Intell chief denies charges of too many contractors

Reacting to a Washington Post series, the director of national intelligence said contractors are key but are not doing inherently governmental work.

The Office of the Director of National Intelligence has issued a rebuttal to a Washington Post report about the intelligence community’s seeming dependence on contractors to carry out its work.

In a story published today and headlined "National Security Inc.," Post reporters write that a two-year investigation concluded that contractors perform inherently government functions all the time and in every counterterrorism agency.

“What started as a temporary fix in response to the [2001] terrorist attacks has turned into a dependency that calls into question whether the federal workforce includes too many people obligated to shareholders rather than the public interest — and whether the government is still in control of its most sensitive activities,” according to the Post.

ODNI disputed that allegation in a fact sheet posted on its Web site.

“Core contract personnel may perform activities such as [data] collection and analysis; however, it is what you do with that analysis, who makes that decision, and who oversees the work that constitute the ‘inherently governmental’ functions,” ODNI said. “Allocating funds, prioritizing workload, and making critical decisions remain strictly within the purview of government employees.”

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When is a position inherently governmental?

Inherently governmental functions are jobs that only a federal employee can perform because they obligate the government to a certain course of action. For example, only a federal employee can sign a contract on the government’s behalf because it obligates the expenditure of tax money.

In its report, the Post estimates that 265,000, or 31 percent, of 854,000 people with top-secret clearances are contractors. ODNI said the number is lower than that estimate. Contractors, who support civilian and military staff members, make up 28 percent of the total workforce.

The Obama administration believes agencies across the government have awarded too much work to vendors, and that agencies have awarded contracts that weren’t in their best interest. Daniel Gordon, administrator of the Office of Federal Procurement Policy (OFPP) inside the Office of Management and Budget, told a Senate task force July 15 that one in every six dollars goes to the private sector.

Since 2009, administration officials have tried to reduce the number of contractors in federal agencies. Officials have pushed insourcing work — even jobs that are not inherently governmental — that was previously outsourced. The president in March 2009 set that course for procurement reform, which had been escalating in Congress over the years with bans on public-private competitions for federal work. For contracts, the administration has decreased slightly the number of new contracts with riskier aspects, such as sole-source and cost-plus-award-fee contracts.

Experts say the 2001 terrorist attacks threw the government into a reactionary mode, and it needed industry’s expertise to quickly ramp up its new efforts, such as combining numerous independent agencies to create the Homeland Security Department and beefing up its counterterrorism agencies and military. To do that, industry offered fast responses to the government's immediate pressing needs.

“The private sector has been extremely agile and flexible in responding to the government’s ever-changing needs post-9/11,” said Stan Soloway, former deputy undersecretary for acquisition reforms in the Defense Department and now president and CEO of the Professional Services Council.

“The private sector’s adaptability and responsiveness to the government’s determination of its needs has been and remains an essential component of our national security response,” he added.

The Washington Post reported that the number of contractors now exceeds the number of federal workers and that contractors cost more than federal workers.

However, USA Today in March reported that federal employees earn more than private-sector employees in eight out of 10 occupations. According to that article, overall, federal workers earned an average salary of $67,691 in 2008 for occupations that exist both in government and the private sector, citing Bureau of Labor Statistics data. The average pay for the same mix of jobs in the private sector was $60,046 in 2008, the most recent data available, according to USA Today.

"I always assumed that industry paid more, but that's not the case," said Robert Burton, former deputy administrator for OFPP. To find who would cost less for the government when considering commercial activities, he said, agencies should consider the cost and benefits of keeping it in-house or outsourcing it.

As the number of contractors has grown, management and oversight have become extremely important, experts say. 

The Project on Government Oversight’s executive director, Danielle Brian, blogged July 19 that the Post’s series would help Congress realize that the intelligence community needs more audits by the Government Accountability Office.

“This series provides further evidence that systemic oversight over the intelligence community is far overdue,” Brian wrote.

Soloway sees the issue of contractor and the intelligence community similarly.

“This is not a contractor issue; it’s a government management and organizational issue,” Soloway said. The key is ensuring the government has the appropriate internal management to oversee all of its work, he added.