Contractors could ease 'human capital crisis,' report says
When federal agencies have trouble finding qualified applicants to fill job openings, they should consider outsourcing the work, according to a new report from a libertarian think tank.
Agencies should concentrate on retaining in-house experts capable of overseeing contracts and tackling substantive mission-related projects, the Reason Foundation, a nonprofit think tank based in Los Angeles, recommended in a new report. Contractors could handle day-to-day tasks.
"Essentially, the focus becomes one where the agency has the internal capacity to manage service planning rather than actually participating in service delivery," the report said.
Outsourcing is one way of addressing an impending "human capital crunch," Reason Foundation scholars Geoffrey Segal, Adrian Moore and John Blair argued in the report. More than 70 percent of the federal workforce will be eligible to retire for regular or early retirement by 2010, and agencies should prepare to fill the ensuing gaps in job skills, the report suggested.
To date, retirements have not taken place at the anticipated rate, partly because of a sluggish economy, the scholars noted. As a result, agencies have not spent enough time developing recruitment strategies. "Ultimately, the sour economy only delays the inevitable, and come the recovery, an even larger number of employees are likely to quickly take advantage of retirement," the report cautioned.
But agencies should not look to contractors to replace retirees, according to the American Federation of Government Employees.
"Indiscriminate downsizing and contracting out are what produced the government's so-called human capital crisis," said Jacque Simon, public policy director for the American Federation of Government Employees. "Only a reversal-not an intensification-of those policies will provide a solution."
The Reason Foundation report recommended that agency personnel offices predict future holes in the workforce and coordinate their efforts with competitive sourcing experts to identify areas where contractors could easily fill those gaps. For instance, workforce planners should keep an eye on positions classified as "commercial" under the 1998 Federal Activities Inventory Reform Act and other jobs not directly related to guiding an agency's core mission.
"The link between human capital management and competitive sourcing becomes abundantly clear in the case where agencies are having recruitment or retention problems in activities that are considered commercial," the report said. Holding competitions for commercial positions has the "added benefit of freeing up resources that can be shifted to inherently governmental activities."
The report cited the Education Department as having done a good job of coordinating workforce planning and competitive sourcing. "Education managers see retirements not as a crisis, but rather as an opportunity to improve the overall workforce quality and mission accomplishments," the Reason scholars wrote.
Education uses a "strategic investment process" to decide whether to place vacant jobs up for competition. The process helps managers classify positions as "core" or "non-core" and "value-added" or "non-value-added." In addition, the process identifies jobs that have an "unstable workload" and those that require specialized skills.
Once agencies have identified areas where contractors could fill anticipated gaps in skills, they should develop transition plans for employees in danger of losing jobs during the competitive sourcing process, the report said. "Agencies could move existing staff between agencies or within the agency to activities considered core or mission-critical," the report recommended.
Federal employees should have no reason to fear competitions, the report claimed. In fact, moving civil servants away from service delivery tasks would free up time for them to focus on mission-related work or contract management, the think tank argued.
"A common misperception about competitive sourcing is that it leads to layoffs and to loss of pay and benefits for workers," the report said. "But a long line of research shows that, in fact, the majority of employees are hired by contractors or shift to other jobs in government while only 5 percent to 7 percent are laid off."
But federal employees do not necessarily benefit from taking jobs with contractors, said Simon. "When decent jobs with health insurance, pensions and some stability open up in the federal government, why should they be handed over to contractors whose only real competitive advantage is that they'll promise to pay less and skimp on the fringe benefits?"