When is it OK to contract out?

The definition of an inherently governmental function needs a re-examination because public employees and private-sector contractors are almost indistinguishable, U.S. Comptroller General David Walker told a Senate committee yesterday.

"We need to look at when and under what circumstances is it appropriate to be contracting and when is it not, because we are in a very different situation today, and we're likely to continue to have to rely on contractors ? to accomplish the government's mission," he told the Senate Homeland Security and Governmental Affairs Committee.

"A lot has happened since those definitions were determined," Walker said.

Public employees and contractors work side by side, so agency officials need to consider what type of duties they should contract out and which ones they should not, Walker said in his testimony.

Moreover, they need to spot the reasons prompting agencies to use contractors when the proper choice might be civil servants or military personnel. Walker listed possible factors including inadequate workforce structure, outdated hiring policies, classification and compensation approaches, and inadequate numbers of full-time equivalent slots.

Whatever the reason, agencies' dependence on contractors only compounds the risks associated with different types of contracts and contractors between agencies and poor management of those contracts, he said.

Marcia Madsen, chairwoman of the Services Acquisition Reform Act panel and a partner at the law firm Mayer Brown Rowe and Maw, said an agency should identify the core needs for its employees and overall organization in terms of its mission.

She said the definitions of an inherently governmental function under Office of Management and Budget Circular A-76 are a starting point, but it may be different for some agencies.

"The agency should think about that not just when it does outsourcing under A-76, but when it buys services," she said.

Matthew Weigelt writes for Federal Computer Week, an 1105 Government Information Group publication.