Congress calls for clarity on decisions to insource

Defense authorization bill includes new requirements for OMB and agencies to determine whether work should be performed in-housed or contracted to small businesses.

U.S. Capitol at Night

Congress wants more clarity on how agencies decide whether to insource work being performed by a small business, according to the defense authorization conference report released Dec. 19.

The final version of the fiscal 2013 National Defense Authorization Act , which the House approved by a vote of 315-107 late on Dec. 20, would require the Office of Management and Budget to publish procedures and methods for agencies to use when deciding whether to insource a small-business contractor’s work. Officials would also have to share how they determined which contracts to consider for potential conversion.

Individual agencies would have to publish their procedures if they develop agency-specific approaches to identifying critical functions, which are defined as work that is “necessary to the agency being able to effectively perform and maintain control of its mission and operations.”

The Office of Federal Procurement Policy released a policy letter in 2011 telling agencies to decide case-by-case whether work should be performed by their own employees rather than contractors.

Overall, though, a recent survey of more than 40 senior federal officials found the insourcing vs. outsourcing debate has stabilized in the middle. In the past two years, 62 percent of respondents said the use of contractors in acquisition has remained relatively the same. Furthermore, 67 percent expect little change in the coming two years. Only 7 percent said their use of contractors has increased since 2010, and 8 percent foresee further increases. Some officials said the budget crunch has played a part in the stasis because they lack the money and clarity to make solid plans.

“With government [full-time equivalents], you are invested,” one survey respondent said. “With contractors, you have more flexibility to meet your needs and then let them go.”

The question of insourcing caused a ruckus in the acquisition community in 2010 and 2011 as agencies were encouraged to do more for themselves. Companies saw the shift as a loss of jobs, while others favored it as way to put the government back in control of its own operations.

In 2011, OFPP defined the jobs that only a federal employee can perform and the work closely associated with those jobs. But the survey found those definitions “only marginally useful in helping agencies making improved resource decisions.”

The Senate still must approve the conference report and then send the final defense bill to President Barack Obama to be signed into law.  A vote on the conference report is scheduled for 1 p.m. on  Dec. 21. 

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