DHS undergoes tough scrutiny

In the eyes of Heritage Foundation Senior
Fellow James Jay Carafano, one way to address
the balance between contractor versus inhouse
support at the Homeland Security
Department would be to develop guidelines as
part of the department's
upcoming quadrennial
review. However, when
Carafano looked recently to see who was conducting
the review, he found the initial work
had been outsourced.

"The quadrennial review is being done by
contractors? That's ironic," Carafano said.

Striking the right balance between contractor
and government employees has
been a longstanding challenge for
DHS since it was established to
improve domestic security in the
wake of the 2001 terrorist attacks.
Also, the contractor/employee
balance throughout the department
has not escaped the attention
of Congress. A recent Senate
report suggests the key to workforce
management at DHS is
dependent on achieving the right
mix of contractors and government
employees.

However, DHS doesn't intend to outsource
the entire review. The department plan is for
employee work teams to perform the review
with support from contractors.

QUEST FOR BALANCE

Experts seem divided on whether there is a
sweet spot that determines what the number
and proportion of contractors and employees
ought to be in a government agency, or
whether the concept is simplistic and
might lead to poor policy.

In the view of members of the
Senate Appropriations
Committee, establishing the
optimal balance at DHS has
been elusive. The department
now has 1,400 contractors
and 1,340 employees, a
balance that favors contractors,
the committee's June 23 report
states.

The committee requested department officials
to strategically determine a
more appropriate mix of contractors
and employees. But setting a
number or percentage brings
with it other thorny concerns.

"I don't know how you would
set up a metric," said W. Bruce
Shirk, special counsel in the government
contracts group at the
Sheppard Mullin Richter law
firm in Washington. "You don't
want it to be arbitrary."

"The number and proportion
of contractors is the wrong metric,"
said Alan Chvotkin, executive vice president
of the Professional Services Council, a
trade association for companies that sell to the
government. "Many times, the number of contractors
is less relevant. The issue is what is
the mission and what are the total resources
available."

SENSE OF URGENCY

The Senate committee wants to see progress
toward an appropriate balance soon. It also is
one of several lingering workforce challenges
at DHS that has received
substantial media coverage in
recent weeks. The critical
attention is raising contractors'
anxiety level at the same
time everyone is preparing
for the presidential transition.

"Contractors are in a difficult
position," Chvotkin said.
"The reports are piling on."

The fear is that Congress or DHS might
come down hard on contractors because of a
real or perceived urgency to address several
long-standing issues, especially those pertaining
to the acquisition workforce.

In recent weeks, lawmakers and auditors
reviewing DHS' workforce have addressed
issues including increasing DHS' acquisition
staffing; setting a proper balance between
contractors and government workers; prohibiting
contractors from carrying out inherently
governmental functions; using federal
regulations to address the potential for conflicts
of interest; and preparing for the presidential
transition. There also have been
reports on diversity in the workforce and discussion
on establishing a training fund for
procurement officials.

Karen Manos, co-partner in charge of
Gibson Dunn and Crutcher's Washington
office, said contractors are worried that
Congress might overreact in response to
recent examples of malfeasance such as those reported in a Government Accountability
Office report on the Defense Contract Audit
Agency.

"The worry is that Congress may apply draconian
restrictions to limit outsourcing,"
Manos said. The egregious examples should be
dealt with on a case-by-case basis, while avoiding
a knee-jerk reaction that affects a larger
group of contractors than intended, she added.

In its report on the fiscal 2009 DHS Appropriations Act, the committee echoes
widespread concerns about contractors being
too closely involved with inherently governmental
functions.

"Without stronger oversight, the risk of
government decisions being influenced by,
rather than independent from, contractor
judgments increases," the committee said.

A PROPER MIX

The department's new undersecretary for management,
Elaine Duke, who was confirmed in
June 2008, is working within the department
and with outside organizations to ensure that
contractors are not performing inherently governmental
functions and to establish a proper
mix of contractors and employees, said DHS
spokesman Larry Orluskie.

But lawmakers remain skeptical. They
noted in their report that although the department
has promised changes, of the 1,400 contractors
working in departmental management
offices, none will be converted to fulltime
employees in fiscal 2008 and only 35
conversions are planned in fiscal 2009.

The senators recommended $39 million for
the Office of the Chief Procurement Officer,
which is $11 million above current levels.
They allocated funds for hiring 66 additional
employees this year, but as of March, at least
one third of them had not been hired. The
panel wants DHS to take advantage of new
authorities in the proposed law to use a portion
of the money left over from fiscal 2008 to
hire additional workers next year.

Alice Lipowicz (alipowicz@1105govinfo.com) is a
staff writer at Washington Technology.