The reinvention of insourcing

It’s not easy to talk about reducing the government’s reliance on support contractors when plans are afloat to freeze federal pay and perhaps even shrink the federal workforce.

That’s not to say the Obama administration is giving up on its insourcing strategy. By all accounts, officials remain committed to bringing work back into agencies and keeping contractors on a shorter leash. But their vision of a sweeping insourcing program might need to be adjusted.

Lou Crenshaw, a principal at Grant Thornton, said agencies will need to trust contractors as they blend the workforce and define the appropriate roles for contractors and federal employees.

“The word ‘insourcing’ will dry up and be replaced with ‘multisector workforce,’ ” said Crenshaw, who retired from the Navy as a vice admiral.

Sound familiar? The idea of a blended or multisector workforce has been around for a while, but it fell out of vogue during insourcing's heyday. Now the concept might prove useful again as agencies start to take a more strategic approach to their staffing plans.

"Strategic" is the operative term, Crenshaw said. In the past two years, many federal managers made staffing decisions based on what they thought the front-office executives wanted. Managers complied with the insourcing initiative but forgot its main intent of finding the right person for the job.

Congress muddied the waters by loading appropriations bills with provisions that rolled back the George W. Bush administration’s competitive sourcing strategy. And when the Obama administration began talking up insourcing, it was widely perceived as a mandate.

Now circumstances are likely to force agencies to strike a better balance.

One wild card is the proposed pay freeze. In theory, it could chill the interest of would-be new hires, although that depends on the state of the private sector, where job security is generally slim and raises are not guaranteed.

Joan Golden, a consultant at Topside Consulting who previously served as human resources manager at the Agriculture Department, said a freeze on pay raises could lead to other freezes in hiring or even promotions, which would further reduce candidates' interest in insourced jobs.

The other wild card is the recent deficit-slashing proposal by the National Commission on Fiscal Responsibility and Reform, which recommends cutting the government workforce by 10 percent — or by 200,000 employees — and hiring only two new employees for every three who leave their jobs.

But even if neither proposal comes to pass, the Obama administration could find insourcing more difficult in 2011. The initial wave has already swept up the obvious candidates, and in the coming year, it will be more difficult to find targets — or feds with the appropriate skills to take on the work, said Larry Allen, former president of the Coalition for Government Procurement and now president and CEO of Allen Federal Business Partners, a consulting firm.

All those reasons mean agencies need to develop strategic plans for building the multisector workforce, Crenshaw said. “This is not just about whacking contractors,” he added. “It’s about common sense and a business case analysis.”

Nevertheless, Robert Burton, former deputy administrator at the Office of Federal Procurement Policy and now a partner at Venable law firm, said no one should write off insourcing yet.

Officials are still thinking in terms of insourcing, not balancing the workforce, Burton said. They even plan to add insourcing provisions to federal regulations in the coming year.

Whatever else is going on, “it is not very likely that insourcing will take a back seat,” he said.

Read more of 6 ideas with some 2011 bounce or return to the 2011 Federal List.

Reader comments

Tue, Dec 14, 2010 Jerry

These comments are well thought out, thank you all for not making this a zero sum game of contract workers vice government workers. Personally, I am equating the multisector worker concept with the military's total force concept. In both situations the goal is to take advantages of the labor pool's skill regardless of employment category. Thank you Mr. Weigelt for pointing out what should have been foremost in all of thoughts: the mission is to provide service to the citizens regardless of our employer.

Tue, Dec 14, 2010 RG MD

The notion that the contract employeee is paid more than his/her federal counterpart is great for keeping alive wedge issues. Typically this is not the case though. The cost per individual may well be higher, but this is a function of wealth transfer to the private sector contracting firms, not the employees. We have the left's social engineering small business, etc and the right's payoffs to their big business benefactors.

Tue, Dec 14, 2010 Mike

Good point! Let's increase 'insourcing' and make those with a 'pay freeze' take on more projects and overall work. Great idea. Pump-up the morale! While we're at it, let's terminate all awards/recognition/banquets/conferences/ceremonies, etc. Did I tap-in to anything here? Do more with less?

Mon, Dec 13, 2010 MJ Virginia

In a multisector workforce contractors are paid more than their federal counterparts. So, actually, the government is paying more for the service. The budget dollars are redistributed to the contractor at the expense of the government employee. The private sector proponents generally argue that government benefits are rich and thereby cost savings is incurred by outsourcing. However, overall cost containment is generally not achieved. And, in this economy, benefits are being reduced.

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