The defense budget draw down of the late 1980s offers important lessons of what to do and not do with today's budget crisis.
In recent months there has been no shortage of comparisons between the budget reductions of the 1980s and 1990s and the likely impacts of the current draw-down. While some of the comparisons are instructive, there also are important lessons that can be drawn from the previous declines that could be tools to drive new thinking and help avoid the mistakes of the past. Unfortunately, in some very key areas there is little evidence that those lessons are being widely heeded.
Specifically, during the last significant budget battle in the 1990s, the Defense Department, in the aftermath of the Cold War, reduced its total physical and personnel infrastructure by about one-third. In fact, according to the Government Accountability Office, 98 percent of all federal workforce reductions during the 1990s took place at DOD. Further, those reductions were taken on an almost linear basis—almost all functional areas were affected at a similar rate, including acquisition.
At the time, one key part of my portfolio at DOD was the acquisition workforce, which at DOD includes not just contracting but also program management, systems engineering, and a range of other high-end skills. We fought long and hard to prevent the Congress from imposing massive, arbitrary, across-the-board acquisition workforce reductions. Yet, even as we fought against immediate cataclysmic cuts, we nonetheless drove sizable reductions in that workforce on our own.
In so doing, we failed to fully account for the already evident and growing demographic imbalance in the workforce and for the fact that, despite the budget reductions, the department's acquisition and technical needs were growing due to the technology revolution and DOD's evolving mission requirements. As a result, more than a decade later, DOD finds itself facing greater workforce challenges than should be the case, as evidenced by the corrective action plan in former Defense Secretary Robert Gates' 2009 workforce initiative. And within the civilian agencies, where attention to the acquisition (and broad technology) workforce is a more recent phenomenon, the problems are equally, if not more, acute.
Therein lies a critical lesson that we can learn from, but don't appear ready to do so. The president's budget request includes significant increases in positions and funding for the Defense Contract Audit Agency, Defense Contract Management Agency, and the Wage and Hour Division of the Labor Department (which enforces the Service Contract and Davis Bacon acts, among other things).
While these increases may well be needed, it is notable that these are all post-award, oversight organizations. Beyond significant but still limited funding to continue the defense acquisition workforce development fund, the budget has little in the way of meaningful proposals to increase other, critical operational and business skills in civilian agency acquisition and the broader technology fields so essential to the government's ability to innovate and drive higher performance.
Although we haven't yet seen the Republican budget proposal, it is unlikely that it will place more emphasis on developing critical skills in the federal workforce and may well go in the other direction.
But, even more importantly, there are no serious proposals on the table today to address the challenges current federal personnel rules and policies create for the government when it is competing for talent. It remains incredibly difficult within government to selectively hire, train, compensate, develop and manage personnel with especially necessary skills. Such strategies are commonplace in the private sector and play a key role in the ability of firms to compete for critical talent. The importance of these strategies – as well as the mandate for new thinking – only compounds during times of constrained resources.
One might ask why an industry executive is raising this issue. The answer is simple: As is true in any other market, the ability of government contractors to do what they do best – optimize efficiency and drive innovation – is tied in large part to the nature and quality of their partners on the other side of the table. The objective is not to supplant contractors; rather it is in the best interest of both government and industry to have a well-resourced, well-supported and well- trained partner workforce. In the end, we rise and fall together.
The Office of Personnel Management reported last year that the government retirement rate rose by nearly 30 percent in 2011 over 2010. Other OPM data continues to show that the government has about four times as many employees over 50 as it does under 30, and that the percentage of federal employees who are deemed to be "technical" has not grown in more than a decade, even as those percentages in the private sector have skyrocketed.
In short, there is a huge federal workforce problem staring us in the face that demands prompt, comprehensive and sustainable action. The lessons of history clearly illustrate what will happen if we don't learn from them.
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