Analysis:

Federal Contracting System In Serious Disrepair

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By Max Stier
Special to the Washington Post
Wednesday, February 4, 2009; 4:35 PM

President Bill Clinton announced 13 years ago that the era of big government is over, and by one measure, that is true. The number of permanent full-time civil service employees today -- almost 1.9 million -- is about the same as it was in 1960.

But that's the wrong measure. You must count the people employed by the growing number of private government contractors, and when they are included, New York University Professor Paul Light estimates that at least 7.6 million additional workers are on the federal payroll.

The truth is no one knows exactly how many contract workers are employed by our government. We also don't seem to know what we want from government contracting, whether contractors are doing a good or a bad job or whether taxpayer money is being spent wisely.

The reason is we have no one in charge of assessing, managing or laying out a strategy for this vast private contracting enterprise which is estimated to cost upwards of $532 billion a year. The result has been frequent revelations of mismanagement, waste, fraud, and failure.

In short, the current federal contracting system is in serious disrepair, and has become a losing proposition for our government, for the American taxpayers, and even for the contractors who have to navigate through these dysfunctional waters.

President Obama must quickly take full ownership of this issue if he wants an effective government workforce that can help him achieve many of his ambitious goals. But he should avoid a knee-jerk reaction of arbitrary cutbacks in contracting or automatic increases in the size of the federal career civil service.

We need a multi-sector workforce to carry out the business of government. There is a legitimate role for employing the expertise of private business to serve the needs of the American people, and there is also an urgent need to bring talented professionals into the career federal workforce to fill mission-critical jobs. The hard part is finding the right balance.

The growth of the private contractor workforce began under President Reagan, took a great leap forward under President Clinton, and exploded under President Bush without consensus about what types of jobs should be kept in the government portfolio and what should be done by the private sector.

As a result, we have Internal Revenue Service tax collections being carried out by private contractors and losing money. By one account, 70 percent of the U.S. intelligence budget is spent on private contractors including the work of the top secret National Reconnaissance Office that analyzes satellite intelligence and imagery. The Centers for Disease Control and Prevention has contracted out one-third of its workforce, including jobs to handle issues like AIDS and food-borne outbreaks.

Even as troubling, contractors are increasingly monitoring other contractors.

The Government Accountability Office, for example, reported that half of the procurement specialists at an Army contracting agency were themselves contractors. Even the government's online database used to track contracts has been outsourced. When the General Services Administration did not have enough people to process cases of fraud or mismanagement by contractors, it turned to a private contracting firm which itself had come under investigation.

In an era when our government needs to do more with less, we need to use our resources wisely. That means we need resources in government to adequately manage and assess contracts and the contractor workforce. President Obama must:

  • Put someone in charge of government-wide workforce planning: The federal workforce is much more complicated than just the number of career federal employees, and we need someone planning for the entire workforce -- including contractors and grantees -- so that government functions rationally with the right talent to do the work.
  • Make sure we don't outsource our brains: Some tasks are either inherently governmental or it simply makes sense that they be done by career federal employees. Important decisions must be made on what types of knowledge, skills and tasks should remain inside our government and which jobs need outside expertise.
  • Devote adequate resources to manage contractors: That means having enough people with the right competencies inside government who can make smart procurement decisions, monitor contracts and the contractor workforce, and make sure we are getting the services we need and bang for the buck.
  • Look to achieve results, not make arbitrary changes: The solution to fixing the broken system is not wholesale contractor cutbacks to reach numerical targets, but making sure we know what contractors should be doing and a transparent way of determining whether we are getting true value. This requires a system of measuring the performance of major contracts and the operation of the procurement system as a whole.
  • Work with Congress to improve budgeting process: Supplemental appropriations often force agencies to default to contractors because they do not have or cannot rely on predictable funding to plan and hire for the long term.

Obama has promised to restore effective oversight of the government-contracting process and to reduce our nation's increasing dependence on private contractors in sensitive or inherently governmental functions. Our new president now has the opportunity to follow through on this pledge, and much of his agenda depends upon it.

Max Stier is president and chief executive officer of the non-partisan Partnership for Public Service


© 2009 The Washington Post Company

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