Debate over contractors continues

Lawmakers foresee no easy solutions to concerns about acquisition outsourcing

GAO offers advice

The Government Accountability Office audited the Army Contracting Agency’s Contracting Center of Excellence and found that the center relied on contractors to handle a large amount of acquisition work.
GAO offered several recommendations:

  • Issue guidance to acquisition officials clarifying the appropriate mix of contractors and government contract specialists and develop a strategy for achieving the appropriate balance.

  • Establish formal oversight procedures requiring contractors to identify themselves as such during telephone calls and e-mail exchanges.

  • Train more in-house contract specialists.

— Matthew Weigelt

When the Army’s purchasing workload swelled five years ago, the agency turned to contractors for help. But even now, the service still needs contractor employees to handle its acquisition workload.

In 2003, the acquisition staff at the Army Contracting Agency’s Contracting Center of Excellence was too small to meet growing purchasing demands, and it lacked experience to handle increasingly complex procurements. The contractors were a stopgap measure to help Army employees.

But by August 2007, contractors still accounted for 42 percent of the center’s contract specialists, according to a March 26 report by the Government Accountability Office.

Like the Army, other federal agencies have augmented their employee rosters with contractors. Many agencies have become accustomed to operating with blended workforces, and there are few signs the situation will change anytime soon, federal acquisition officials say.

Meanwhile, lawmakers and other policy experts continue to raise questions and hold hearings about the appropriate role of contractors in the federal acquisition workforce: How many contractors is too many? What duties should contractors be allowed to perform?

“The balance between government employees and contractors is not — and shouldn’t be — defined by a ratio,” said Rep. Solomon Ortiz (D-Texas), chairman of the Armed Services Committee’s Readiness Subcommittee . “Rather, it’s the work performed that defines the balance.”

Ortiz, who held a March 11 hearing on inherently governmental work, said Defense Department officials can outsource work that isn’t deemed inherently governmental. However, identifying functions that meet that test constitutes only one step in deciding whether to hire contractors, he said, adding that Congress should intervene.

“With [DOD]and the military facing new challenges and responsibilities, Congress should redefine what is considered inherently governmental,” Ortiz said.

The Federal Acquisition Regulation lists inherently governmental duties that only federal employees can perform, such as approving contractual documents, awarding contracts and determining whether contract costs are reasonable.

GAO found contractors  had created many of the center’s contracting documents. Among other things, they had prepared contract modifications, requested legal reviews and written memos about award decisions.

 Contractors had requested  and received on behalf of the government documents such as proposals, technical evaluations and past-performance questionnaires from vendors and other DOD entities. They also had assisted with preparing statements of work, GAO said. Contractors and officials at the center told GAO that federal employees made the final decisions on contracts and in contract negotiations. The contractors only provided support.

Shay Assad, director of defense procurement, acquisition policy and strategic sourcing at DOD, said contractors working in procurement and contracting offices “should be confined to administrative-
support areas whenever possible.” He added that DOD must carefully oversee the work of contractors, especially those who have been authorized to determine acquisition strategies, select contract awardees, and negotiate cost and price.

Since 2004, DOD has moved away from non-DOD contracts and, through the contracting center, has been awarding its contracts through full-and-open competition.

Officials at the center told GAO they had to assign much of the workload to a limited number of more experienced employees, creating a situation in which Army officials believed they had no choice but to hire contractors to help with other tasks.

Between fiscal 2005 and 2007, GAO found, contractors handled about 30 percent of the contracting workload, including contract modifications.

In a March 2 4 letter to GAO, Assad said DOD intends to wean the Army from contractors working as contract specialists. The department expects to recruit aggressively to increase the number of government employees handling DOD acquisitions, he said.

Assad said DOD anticipates more reductions in contractors at the center during the next two years. As of Feb. 26, DOD had reduced the number of contractors at the center from 31 to 17, he said.

Assad said the outsourcing of acquisition functions is a matter of grave concern and he would meet with procurement executives in the Army “in an effort to accelerate the transition of contractors out of the contract specialist role.”

If the Army cannot eliminate the role of contractors acting as contract specialists by September, Assad said, he would urge the service to transfer the workload to other DOD contracting organizations or other federal agencies.

However, other policy officials are convinced that reliance on contractors will continue. “The blended workforce is here to stay,” said Robert Burton, deputy administrator at the Office of Federal Procurement Policy.

Burton said the next administration must attempt to draw clear lines of demarcation to determine who can do what and how public and private employees work together. The issues are so broad and the boundaries so unclear that questions surrounding the blended workforce will continue for years, he said.

Answering those questions will be among `the toughest acquisition challenges awaiting the next administration, he added. 

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.


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