Clarity is key to avoiding icy government-industry relationship

So many changes in procurement rules leave the government/industry relationship on a shaky footing

At a recent breakfast gathering, a group of industry executives listened closely to a speech by the Obama administration’s new procurement policy chief. They know his words can help them find their bearings in this administration. They also know he can just as easily turn their lives as government contractors into toil and trouble.

For those nervous execs, getting the attention of Daniel Gordon, administrator of the Office of Federal Procurement Policy, is as important as hearing from him. Many industry experts say the Obama administration is creating an almost adversarial relationship with government contractors by pursuing various policies and practices without regard to how they might play in the real world. These execs came, hoping to hear Gordon say that’s not necessarily so.


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In his speech, Gordon said he’s working to "rebalance" the relationship between government and industry. Rebalancing essentially means insourcing government work that had been largely outsourced during the George W. Bush regime. Right now, the relationship is lopsided, Gordon said, with the public sector seemingly handcuffed to the private sector.

“I can guarantee you there will be change,” he said.

Gordon's viewpoint, aligned with the president’s, adds more turbulence to the major procurement transformations of the past year, which included an emphasis on insourcing federal work. Gordon wants to shove contractors further away from the inner workings of government contracting decisions, which is not necessarily a bad thing but poses some tough business and ethical questions.

“There are too many anecdotes that suggest work that is really inherently governmental — work that needs to be reserved for federal employees — is, in fact, being done by contractors,” Gordon said. There’s no “evil intent.” Instead it might be a sign of the oppressive times, he said.

But if the rules are going to change, contractors want clear lines — as Gordon said he also does — so they won’t cross into forbidden territory without even knowing it. “We’d welcome bright lines,” said Arnold Punaro, executive vice president at Science Applications International Corp.

Both government and industry need clear lines to define inherently governmental functions. For more than a year, the OFPP staff has tried to demarcate what is and what is not a job that only a federal employee can do. They published draft guidelines in the Federal Register March 31 to clarify the definition of inherently governmental functions, or jobs that government workers should perform instead of private contractors. They based the single, governmentwide definition on the Federal Activities Inventory Reform Act, which defines such functions as intimately related to an agency's operations. The guidelines should be finalized by the fall after various stakeholders comment on them.

Gordon has said a policy letter on the issue — the fourth of its kind related to inherently governmental duties — is coming soon. The letter also will try to address what are known as critical, or core, functions. Those jobs aren't work that only a federal employee can do but are as close as you can get. Officials want to make sure agency employees can do the work so they won't depend as much on the private sector.

However, experts say government and industry can’t move too far away from each other or build a Berlin wall between them.

Henry “Trey” Obering, retired Air Force lieutenant general and now senior vice president at Booz Allen Hamilton, said the barriers won’t help government managers or contractors. Contractors who were once eager to do more work than required won’t be so willing to work overtime or postpone a vacation to help an agency if the government/industry relationship becomes icy.

Obering said managers who meet regularly with contractors get good insight into what’s happening and can share their expectations. Often, “it’s what you didn’t see that hurts you,” he said.

The Air Force recently settled a court case in which it didn’t follow insourcing guidelines. It didn’t notify a small business about its insourcing considerations, and it didn’t do a fair job analyzing its comparable costs to the contractor’s.

“This case demonstrates that although the Obama administration may be seeking to insource much of the services the federal government currently fulfills through private contractors, it will not be allowed to do so in a carte blanche manner,” Venable law firm states in a newsletter article to clients.

As Gordon and government officials consider rebalancing through insourcing, contractors want the government to be forthright and explain what’s happening. As it stands, the battle lines are being drawn between the government’s steps to insource and contractors' desires to save their livelihood.

Industry and government would do best to draw lines for clarity, not for battle.

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