Breakout Session 707

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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 430 Session
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Outsourcing The Current Reality
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DHS A Portrait of Outsourcing
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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.
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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
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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

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Outsourcing and Privatization Bipartisan Trend
The era of big government is over. Too much
government crowds outthe private economy.
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Federal Procurement Spending Since 2000 (in
Billions)
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Cumulative Growth in Federal Procurement
Dramatically Outpaces Inflation
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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

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Debate on Privatizing Our MilitaryGoes Mainstream
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Battlefield ContractingAn Unprecedented
Industry?

• 180,000 contractors in Iraq
• 11 ratio - contractors to troops
• Multi-billion dollar industry
• 25 of allied fatalities in 2007

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4,507 Total FatalitiesWhat About the 1,120
Contractors?
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Big PictureProcurement Pressure

• Statutory Cuts 1989-2000 workforce reductions
• Post-9/11 huge procurement spending growth

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Defense Acquisition Workforce and Procurement
Trends
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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

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Federal Procurement Dollars Awarded Through
Limited-Competition Since 2000
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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

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Is the Government Too Dependent Upon
Contractors?

• Thats 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?

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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

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Outsourcing is Attractiveto Program Managers

• No troop/personnel caps
• Customer Service ethic
• Civil Service frustration

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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

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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

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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

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Investing in theAcquisition Workforce

• Total Headcount
• New Hires
• Pending Losses
• Training and Experience
• New Hires
• Existing Workforce

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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

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Restoring the Acquisition Workforce?For the
foreseeable future, Congress cannot spend too
much on

• intern programs,
• workforce training
• sabbaticals (for higher education)

• Salary
• performance incentives
• recruitment bonuses
• retention bonuses

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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

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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
• lt 8,200 Attorneys, including
• General Legal Activities (all)
• U.S. Attorneys (all 50 States)
• Antitrust Division
• Trustees

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Current Acquisition WorkforceWrong Skill Set?

• Today
• Services
• Employee augmentation
• Personal Services
• ID/IQ, Inter-agency vehicle
• Cost-Reimbursement, TM
• Limited Competition
• Unclear responsibility for post-award contract
  management

• 1984 (CICA-FAR Era)
• Supply
• Formal Advertised/Sealed Bid
• Firm Fixed Price
• Government-specific specification
• Awarded by PCO
• Managed by DCAS (DCMC, DCMA)

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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
• 1990s failed incentive initiative

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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?

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Compare to private sector.
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. Business Acquisition Contracts Pricing
Manager responsible to provide contracting
expertise to develop and negotiate creative
business solutions Position 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
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Acquisition Reform Chorus?constant drumbeat
claiming that federal agency IGs are
discouraging the acquisition workforce from
performing their work in an optimum
fashion.Nash, Dateline, 21 NCR (May 2007)
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Can NCMA Play a Leadership Role?
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Good Luck!

• Questions?
• Comments?
• Suggestions?
• Ideas?