PSC still worried about defense insourcing


Stan Soloway and Alan Chvotkin over at the Professional Services Council expressed their displeasure with Defense Department insourcing efforts in a May letter to Defense Secretary Robert Gates. Recent congressional attention to the issue hasn’t done much to assuage their concerns.

In a conference call with reporters this morning to discuss the Senate and House versions of the 2011 defense authorization bill, Soloway and Chvotkin said PSC supports an amendment by Rep. Jim Langevin that would prohibit DoD from setting quotas for its insourcing efforts.

However, two other amendments passed by the House seem to conflict with the Langevin amendment, Soloway said. One, proposed by Rep. John Sarbanes, would institutionalize a preference for insourcing; the other, from Rep. Tom Perriello, would forbid DoD from giving firms credit if their benefits costs are lower than the government’s, Soloway said.

Soloway complained that the amendments were passed “with little discussion or debate” and that acquisition issues are receiving insignificant attention from Congress during the defense budget process. The Senate still hasn’t passed its version of the authorization bill, so the final impact on defense acquisition remains to be seen.


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  1. A Sarbanes staffer sent me a quite lengthy response to PSC’s comments — here it is in its entirety:

    Nothing contained within the Sarbanes amendment is groundbreaking or controversial—identical requirements have been implemented by the Department of Defense, most of which were signed into law by President Bush. The Sarbanes amendment applies these rules to all non-Defense agencies.

    In very brief, the Sarbanes Amendment (attached) would require agencies to inventory their service contracts to determine which ones are poorly performed or include functions that are too important or sensitive to outsource. Currently, the federal government does not maintain any sort of a comprehensive catalog of what functions are currently being performed by contractors or how many contractors are currently being paid by taxpayers.

    Additionally, the Sarbanes amendment would ensure that work cannot be awarded to contractors without first conducting cost comparisons— some agencies still retain the authority to hire contractors to perform certain functions without any consideration of the cost to taxpayers. The Sarbanes amendment ends this practice, which was banned by the Department of Defense in 2009.

    There is nothing in the Sarbanes Amendment that requires agencies to fill new positions with federal employees. In fact, the Sarbanes amendment explicitly prohibits any quotas for federal hiring (see page 13, line 20 through page 14, line 2) and requires the Office of Management and Budget to report to Congress on new hiring policies.

    The Sarbanes amendment would task agencies with developing guidance so that they can at least consider bringing back in-house work performed under contracts that are poorly performed or include functions that should be reserved for federal employee performance. This is the section which the Professional Services Council contends will create some sort of a blanket “preference” for Federal Employee hiring. This claim is both misleading and largely disconnected from the text of the Sarbanes Amendment, which only requires agencies consider four specific categories of work—

    · Poorly performed work;

    · Work contracted out without competition (on the assumption that it costs more than it should);

    · Closely associated with inherently governmental work;

    · Work performed by federal employees within the last ten years (in response to longstanding concerns over the efficacy of the contracting rules employed by the last administration)

    To be clear, contractors performing these four categories of work will not automatically have their positions converted to federal employee performance. The Sarbanes Amendment asks agencies to evaluate whether performance by a Contractor is appropriate, at which point the Agency can elect to leave the contractor in place, eliminate the position entirely or convert the position to one filled by a federal employee—a far cry from a “preference” for federal employee hiring. This same model has been applied successfully by the Department of Defense, which has estimated that it will save $900 million in FY10 from these and other related reforms (Department of Defense, “Report to the Congressional Defense Committees on the Department of Defense’s FY2010 In-sourcing Initiative and Plans”, page 2).

    Congressman Sarbanes chose to introduce this amendment for four reasons—

    REASON #1—Restores good government policies in the procurement process. The Sarbanes amendment prohibits agencies from awarding contracts without competition.

    REASON #2—Saves taxpayer money. Procurement policies developed during the Bush Administration have resulted in contracts run wild. The amendment would correct these problems.

    REASON #3—Creates an inventory of contractors. Although we have detailed information on work performed by federal employees—how many there are, what work they do, and how much they cost, we have none of this information about contractors working for the government.

    REASON #4—Ensures contractors will not RUN government agencies. During the Bush Administration, critical government functions were tasked to contractors, undermining the public interest. The Sarbanes amendment would place a priority on eliminating this practice.

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