Congress wants contractor cuts along with workforce caps

Senate and House members fear caps on federal employees without caps on contractors will push DOD to use more contractors.

Twenty-six senators told Defense Secretary Leon Panetta in a letter that they expect him to cap both spending on service contracts at the fiscal 2010 amount and size of the contractor workforce, if his department intends to put a cap on the civilian workforce’s size.

“If the department insists on capping the civilian workforce at fiscal 2010 levels, a similar cap must be applied to the service contractor workforce levels,” the senators, led by Sens. Sherrod Brown (D-Ohio) and Kirsten Gillibrand (D-N.Y.), wrote April 25.

The senators’ letter was preceded by a similar letter from 131 House members, making the same recommendations to Panetta.

The cap is a part of DOD’s “Efficiency Initiative,” a means of dealing with the department's tight budget.

Lawmakers acknowledged Panetta’s predicament. Yet, they told defense officials to follow the rules on outsourcing and management if the cap remains. Officials must make its decisions on what is best for the country, even if that means lifting the cap on how many civilian employees it has.

A main concern is that the department’s initiative would put the civilian workforce under a check, although contractors would not be under anything similar.

“We are concerned that while the size of the civilian workforce is proposed to be cut back to fiscal 2010 levels, no comparable constraints were imposed on workforce hired through contractors,” the senators wrote. “We are concerned that this would incentivize managers to use contracting firms rather than civilian employees even when the latter costs less.”

In a response letter sent to the senators April 30, Stan Soloway, president and CEO of the Professional Services Council, wrote that contractors have been dealing with cuts in services contract spending for several years now.

Since 2009, DOD spending on services dropped, as a percentage of total DoD outlays, nearly 10 percent. The Army, which by far spends the most in government on services, has reduced its spending by 15 percent. The Navy and Air Force have reduced spending close to fiscal 2008 amounts.

In 2009 DOD initiated a 10 percent reduction in advisory and administrative support services contracts over three years. Further, in 2011 the Office of Management and Budget directed all federal agencies to reduce spending on services by 15 percent in 15 categories over a 15-month period.

“In other words, contractors and their employees have not been, and are not now, immune from the budget pressures,” Soloway wrote. Cuts, like DOD has already made, result in lost private-sector jobs when the work is done or no longer funded. Even more, contractors face a tougher competitive market that will drive down wages and other contractor costs.

Nevertheless, the senators and House members told Panetta to end the civilian workforce constraint and to be sure to conduct the required comparisons of costs between federal employees and contractors before outsourcing work. As defense officials seek out those efficiencies, the lawmakers wrote they expect officials to look at their workforce holistically, not put caps on the civilian employees. Instead, they need to consider its military personnel, civilian employees and contractors as they hunt for spending reductions.

“It is imperative that the department and the services build upon and fully integrate the remarkable work done by our civilian personnel,” they wrote.

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