Report: Think twice before in-sourcing government work

A report says the Obama administation should be careful before taking jobs from contractors and giving them to agencies

Editor's Note: The story was updated to reflect an attribution about President Barack Obama's depiction of contractors. The story was updated at noon on June 11. 

The Obama administration and Congress should proceed cautiously as they attempt to take work away from contractors and hand it to agencies' employees, according to a report released today.

“A rush to insource thousands of positions, while trying to take on ever more government programs, can end in disaster,” wrote Raj Sharma, president of the Federal Acquisition Innovation and Reform Institute, in a report titled "The Move to 'Insourcing'…Proceed with Caution."

Agencies should concentrate first on removing contractors from jobs already defined as inherently governmental and duties central to agencies’ missions, the report states. At the same time, officials need to consider insourcing other jobs in longer-term phases, he wrote, adding that the government can handle the shifting load much easier in stages rather than all at once.

“Rushing to undo what has been in the making for years — perhaps decades — will be counterproductive,” Sharma wrote.

Moreover, taking work from contractors must be done deliberately and based on facts, not innuendo and rhetoric, he wrote.


A reader responds:

In the Air force, the popular view seems to be that contractors are infallible and that our own, in-house people are in-competent.

What do you think? Scroll down to read more comments or post your own.


On several occasions, President Barack Obama has made remarks that he considers contractors have taken advantage of the government.

However, contractors are a major component of how the government operates, Sharma said, and they often perform work that requires specialized expertise.

“The current rhetoric that demonizes all contractors, instead of those few that are guilty of fraud and abuse, will only deter the best suppliers that we so badly need from competing for government business,” he wrote.

He added that an essential component of success for Obama’s plans for health care reform, energy independence and social innovation will be the technical expertise, innovation and scale that industry can bring.

Meanwhile, experts say experienced federal employees are attractive to private-sector companies, which often offer more to those employees than the government does. Also, a large number of government employees are nearing retirement, and agencies’ acquisition jobs are remaining vacant because few people are seeking those jobs.

Obama’s calls to join public service can only do so much to help find people to do the work, Sharma wrote. The government needs to reconsider its recruiting efforts, pay and professional development policies to make them competitive with the private sector before agencies dramatically insource jobs.

“While it may be feasible to hire thousands of people during the current economic downturn, it will be difficult to retain this talent unless systemic human-capital issues are addressed,” he wrote.

Sharma said officials should answer the following questions before bringing work in-house:

  • Which positions should be insourced?
  • How and when should they be insourced?
  • What will attract the people needed to do the jobs once they are brought in-house?
  • How will the government retain the employees who are doing the insourced jobs?

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Reader comments

Fri, Jan 7, 2011 Sandy Texas

I have been a government contract employee for 14 years with two different contractors. Due to government in-sourcing I will be displaced/unemployed in 2011. Because I have no preference points, I am "eligible but not referred to hiring official" to continue working at a job I have had since 1997. Executive Order datedJanuary 30, 2010 gives the right of first refusal to government service contract employees when a new contractor takes over an existing service contract to prevent disruption of service to government.So isn't it just as disruptive when gov contract employees are displaced and not rehired as civil service employees? To date, I have receieved several "notice of results" while applying for my job. We have reviewed your application and found you qualified for the position listed above. However, you were not among the most highly qualified candidates. Therefore, your name will not be be referred to the employing agency at this time. If we receive a request from the agency for additional candidates, or another agency requests a list of eligibles for a very similar positon within the next 90 days, your application will again be reviewed for possible referral. This refers to USAJOBS-1060-09 Photographer, a job I have held as a government service contract employee since 1997. What is the difference between displaced by gov contractors or government insourcing? Both equal unemployment for me in 2011.

Tue, Nov 23, 2010

I have just the opposite experience after 33 yrs of federal service. I am doing similar work. The fed government needs to hire junior people and surplus my job. The junior person will gain the mentorship that can be done by the more experienced so they can take over in a year or two.

Fri, Mar 19, 2010

I'm currently a contractor and my company charges $220 an hour for my services and pays me roughly $56 an hour. Given economies of scale it is probably more cost effective to insource my job. Right now, that is in the works.

Tue, Sep 8, 2009 Concerned

Due to in-sourcing I could very easily find myself out of a job at the end of the month. I am in Information Technology... The people who run this network have been here for over 15years. You can't just hire Joe-Schmo off the street and put him at a computer and tell him to run the network. Even the best will have to adapt when put into that place. If they keep us here and in-source us - fine, if they keep up as contractors - fine. The bigger picture that I don't think anyone is considereing (which is sad) is that this plan is going to put people out of work during a time when jobs are few and far between and the economy BLOWS. Why would anyone who wants to fix the economy and insure Americans keep their jobs push for something like this? I wonder if they have considered how much more money will be lost in paying unemployment? The idea of in-sourcing doesn't surprise me. Hell, about 6 years ago I lost my job due to the company out-sourcing to India... I'm a fan of balance... but can we not wait until we see a decrease in unemployment before we start jacking around with people's lives. I hate that the human race has gotten to the point that we just don't care about the little broke guy with the mortgage and the family anymore.

Sat, Jun 13, 2009

Can some one please tell me who Mr. Raj Sharma is working for? or who the Federal Acquisition Innovation and Reform Institute working for? It seems to me that this so call institute is a lobby firm for contractors, oh by the way what do one expected them to say in their so call report. As a Federal employee this is the right plan. The president should go forward with it. The employees of contracting know they will be better enough to work directly for the goverment rather than doing the same job for less and the so call owners (PIMPS) making millions. It is their millions which treaten not the individual employee. Lets all use common sense here, the idea of contractors is a way to confuse the American people. The more contractors in the federal payroll the better it is for the administration to claim - they have reduce the size of government. You see it in political ads "Our party reduce the size of government while the other party will increase the size of government" without mentioning the increase in size for contractor jobs.

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