Breakout Session # 707 Professor Steven L. Schooner Daniel S. Greenspahn The George Washington University Law School Ap

2. Too Dependent on Contractors?W. Gregor Macfarlan Excellence in Contract ManagementResearch and Writing Program: Breakout Session #707 Professor Steven L. Schooner Daniel S. GreenspahnThe George Washington University Law School April 15, 2008 4:30 Session

3. Outsourcing: The Current Reality

4. DHS: A Portrait of Outsourcing

5. Tax Day: Competing Views Optimistic Pessimistic “I pay my tax bills more readily than others for… I get civilized society for it.” -Oliver Wendell Holmes vs.

6. Tax Day: Competing Critiques vs. Nations maximize wealth through free markets and limited taxes -Adam Smith The IRS has no legal authority to collect taxes -Wesley Snipes

7. Tax Reality: Where Your Money Goes • Adam Smith: a profit motive fosters innovation and efficiency better than a public service ethic • U.S. Spending: nearly 50% of the federal discretionary budget goes to government contracts

8. Outsourcing and Privatization: Bipartisan Trend “The era of big government is over.” “Too much government crowds out…the private economy.”

9. Federal Procurement Spending Since 2000 (in Billions)

10. Cumulative Growth in Federal Procurement Dramatically Outpaces Inflation

11. Outsourcing and Privatization: Growth Areas • Tax Collection • Health Care • Education • Welfare • Prisons • Info Technology • Disaster Relief • Police • Border Security • Port Security • Foreign Operations • Military Operations

14. Debate on Privatizing Our MilitaryGoes Mainstream

15. Battlefield Contracting:An “Unprecedented” Industry? • 180,000 contractors in Iraq • 1:1 ratio - contractors to troops • Multi-billion dollar industry • 25% of allied fatalities in 2007

16. 4,507 “Total” Fatalities:What About the 1,120 Contractors?

17. Big Picture:Procurement Pressure • Statutory Cuts: 1989-2000 workforce reductions • Post-9/11: huge procurement spending growth

18. Defense Acquisition Workforce and Procurement Trends

19. Hollow Procurement and Contract Management Shops • DHS has “no in-house ability to evaluate the solutions its contractors propose” • “In Iraq, contract management . . . was a ‘pick up game’ ”

20. Federal Procurement Dollars Awarded Through Limited-Competition Since 2000

21. Tying It Together • Taxes: tax evasion flourishes because of an under-funded enforcement agency • Procurement: purchasing regime is more prone to error, fraud, waste, and abuse with hollowed-out and under-funded agencies

22. Is the Government “Too Dependent” Upon Contractors? • That’s Irrelevant • Too many mandates, too few government employees • Pressure to suppress government headcount • Outsourced governance (and the blended workforce) is the reality, and here to stay…. • The better question, therefore, is: Can the Government responsibly manage its “outsourced workforce”?

23. Outsourcing Makes Sense • Maintain focus on mission - specialization • Surge capacity • Flexibility • Innovation, access to technical expertise • Continue to meet agency missions with inadequate personnel, abilities, and resources

24. Outsourcing is “Attractive”to Program Managers • No troop/personnel caps • Customer Service “ethic” • Civil Service frustration

26. Penny-Wise, Pound Foolish? • Marginal cost saving (in a vacuum) is not the only metric • Best value – Paying more for: • Higher quality goods/services • Quicker delivery/response time • Unlimited surge capacity • Flexibility – changing personnel, products, approaches

27. Outsourcing Has Limits • Inherently Government Functions • Right idea • Poor decision-making rubric • Blended Workforce evolved more quickly than: • Best management practices • Ethics rules (e.g., organizational conflicts) • Contractors Need to Be Managed

29. Gansler Commission: A Plea For Responsible Outsourcing? Contract management is the essential post-award contracting function to ensure mission accomplishment, and it is an important control over fraud, waste, and abuse;... With not enough ACOs, PCOs could do this - but they are too busy and therefore it is not being done

30. Investing in theAcquisition Workforce • Total Headcount • New Hires • Pending Losses • Training and Experience • New Hires • Existing Workforce

31. Acquisition WorkforceWorst-Case Scenario??? • Denial remains prevalent • Retirement bubble ready to burst (but, a recession may help) • Insufficient: • leadership for massive hiring/training initiative; • numbers of qualified individuals interested in working for the government (but, a recession may help); • time/resources for the existing workforce to gain sufficient training/experience

32. Salary performance incentives recruitment bonuses retention bonuses intern programs, workforce training sabbaticals (for higher education) Restoring the Acquisition Workforce?For the foreseeable future, Congress cannot spend “too much” on:

33. Gansler Commission: A Plea For Responsible Outsourcing? • Increase • Army military and civilian contracting personnel [1,400+, approximately] 25 percent of the total • DOD post-award contract management personnel (to fill DCMA billets for Army support) [nearly 600] • Extrapolate across Government [8,000-10,000?] • Army ~ 15-25 percent of federal procurement $ • Army historically better staffed than other agencies

34. Scope of the Challenge: Recruiting the Future Acquisition Workforce: • Back-of-the-napkin assumption: • 8,000-10,000 professional needed • An Analogy: US Department of Justice < 8,200 Attorneys, including: • General Legal Activities (all) • U.S. Attorneys (all 50 States) • Antitrust Division • Trustees

35. 1984 (CICA-FAR Era) Supply Formal Advertised/Sealed Bid Firm Fixed Price Government-specific specification Awarded by PCO Managed by DCAS (DCMC, DCMA) Today Services Employee augmentation Personal Services ID/IQ, Inter-agency vehicle Cost-Reimbursement, T&M Limited Competition Unclear responsibility for post-award contract management Current Acquisition WorkforceWrong Skill Set?

36. Current Acquisition WorkforceOpportunities, Attractions? • Civil Service (for better or for worse) • Career ladder out of secretarial pool • Long-term, stable, safe career • Fixed retirement program • Inadequate incentive structure • 1990’s – failed incentive initiative

37. Recruiting the FutureAcquisition Workforce • Gen X, Gen Y…. • “most praised generation” • Universities and Helicopter Parenting • Show me the money! • Civil Service Bureaucracy • Impenetrable, Slow, not user friendly • Job Mobility • 401(k), TSP (What, me worry?) • What is, why work in “procurement”?

38. Compare to private sector….

39. …. Business Acquisition Contracts & Pricing Manager responsible to provide contracting expertise to develop and negotiate creative business solutions …[P]osition … requires leading and managing … Create a culture of continuous improvement by communicating/deploying enterprise best practices and employee engagement. … Coach, mentor, manage, motivate and provide developmental opportunities … Seek and expand on original ideas, enhance others' ideas, and contribute own ideas. Understand the business issues related to the operation…

40. Acquisition Reform Chorus?“constant drumbeat claiming that federal agency [IG’s] are discouraging the acquisition workforce from performing their work in an optimum fashion.”Nash, Dateline, 21 N&CR (May 2007)

43. Can NCMA Play a Leadership Role?

44. Good Luck! • Questions? • Comments? • Suggestions? • Ideas?