Unions fire back at Gates for insourcing about-face

AFGE demands answers from Defense Secretary

The American Federation of Government Employees wants answers from Defense Secretary Robert Gates about how his plans to save the Pentagon money will affect insourcing efforts and federal employees.

Gates has reversed course from plans he had last year to eliminate as many as 33,000 service contractors in the next five years and boost the acquisition workforce by roughly 20,000 employees. However, union leaders believe Gates hasn’t given insourcing a chance to work before abandoning it.

John Gage, AFGE’s national president, said he will seek clarification from the Defense Department about its insourcing plans, the elimination of three DOD agencies and a hiring freeze on most jobs.

“Surely we should not give up on the promising but short-lived insourcing effort after just one year,” Gage said.

On the other hand, business groups are cheering Gates’ announcement and can’t wait for insourcing to end. The Business Coalition for Fair Competition sent a letter today to Jeffrey Zients, acting director of the Office of Management and Budget, about insourcing in light of Gates’ comments that it had failed to meet expectations.


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“BCFC respectfully urges OMB to issue a revision to the insourcing agenda calling for an immediate halt to all insourcing efforts throughout the federal government,” wrote John Palatiello, the coalition’s president.

Despite their strong disagreement, the union and the business coalition can agree on one topic: They both want to know whether federal employees or contractors are cheaper.

During the moratorium, the coalition recommends that federal officials develop objective metrics for determining whether it’s less expensive for the government to perform commercial activities. Similarly, union leaders said DOD hasn’t conducted a full inventory of its contractor workforce and integrated those results into the budget process. Because of that, officials are unable to determine the costs and savings from insourcing, union officials said.

They believe insourcing will save DOD more money than awarding new service support contracts. They also pointed out that DOD officials said they spent 39 percent of the department's total workforce budget on service support and advisory contractors in 2009, up from 26 percent in 2000.

On Aug. 9, Gates said insourcing didn’t save money as officials had expected. Nevertheless, he said he still wants to target contractors but is taking a different approach: He’s going to hit them in the pocketbook.

The secretary specified a roughly 30 percent reduction in funds for support contractors through 2013. He said the goal is to reduce the number of contractors that are performing functions that are inherently governmental, meaning they should only be done by government employees. Gates also made an immediate 10 percent cut in funding for advisory and assistance contractors at the defense intelligence agencies. He also put a freeze on the number of senior executive positions at those organizations.

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Reader comments

Mon, Feb 14, 2011 Hawaii

I have been a DOD GS civil servant for 30 years. They hired a private contractor to do the same work that I do for 124k per year. I do the same work for 60k per year. Soooo my question is, is every one having a hard time with simple math now? I'm in the wrong business. I feel like quitting and getting hired as a contractor.

Fri, Feb 4, 2011 Bull

Contactors = Usually more expensive in the short-term (burdened labor rates). Civ's = Usually more expensive in the long run (retirement, etc).

Tue, Sep 7, 2010 hansel

We are experiencing a hiring freeze and recently management got rid of one professional engineer and then hired a consulting firm. That firm hired 5 newpeople and have them working here on site full time. their 5 people are doing the work of that fired engineer. The Engineer was paid 65k/year and the consulting firms bills are close to 1 million a year. Explain how that is a cost savings. We hired another auditor to audit the consulting firms bills and they have recovered 450,000 in over charges but the contractor is still here. Something fishy here

Tue, Aug 24, 2010 NSPS Civilian D.C.

We were able to hire 13 federal employees for what we were paying for the 10 contractors. Not that we saved money, but slightly expanded the scope of the group's tasking for the same money and reduce the new employees stress levels.

Mon, Aug 23, 2010 Bob

Last week met with a small company owner who told me about his insourcing story. DOD insourced his work and hired his 10 employees and 3 additional new hires to do the work he did with 10 contractor employees. It is not just the total expense of a GS employee it is also the GS mindset to build an empire to get a promotion as the supervisor of such a large workforce versus the contractor mindset to do the work competitively and not lose the recompete.

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