Outsourcing: Friend or foe?

As the trend to outsource work to private contractors grows more popular in government, it is imperative that Congress keep in check the potential abuse of the process. A recently enacted bill that requires the Defense Department to report on its use of outsourcing is a good first step in this direction.

Outsourcing has its benefits. If work is contracted out and performed by the private sector at less cost to the taxpayer, it is a good deal. However, if outsourcing is used to mask the real size of government, the public is being misled, and the administration is taking credit for benefits that are not really there.

The Clinton administration boasts that the era of big government is over because the executive branch non-Postal Service civilian work force is the smallest it has been since the Kennedy administration. What it is not disclosing is that virtually all of the job cuts have been in the Defense Department, and much of that is attributable to the end of the Cold War.

In addition, DOD also has reduced staffing by contracting out many activities and functions that used to be performed by government workers. A shadow work force of contractors is performing this work.I doubt that Clinton or Gore has the chutzpah to try to take credit for that accomplishment, although you never can tell with this crowd.

Paul Light, a Brookings Institution scholar, estimates that 5.6 million jobs were created under federal contracts in 1996. In 1996, there were only 1.9 million federal employees. If these figures are accurate, we have the makings of a major scandal. How does the taxpayer benefit from shifting government work to the private sector?

In addition, because no one is maintaining data on what it costs agencies to continue having a function performed by contractor personnel, we do not know whether there are cost savings. Although government agencies go through a cost comparison exercise - required by the Office of Management and Budget's Circular A-76 - prior to contracting out work that is being performed by government employees, no one is tracking the cost for performing this work three, four and five years down the road.

For the life of me, I cannot understand why Congress or the General Accounting Office has not required government agencies that contract out functions to monitor and report on the ongoing costs for the performance of these jobs once they are outsourced.

The recently enacted DOD authorization bill underscores the importance of keeping tabs on the costs and benefits of contracting out federal jobs to the private sector over the long-term. Section 343 of the law requires the Pentagon to report to Congress by March 1, 2001, on the number of work year equivalents performed by contractors providing services to DOD. The Pentagon also must provide detailed information on the nature of the services being provided and which DOD components are receiving the services. Section 343 is expected to help Congress obtain a more accurate picture of DOD's total work force and what's really going on. Stay tuned.

Another increasingly common phenomenon that the authorization bill addresses is the practice of waiving the cost comparison exercises called for by A-76. This circular has loopholes so wide you can drive a truck through them, and the Pentagon has been taking advantage of these loopholes big time. Many of the Pentagon brass hope to obtain lucrative jobs with contractors once they have put in their 20 years and pass through the revolving doors into the private sector.

With OMB and Congress turning a blind eye to this practice, it is placing many federal jobs in jeopardy. However, Section 342 of the bill aims to change this. It requires DOD to notify Congress within 10 days of a decision to waive the cost comparison requirements of A-76 when converting public functions to contractor performance. The report must identify the number of civilian jobs affected; the competitive process used to make the decision on who should perform the work; and the anticipated savings from the waiver and subsequent conversion to private-sector performance. DOD says that it will save $11 billion over the next five years by allowing the private sector to compete for 229,000 federal positions.Section 342 should help Congress keep tabs on instances where DOD may seek to convert public functions to private-sector performance without the benefit of public/private competition.

The provisions in this bill are essential first steps toward putting the breaks on a runaway process. Let's hope it works.

--Bureaucratus is a retired federal employee who contributes regularly to Federal Computer Week.

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