Are you ready for a new era of outsourcing?
By
Nick Wakeman
The expectation is that with a Republican administration that the market will see more outsourcing. But some of the proposals in the Trump budget point to something beyond simple outsourcing.
In recent days I’ve gotten questions from a few different folks about whether I think we’ll see more private-public partnerships in the federal market.
The short answer is yes, but first I think we’ll have to weather the debate about what is inherently governmental. Agencies will be weighing keeping functions in house or whether they will be outsourced.
The whole insourcing-outsourcing debate has swung back and forth over the years. Generally, Democrats support more insourcing and Republicans favor more outsourcing.
We’ve had eight years of the Obama administration, a Democrat, and now we have Donald Trump, a Republican. The pendulum is swinging back to outsourcing.
But it might overly simplistic to think of it as simply outsourcing. The Trump administration plan for funding its $1 trillion infrastructure investment takes outsourcing to a new level. I’m not saying this is necessarily bad but any shift of this magnitude should not be taken lightly.
The Trump budget proposal has $200 billion over 10 years in incentives for private and public spending on infrastructure. Now a lot of this is roads, bridges and other structures. But IT will play an important role, particularly around the need for intelligent transportation systems and smart power grids.
A Washington Post analysis looks at Trump’s transportation budget and one thing that drew my attention was that the budget proposal takes aim at slow procurement processes. There is a belief that government practices are dragging down investments and progress on infrastructure projects.
One plan is to shorten the time of federal environmental reviews and permitting, surely to be controversial in some quarters. But there is a general feeling that the federal government is an unnecessary middleman.
And increased infrastructure spending has bipartisan support but it is how you get there that will dictate who supports it and who won’t.
One idea is to lease vacant space in Veterans Affairs facilities, but it is the selling off of assets that likely will raise the most eyebrows. The Post story contains several examples such as selling power facilities and airports.
The article cites examples of this in other countries such as Australia’s decision to lease its state-owned power grid for 99 years. What is intriguing about the Australia approach is that they used the money from the lease to pay for improvements to the Sydney subway system.
The Trump administration wants to encourage state and local governments here to take similar actions.
That is where I pause: Should the government sell assets? I’m not sure.
I know you can argue that the government auctions spectrum, so we are used to that. But to sell or lease assets such as real estate, and not just an unused and unneeded building somewhere, that’s different in my mind.
I’m not saying it is a bad idea or that we shouldn’t do it but we have to think through all the implications. There is a risk of unintended consequences.
But whether the government sells assets to pay for other modernization efforts, I think it is a safe bet to expect more public-private funding for projects and this should include IT projects.
Of course, first we’ll need to debate what is inherently governmental and in this atmosphere I’m sure the rhetoric will fly. But the right projects should find bipartisan support and the right companies with the scale, resources and skills might find some lucrative opportunities.
Stay tuned.