A shrinking defense budget has touched off a debate about whether contractors or civilian employees have paid a greater share of the sacrifice.

A group of 26 Democratic senators, led by Sens. Sherrod Brown of Ohio and Kirsten Gillibrand of New York, wrote last week to Defense Secretary Leon Panetta urging the Pentagon to lift an “arbitrary” cap on DoD’s civilian workforce.

“We understand that the defense budget must be adjusted to take into account new national security risks and budgetary realities,” Brown and Gillibrand wrote in the letter However, the group is concerned that while the size of the DoD’s civilian workforce has been restricted to fiscal-year 2010 levels, “no comparable constraints were imposed on workforce hired through contractors.”

Brown and Gillibrand said they were concerned the ceiling on civilian employees would lead DoD to rely more on contractors.

“When determining whether services should be performed by employees or contractors, DoD’s sourcing decisions should be made on the basis of the law, cost, policy and risk, and not because DoD managers simply have fewer civilian employee slots.”

Panetta’s predecessor Robert Gates instituted the civilian workforce cap as part of a series of efficiency initiatives at the department.

But the Professional Services Council, an industry group which represents many defense contractors, rebuts the charge that contractors haven’t also felt the effects of the current fiscal climate.

A ‘race to the bottom?’

In a letter to Brown and Gillibrand (along with the other lawmakers), PSC President and CEO Stan Soloway said the lawmakers’ suggestion that contractors haven’t shared in the sacrifice are “contrary to the facts and leads to misconceptions and potentially harmful policy initiatives.”

Soloway pointed to statistics that buttress the group’s argument: Since FY 2010, spending on services contracting across the government has declined by $20 billion and DoD’s contract spending on services, as a percentage of the department’s total outlays, fell by 10 percent.

PSC also noted the 2012 defense authorization bill called for capping at 2010 levels DoD spending on services contracts for the next two years.

The discussion risks turning into a “race to the bottom,” Alan Chvotkin, the executive vice president and counsel at Professional Services Council, told In Depth with Francis Rose.

“Our suggestion is not federal employees should be arbitrarily cut,” Chvotkin said. “In fact, we take the position in this letter as we have for the last 10 years that we oppose arbitrary constraints imposed on federal employees or contractors. (Reductions) ought to be done pursuant to a well thought-out human capital strategy and mission strategy.”

The Senate letter follows a similar one members of the House sent to Panetta in March.

In their letter, Senate Democrats also called for DoD to implement an inventory of service contracts to better identify and control costs and to bar the outsourcing of inherently governmental work.

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