uses essentially the same language, only spread out to all agencies and citing the FAIR Act.

Persistent reports have surfaced of certain agencies, mostly in DOD, eagerly using this guidance, an expected flattening of Defense spending and the generally weak economy to offer contractor workers government jobs. No small irony here. It seems like just a few years ago it was government howling that the best talent was being poached by industry.

Counter-insourcing, or at least cautionary, voices have not been silent. Democratic Congressman Gerald M. Connolly of Virginia — his district has both contractors and federal workers — wrote to Defense Secretary Robert M. Gates, cautioning him that the DOD insourcing drive was occurring ahead of a statutorily-required analysis of what functions are inherently governmental. So much back and forth among Congress, DOD, and the PSC took place in the spring that by July, Lt. Gen. Patrick O’Reilly, Director of the Missile Defense Agency, had to remind his management team not to simply convert contractor workers wholesale to government in violation of Merit Systems Principles.

PSC President Stan Soloway pointed out that neither the Bush nor the Obama administration actually put a quota on jobs to outsource or insource. Since public-private competitions under OMB Circular A-76 were outlawed, how do agencies go about the task of determining what to contract and what to keep or return to in-house? The former Defense procurement chief has argued for more openness on the part of agencies who opt to insource about how they made the decision. And he said that competition, not between government and contractors, but among contractors is not getting enough emphasis in the drive to cut costs. Hardly an unreasonable suggestion.

The whole question is complicated by a kaleidoscopic range of opinions being asserted of the range of activities that should be subject to the potential of outsourcing. And by pressure from unions, who think nothing above lawn mowing and painting should be done by anyone except government employees.

It is unrealistic to think that the federal government’s dependency on contractors for even mission critical functions will lessen appreciably, even if this were a desirable goal, which is questionable. If the goals of the current leadership are better performance, lower cost and more accountability — and which administration in the last 20 years has not articulated those goals in one way or another — wholesale reduction in contracting isn’t synonymous with them.

A lurching change in administrations, contracting scandals in Veterans Affairs and in Iraq reconstruction, and a new assertiveness by federal employee unions have contributed to an anti-contractor tone in Washington. Now is the time for honest people on both sides, government and industry, who really know how things should work, to bring reason and balance to the laudable goal of making sure missions are executed by the best combination of resources.

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Profile Photo Jeff Smith

A fine recap of the insourcing issue before the DOD and the rest of federal civilian government, Peg. The initial lure of the private sector, for government employees and would-be government employees, has historically been higher wages and lower bureaucratic headaches. I believe the private sector will continue to have the upper hand were salaries are concerned.

But I would also submit that the anti-contractor tone in Washington could be attributed to a new generation of workers graduating from universities with a new-found desire to work in the public sector. A few studies have come out this past year focused on Gen. Y’s public sector leanings, which have a good chance of growing stronger for those who come of age during this administration.

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