Intell chief denies charges of too many contractors

Agencies do not outsource critical work, ODNI says

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.


About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

Reader Comments

Mon, Jul 26, 2010

I agree with most of the posters: The take-home pay of contracted employees is NOT the total cost of the contract.

As for contractors being expendable, there are contractors here that have worked for a decade and more at the same job. They do the research and make the recommendations and since they have so much time and experience, their recommendations - which oddly enough always benefit their company instead of the government - are accepted and signed off on by the government employee who sees no need to do his/her own research. This should stop and contract administrators should be held accountable. Maybe then government contracts wouldn’t be such a cash cow for contractors and constantly-rising costs can be curbed. After all, a contract-employee is loyal to his/her company first, NOT to the agency they're stationed at so making money for that company is a focus for them.

As for contractors being necessary because government employees don't have the necessary knowledge and skill, well that’s because there’s been no reason to hire – or train - people with those skills when contractors are already there. It’s a self-perpetuating cycle and the modifications and cost-overruns continue to be a drain on the government’s finances…

Thu, Jul 22, 2010

To quote the article - "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." That sounds good doesn't it - FEDs make more therefore, hire a contractor and save money right? Except for the fact that the government isn't pay the private sector employee directly so the salary comparison is lopsided. The government is paying the company under contract and then the company is paying their employee. Do you for one minute think that the company is not making a profit from that employee? What about the employee's benefits that the company is providing him - those benefits are in excess of what the employees salary is. Do you think the company eats that cost? What of unemployment insurance - the company eats the cost of that too? There are many expenses that the company has to pay to support that employee that are not directly salary related. If the company makes as little as 20% profit over what they are paying their employee who happens to be a contractor working for the government, than what they would have to receive from the government for that employee would be a minimum of $72,555. That is more than what the FED makes in the same position and in general, what the government pays for the contractor is usually 200% or more than what the actual worker themselves are getting paid to do that job.

Thu, Jul 22, 2010

Basic rules of contracting from the commercial spheres point of view is - you hire a subcontractor when you A) you don't have the knowledge or the skill in house to do it yourself or B) you don't have the time, in the form of man-hours, to do it yourself. If you don't have the skill and you need that skill for a limited amount of time and for a unique or singular project, you hire a contractor. If you are going to be handling the same type of work for more than 6 months and/or there appears to be a lot of repeat business that obviously justifies a full time employees position, then you had better hire someone to do that job. Contractors are never hired to save money. They are hired to perform unique tasks, which are needed to generate profit or capital for the company that can OFFSET the inflated cost of the contractor's salary. If the contractor is competent to do the job, he is going to cost more as a contractor then if he becomes a Government employee. Why would the same person NOT be competent as a Government employee? People always talk about the Government employee as being incompetent where as the contractor is competent. Hire the contractor, and he is the exact same person so ... when he became a FED they take 1/2 of his brain out of his head?

Thu, Jul 22, 2010

REPLY TO : In my opinion, contractors should not be replacing properly recruited and trained government workers. Contractors are sometimes appropriate for short term needs and limited duration projects, not ongoing operations. - MY REPLY: Contractors are properly trained and recruited. The majority of contractors are former military or government workers that retired or realized that the private sector pays per performance & not for time in service.

Thu, Jul 22, 2010 roger dc

If you've ever been a contractor you know that the contract can end at any time, funding can be taken away, etc. Is there waste? Of course there is. But is it more efficient than a govvy who you own for life? Of course it is. Anyone who's actually ever been a contractor knows the kind of GS worker I'm talking about - they don't actually do anything except tell contractors what to do. Some are good at it, others not so much. BTW the Post article has to be one of the poorest examples of what passes for journalism that I've seen in a long time. They did not even attempt to put it in any historical context, to find any successes, etc. I quote now Ed Tufte (look him up - with apologies for my paraphrasing) "compared to what?" - the Post failed to provide any comparison that might put the story in perspective. Alas, writing to a 9th grade reading level does that.

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