Mix & Match

The challenge of managing a multisector workforce.

In the aftermath of the Sept. 11 attacks, the intelligence community faced a sudden, daunting task: meeting the dramatic new national security challenges the nation faced with a workforce that had been downsized during the previous decade.

At the same time, thousands of Americans became interested in putting their talents to use serving their country in the intelligence field. But there wasn't enough time to hire and train them as federal employees. So intelligence agencies turned to private contractors with the experience and expertise to meet their pressing needs.

Now, more than eight years later, those agencies face a different problem-incorporating the tens of thousands of contract employees they continue to rely on into long-term workforce plans. The goal is to manage the entire intelligence workforce across both the public and private sectors as a single cohesive unit.

But achieving that objective involves multiple challenges. In fact, even understanding the magnitude of the task gives leaders headaches.

"Nobody had been counting [contractors], so even though we had surged, we had no idea how many" were involved in intelligence work, says Ron Sanders, chief human capital officer at the Office of the Director of National Intelligence. "Frankly, just trying to count them, we encountered all types of difficulties in terms of taxonomy."

Aside from the challenge of defining just who is a contractor, intelligence community leaders face the difficult task of tracking the training and expertise of their contract employees. Such information is readily available for government employees, but often hidden behind proprietary walls at private contractors.

In 2006, under the direction of the newly created ODNI, the intelligence community embarked on a long-term workforce planning effort, which involved counting contract workers and setting requirements for their employers to release detailed personnel data to the government. Now, Sanders says, the goal is to develop long-term projections of contracting needs by fiscal 2011.

Similar efforts are under way across government. Many different agencies have seen a surge in contracting-whether due to national security crises, the logistical challenge of supporting wars in Iraq or Afghanistan, a lack of federal employees with the necessary skills and expertise, or a shift toward reliance on the private sector fueled by congressional efforts to restrict federal employment.

Now the Obama administration not only has pledged to insource jobs that private firms have been performing in recent years, but also has launched a thorough review of how agencies use contractors and incorporate them into long-term plans. The initiative has earned praise from both public sector advocates and contracting trade groups. "As you move from an arms-length relationship with contractors to one of partnership, you're relying on contractors to accomplish agency missions," says Allan Burman, president of consulting firm Jefferson Solutions and former head of the Office of Federal Procurement Policy. "It makes sense for you to look at your long-term planning, to look at all of the resources that might be available."

But, as the intelligence community's experience shows, before the government can decide what to do about its contracting workforce, it first must understand it. And that is a costly and difficult undertaking.

In-and-Outsourcing

President Obama has signaled a cultural shift when it comes to federal contracting. During the campaign, he promised to beef up the federal workforce in key areas-indeed, to use his bully pulpit to make working for government "cool" again. "I will not contract out vital government services without first considering whether the private sector can actually provide a better service and whether the so-called hidden costs of privatization are fully accounted for in the cost estimate," Obama wrote in response to a questionnaire from the American Federation of Government Employees.

In late July, Office of Management and Budget Director Peter R. Orszag ordered agencies to come up with plans to cut their contract spending by 7 percent by the end of 2011. But at the same time, he issued a memo, titled "Managing the Multisector Workforce," calling on agencies to do a better job of assessing their contract workforce when drawing up long-term personnel plans.

"Too often, assessments of the multi- sector workforce are focused either around a particular outcome (e.g., outsourcing, insourcing) or the day-to-day challenges of managing individual employees and filling federal positions when they become vacant," the memo stated. "In both instances, agencies are not generally taking the time to fully and effectively consider their programs' goals and priorities, and the associated human capital needs, as they must do in order to properly identify which work should be done by federal employees and which should be performed by contractors."

A lack of effective workforce planning is one reason the government has become so heavily reliant on contractors, Orszag noted.

Contractors, of course, will play a role in any long-term plan. They can be used to fill a crucial expertise gap while younger recruits are being groomed-or, conversely, they can provide a flexible way to recruit young talent. And sometimes they're the best employees agencies can get.

The Government Accountability Office study said in April 2009 (GAO-09-616T) that 22 program offices at the Defense Department reported a lack of available civilians with expertise-and not staffing limits-was the reason they used contractors. Eighteen offices, by contrast, pointed to ceilings on federal employment as the prime reason for turning to the private sector.

"We're in a world where you have contractors and government employees working side by side," says Stan Soloway, president and chief executive officer of the Professional Services Council, a contracting trade group. "One of the implications of the OMB guidance is that, whatever adjustments we make in the near term, this is the picture of the future."

The OMB memo directed each agency to conduct a pilot program at a single office where officials believe they have over-relied on contractors. Rather than simply moving work in-house, the memo directs the agencies to conduct studies to determine whether they're using public and private sector workers efficiently. The standard to apply-which OMB wants all agencies eventually to use to determine whether or not to outsource work-is to classify each function as "inherently governmental," "critical, but not inherently governmental," or "essential, but not inherently governmental." Inherently governmental jobs should be done only by federal workers, Orszag wrote. Critical positions can be filled with a mix of public and private workers, but the latter can be used only after a federal agency has developed "sufficient internal capability to control its mission and operations." Essential jobs can be filled by either public or private employees.

Orszag acknowledged that one of the biggest challenges to developing a multisector workforce plan is learning exactly who an agency's contractors are and what they do. "In many cases, agencies lack the information that would allow managers to understand how contractor employees are deployed throughout their organization and integrated with federal employees," he wrote. "The full potential of our total workforce-both contracted and federal-often goes un-realized due to insufficient or ineffective management attention."

Tracking Contractors

Even determining how many federal contractors work on behalf of government is difficult-let alone profiling what they do, assessing their qualifications and finding out how much they are paid.

"Contractors do not supply, as a general rule, detailed information on their workforce," says New York University professor Paul C. Light, who has spent years researching federal contracting. "It's very difficult to get direct data and the contractors are very reluctant, and even loath, to give it."

Collecting such data has political implications, Light notes. Elected leaders generally don't want to publicize the fact that the government's overall workforce-civil service and contractor-is growing. That's true even if, as Light's studies have shown, most of that increase has been in the private sector.

Then there's the question of who exactly is a contractor. Of course, those who work full time under federal contracts, often side by side with government workers, should be counted. But what about a computer specialist who spends only about half his time on government work? Or the truck drivers and cooks that a food company might use to feed troops in Iraq and Afghanistan? Prime contractors generally have clear goals and functions, but at the subcontractor level, things get murkier.

"We've got subs of subs of subs," Light says.

In his latest study of what he calls the "true size of government," published in 2006, Light estimated that the actual federal workforce-including military personnel, civilian federal employees, postal workers and employees in the nonfederal sector working under contracts and grants-was 14.6 million people in 2005. More than half of them are contractors.

Industry representatives have disputed that figure, claiming it vastly overstates the size of government by including contract employees whose work is not governmental in nature. "Few people think of manufacturing computers or pencils, building office buildings, or integrating major weapons systems as the 'work of government,' " the Professional Services Council noted in a response to Light's study.

Light's estimate of the contractor workforce is based on a review of the economic impact of federal contracts. It's hard to get more direct figures because most contracts are oriented around services, not personnel. "Ordinarily, when you have a contract with a company, that contract is not with the individuals who are working on projects, but rather with the company that's providing some kind of specific outcome to meet a government need," Burman says.

As contracts evolve, the number of workers and the nature of what they do also could change, making an accurate head count even harder. "It's not simple," Burman says. "As people change, as hours change, that information isn't readily available."

Personnel Pilots

Still, federal officials say, contractors often keep detailed records about their employees and what they do on behalf of government.

"In some cases, they have more accurate and more current data than the government has [about] its employees," says David Drabkin, deputy associate administrator for acquisition policy at the General Services Administration. "The question is, how do we get it and protect it as well?"

Drabkin says that as GSA moves forward with its multisector workforce planning initiative, it would seek to get more information from contractors. "It's relevant now, and it's information that we can ask for," he says. "It's the only way that we can make the kind of analysis and decisions that the president has asked us to make."

For its OMB-mandated pilot program, GSA is studying its central contracting office, which has itself relied on contractors to support the very managers who make contracting decisions. "We picked our contracting office because it really is the place where these questions will be most fertile," Drabkin says.

GSA already knows how many contractors work on behalf of the office. So the central challenge isn't counting heads, but determining whether the work they do is inherently governmental.

The underlying message of Orszag's memo "is that the government has not considered as carefully as the president would like what our core functions are, and what internal capabilities or resources we need to perform those core functions," Drabkin says. The memo, he adds, "doesn't say, 'Bring everything back in-house.' It's quite well-written and quite well- reasoned in encouraging enterprises and agencies to consider, carefully and intellectually as well, what we should be doing internally versus what we should be paying people to do for us."

Sanders notes that one reason agencies are only now getting around to collecting personnel data about contractors-after they've become such an integral part of the government workforce-is that human resources officials just recently became involved in the process. Before, contract officers and acquisition managers ran the show-and their job was to focus on making sure contracts were properly structured, not drawing up long-term plans for personnel. Now human resources officials are trying to fill the void.

It's a big void to fill. "I can't tell you if this will be successful," Sanders says. "We think it's important for us to do."