Managing a blended workforce

Views differ on what the government can do to handle its outsourcing challenges

Use contractors as mentors

When a lack of skills inside the government forces an agency to outsource a strategic activity, such as a modernization program, the best way to manage the program might be to create a government/contractor management team.

“If you don’t have a skilled person to manage something, don’t give up that easily by outsourcing the whole thing,” said Robert Otto, former chief information officer and chief technology officer at the U.S. Postal Service. Otto is now executive vice president of advisory services at Agilex Technologies.

USPS faced that skills gap when it began a program to modernize its human resources operations using SAP human resources software. The blended team that USPS created to manage the project consisted of SAP and USPS employees in roles as co-program managers and software configuration experts.

“On Day One, our postal configurers and program managers knew zip about SAP and were of little value other than they knew the Postal Service,” Otto said.

However, the agency’s contract with SAP stipulated that the company would transfer its program management and software configuration knowledge to USPS employees by the end of the contract.

Agencies should withhold final payment if they aren’t satisfied that the company has transferred its knowledge and skills to agency employees, Otto said.

“You pay the vendors up to about 75 percent of whatever you’re going to pay them, and you hold that last 25 percent for the documentation, training and knowledge transfer,” he said. “And if you don’t get that, you don’t pay them the last 25 percent.”

— Florence Olsen

A recent Government Accountability Office report focused on the extent to which the Army and other federal agencies might have gone too far in augmenting the civil service workforce with contractors. This phenomenon, often referred to as a blended workforce, has become controversial as lawmakers, agency leaders and government auditors debate whether the government has grown overly dependent on a contractor workforce.

In interviews, several contracting experts pointed to inadequate contract administration and management of outsourcing as the primary problem that needs fixing.

“Contracting has certainly grown, but the mechanism to monitor and evaluate what the contractors are doing hasn’t grown,” said Joseph Petrillo, an attorney at Washington law firm Petrillo and Powell.  

Petrillo said a solution would be for the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council to provide more regulation and guidance on how to administer and manage federal contracts for services.

“There’s the issue of how do you advertise for those contracts,” Petrillo said. “How do you compete them? How do you evaluate proposals? How do you manage them? How do you monitor performance when you use performance-based contracting? We need more recognition of these contracts in rules and guidance, and we need more people, more bodies to do it.”

A shortage of people in government who can properly administer and manage services contracts developed over many years because agencies didn’t invest in workforce development and modernization to the same extent as other sectors, said Stan Soloway, president and chief executive officer of the Professional Services Council.

In cases where the government has not developed career federal employees with sufficient expertise to manage services contracts, it makes sense for agencies to hire midcareer people from outside government who have those skills, said Steve Kelman, professor of public management at Harvard University’s Kennedy School of Government and former administrator of the Office of Federal Procurement Policy.

In making decisions about outsourcing, agency leaders should worry less about who is doing the work and more about accomplishing the agency’s mission, said Anne Thomson Reed, president and chief executive officer of Acquisition Solutions and a former chief information officer at the Agriculture Department. However, there is a clear line between work that should and should not be outsourced, she said.  

As an example, Reed’s colleague, Timothy Long, chief development officer at Acquisition Solutions, said contractors can help government serve the public interest. However, he added, “the definition of the public interest has to lie with government employees.” 

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