Efforts to bring jobs in-house may be losing momentum

Opponents of the Obama administration's efforts to bring more contract work in-house were heartened by last week's House passage of the fiscal 2012 Defense authorization bill, which contains provisions to ease a two-year-old moratorium on Pentagon outsourcing.

As passed by the Republican-controlled House on May 26, the authorization measure (H.R. 1540) would modify a temporary suspension of procedures for public-private competition for federal work that President Obama ordered in a March 2009 memorandum.

The bill would end the moratorium after the Defense Department submits a comprehensive review of public-private competitions, which the Government Accountability Office would then look over. It would shift responsibility for such competitions from the Pentagon's acquisitions divisions to its personnel and readinesss staff. And it would create an assistant secretary of Defense for contingency contracting to be the principal adviser of the Defense secretary and the undersecretary of Defense for acquisition, technology and logistics.

The measure also included a nonbinding "sense of Congress" resolution that "the federal government should not be in the business of competing with its citizens and private enterprise." It was introduced by Rep. Nan Hayworth, R-N.Y., who, citing problems with insourcing in her district with veterans struggling to win government contracts, said, "The Department of Defense has added positions 'in-house' that are commercial in nature, such as food services, mapping and audio-visual services. The result is often higher costs, lower quality and less support for local businesses."

MAPPS, the national association of private sector geospatial firms, praised the adoption of Hayworth's amendment, as did the Professional Services Council, a contractor trade group. "Many members of Congress concur that the [Defense] department's arbitrary actions on insourcing reflect a lack of documentation and analysis," PSC Executive Vice President Alan Chvotkin told Government Executive. "The Pentagon has changed its position, recognizing the cost implications in these times of restrained budgets, which is why the House re-leveled the playing field."

The same day as the vote, the Lexington Institute, a conservative think tank, held a high-level forum on Capitol Hill, during which its vice president, Daniel Goure, warned that insourcing goes against Defense's drive for greater competition.

The Obama administration's "temptation to seek any means available to pull work back inside the fence is understandable but shortsighted," he wrote in a later blog post. "Insourcing workload could spell the eventual ruin of the public sector installations" such as the Pentagon's three air logistics centers.

John Conger, assistant Defense deputy undersecretary for installations and environment, also said during the forum that he would welcome an end to the moratorium, according to Federal News Radio. But he cautioned that contractors don't always turn out to be the most cost-effective option: "Through the miracle of competition, we saved $11.5 billion. We did the math. That's a lot of money, especially in an environment where we're squeezing for every dollar. Now, here's the thing that not everybody realizes: More than half of these competitions were won by the public sector, and we still saved money. Why do we save money when the public sector wins? We save money because the public sector looks at its organization and squeezes it down in order to win the competition, just like a private company's going to do to come in with a good bid."

Obama's original insourcing plan was designed to curb the use of contractors championed by the George W. Bush administration using the long-standing Office of Management and Budget Circular A-76 to assure that government has "the capacity to carry out robust and thorough management and oversight of its contracts in order to achieve programmatic goals, avoid significant overcharges and curb wasteful spending."

But savings from bringing jobs back in-house have not been plentiful, leading to second thoughts. In February, the Army announced it was suspending all insourcing plans.

In March, Defense Secretary Robert Gates issued a memo that "all insourcing will be on a case-by-case basis, after careful consideration of critical need, whether a function is inherently governmental, and benefit demonstrated by a cost-benefit analysis. Additional insourcing must be supportable within current budget levels."

Prospects for ending the moratorium in the Democratic-controlled Senate are less clear. Sen. Barbara Mikulski, D-Md., has introduced the Correction of Long-standing Errors in Agencies Unsustainable Procurements (CLEAN UP) Act.

It would reinforce insourcing by "reforming the discredited OMB Circular A-76 privatization process by ensuring all costs of conducting studies are considered," she said. And it would impose a temporary suspension on the OMB Circular A-76 privatization process until the OMB director and the inspectors general of the five largest agencies determine that all of the reforms required by her bill have been implemented.

"Year after year, I've fought to improve the contracting out process and make the competition process fair before federal jobs are contracted out," Mikulski said. "Our federal employees are on the front lines every day, working hard for America. They deserve our respect and appreciation. I will not stop fighting to level the playing field for federal employees and to protect them against unfair contracting out policies."

Scott Amey, Project on Government Oversight's general counsel, said: "The administration and DoD are retreating from insourcing activities, and the House's version of the Defense authorization bill definitely has a pro-outsourcing feel. POGO supports the revitalization of public-private competitions as they generally lead to cost savings and efficiencies, but the government needs the flexibility to hire both public servants and contractors when needs arise.

"Removing flexibilities will impede the government's efforts to realize benefits," Amey said. "We could see a lively conference if the Senate considers all of the issues involved."

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
Close [ x ] More from GovExec

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Sponsored by Brocade

    Best of 2016 Federal Forum eBook

    Earlier this summer, Federal and tech industry leaders convened to talk security, machine learning, network modernization, DevOps, and much more at the 2016 Federal Forum. This eBook includes a useful summary highlighting the best content shared at the 2016 Federal Forum to help agencies modernize their network infrastructure.

  • Sponsored by CDW-G

    GBC Flash Poll Series: Merger & Acquisitions

    Download this GBC Flash Poll to learn more about federal perspectives on the impact of industry consolidation.

  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

  • Sponsored by Aquilent

    A DevOps Roadmap for the Federal Government

    This GBC Report discusses how DevOps is steadily gaining traction among some of government's leading IT developers and agencies.

  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.

  • Sponsored by CDW-G

    Joint Enterprise Licensing Agreements

    Read this eBook to learn how defense agencies can achieve savings and efficiencies with an Enterprise Software Agreement.

  • Sponsored by Cloudera

    Government Forum Content Library

    Get all the essential resources needed for effective technology strategies in the federal landscape.


When you download a report, your information may be shared with the underwriters of that document.