Inherently governmental guidance never made it off launchpad

Many believed the Obama administration would turn the government 180-degrees from the Bush administration's push for competitive sourcing under Circular A-76, w...

Many believed the Obama administration would turn the government 180-degrees from the Bush administration’s push for competitive outsourcing, with speculation of a major effort to bring jobs back into government through insourcing.

OFPP said the initiative was not about bringing jobs back into government, but finding the right balance between the contractor and federal employee workforces.

Then-OMB Director Peter Orszag issued a memo in July 2009 giving agencies initial guidance for managing contractors.

To help agencies better balance their workforce, the White House revamped the definition of what is considered an inherently governmental function, creating two new job function categories: closely associated and critical functions.

Why the inherently
governmental guidance was rated ineffective
Reason #1: OFPP issues detailed policy letter on inherently governmental

Reason #2: GAO report critical of DoD insourcing

Reason #3: Army puts brakes on insourcing

Reason #4: Defense Secretary Robert Gates says insourcing is not saving money

(More primary source material available on The Obama Impact Resource Page)

But after this initial thrust, little has come of the White House’s effort to better balance the size of the federal workforce and its contracted workers. Federal News Radio believes the efforts, so far, have been ineffective.

This rating is part of Federal News Radio’s special report, The Obama Impact: Evaluating the Last Four Years. Throughout the series, Federal News Radio examines 23 different ideas and initiatives instituted by the Obama Administration and ranks them as effective, ineffective and more progress needed.

As of October 2009, the Government Accountability Office found: “None of the nine civilian agencies we visited met the statutory date for developing and implementing their insourcing guidelines and procedures. Although one agency issued preliminary guidelines, and two others had drafted but not issued their guidelines as of our review, most of the agencies’ efforts are still in their early stages.”

Soon, the Defense Department realized that effort wasn’t saving the government money. And in February 2011, the Army put the brakes on insourcing, finding the service needed to more analysis.

The acquisition workforce has grown, but not by leaps and bounds. DoD insourced 17,000 positions, according to GAO, but few other agencies followed suit.

Defense Secretary Robert Gates thought he could save 40 percent by bringing work in-house. But almost two years later the secretary of the army put a moratorium on insourcing because it was not saving money, said procurement expert Jacob Pankowski, chair of the government contracts practice, at Greenberg Traurig.

He tells Federal News Radio that the Obama administration’s form to justify insourcing is actually a step backwards from an existing form that’s been in use for 40 years.

And the slight policy change could have negatively impacted many small businesses who provide services to the federal government. The government still needs the same work completed and would likely hire the contracted workers directly, leaving the business owner, who invested in those workers and trained them, struggling or even out of business, Pankowski said.

“A lot of these jobs that we’re talking about are really at the heart of growth of a small business community. I really don’t think we’re at the point now where we have the metrics where we can really say that this is saving any sort of money for the taxpayer,” he said.

Dave Childs, program manager at Management Analysis Incorporated told Federal News Radio that part of the problem with the revised definitions is that no metrics are in place to determine how many people are needed at each agency to provide critical functions. Nor is the government required to analyze whether insourcing is more cost-effective than outsourcing.

“The impact i think has been in the effort to do the balanced workforce kind of thing. And that is a function of whether or not you have a policy structure that allows you to take work that is already contracted, or new work that’s never been done before, bring it in house and done by federal employees instead of an analysis that requires you to look at performance, the cost and the oversight function,” Childs said. “Is this work, whether it is critical, national security related, highly technical, is it appropriate to bring it back for federal performance or is it more appropriate to leave it in the private sector?”

Childs said the definitions changed little although more guidance was provided. However the Obama implemented the language differently and that was contractors’ fear.

There was a perception that the definition of inherently governmental was contributing to the growth of contracting compared to the size of the federal government. OFPP was charged with determining why the government was doing so much contracting. OFPP took the idea of residual core, dubbed it critical function and created some opportunities to insource some critical core functions, Childs said.

Federal program managers like the option to outsource work because contracts give them more flexibility to increase their manpower, shrink it or close down a program all together as budgets increase and decrease over time, he said.

More from the special report, The Obama Impact: Evaluating the Last Four Years

Part 1: Evaluating the Obama administration’s management initiatives

Part 2: Evaluating Obama’s technology reforms

Part 3: Evaluating Obama’s workforce initiatives

Part 4: Evaluating Obama’s acquisition efforts

Part 5A: What would a second-term for President Obama mean for feds?

Part 5B: What would a Romney presidency mean for federal workers?

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