The Army goes astray

Businesses and agencies alike have embraced outsourcing in recent years as a way to save money while concentrating energies on their core responsibilities. Federal agencies in particular have accepted outsourcing as a way to stretch funding while refocusing on their primary missions.

In 1998, Congress gave a needed boost to outsourcing in the federal sector by passing the Federal Activities Inventory Reform (FAIR) Act. The law requires agencies to identify annually all of their activities not considered to be "inherently governmental functions."

Such functions are defined as "so intimately related to the public interest as to require performance by federal government employees." These FAIR Act inventories are supposed to be a baseline for identifying activities to be outsourced.

Also, as part of the fiscal 2000 Defense Authorization Act, Congress directed the Defense Department to provide a report by March 1, 2001, on the use of contractors to provide services for DOD. That act specifically directed DOD to use "information available from existing data and reporting systems" rather than initiate a new reporting system.

Despite this clear direction, DOD requested emergency approval in March 2000 from the Office of Management and Budget for a new data-collection effort. It required Army contractors to provide specific staffing information for their services contracts, including statistics on direct and indirect labor hours. The Army claimed this data was needed to implement the new congressional reporting requirement and to assist it in assessing its overall reliance on contractors.

Although no other DOD agency requested such permission, OMB approved the proposal, and the Army published an interim rule imposing the data-collection effort. Then last December, the Army issued a final rule, indefinitely extending the data-collection requirement.

It's hard to see how the Army's rule will help it comply with a DOD reporting deadline already passed. It is also hard to see why the Army needs its contractors to provide information that no other agency needs.

In fact, the data the Army is collecting will have little or no value. Under the existing policies, outsourcing decisions are made on an activity-by- activity basis. Moreover, the decision whether to outsource is determined strictly by comparing in-house vs. contractor performance. The Army's data can have no bearing on those decisions.

But that same information can be highly proprietary to the contractors from which it is collected. Specific staffing information is sensitive. Although the Army has promised to protect this data from public disclosure when associated with a contractor's name, this may not provide adequate safeguards. Other information, such as location of the work, may associate the data with a particular contractor.

Under the circumstances, the Army's data-collection effort poses more problems than advantages. The Army should repeal its new rule today. If the Army won't rescind the rule on its own, then DOD or OMB should ask it to do so.

Peckinpaugh is corporate counsel for DynCorp, Reston, Va. This column represents his personal views.