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Defense contractors are performing fundamental government functions that should be confined exclusively to federal employees, the Pentagon's top procurement policy official testified on Tuesday.

Roughly 5 percent of the Defense Department's acquisition workforce consists of contractors, a number of whom provide administrative support, Shay Assad, director of Defense procurement and acquisition policy told the House Armed Service Subcommittee on Readiness.

On occasion, he said, these contractors appear to be performing "inherently governmental" tasks such as helping to determine an acquisition approach and business strategy, selecting who will perform the work, and negotiating the cost and terms of a contract.

"I can assure you that I am working to change those instances where I believe contractors are performing functions that should be inherently governmental," Assad said. "It is essential that we in the government fully recognize that contracting personnel are entrusted with important responsibilities and must be accountable to the taxpayer. We should not outsource that responsibility."

Inherently governmental functions are those tasks so intimately related to the public interest that federal employees must perform them. The Federal Acquisition Regulation, as well as the 1998 Federal Activities Inventory Reform Act, spells out a number of jobs that are prohibited from outsourcing, including administering contracts and determining which services or supplies the government should buy.

Jack Bell, deputy undersecretary of Defense for logistics and materiel readiness, said the agency follows these regulations, noting that its use of contractors "is entirely consistent with existing U.S. governmental policy on inherently governmental functions."

Nonetheless, some contracting officials might be interpreting inherently governmental policies in different ways.

Assad said he has found several instances in which Defense contractors might have performed tasks during the pre-award contract decision-making process that should have been kept in-house. "While not pervasive within the department, there are occasions when contractor personnel are performing contracting roles," he said.

Several panelists testified that the problems originated in the 1980s as the Pentagon attempted to cash in on the post-Cold War "peace dividend" by reducing the size of its military and civilian forces. The drawdown of the agency's contracting staff subsequently led to a less experienced workforce that was forced to manage increasingly complex contracts, particularly in recent years during the global war on terrorism. Lacking these core capabilities, the agency turned to the private sector.

But, such a reliance on contractors for core government functions can put taxpayers at risk, according to David M. Walker, the outgoing comptroller general. Walker was making his final congressional appearance before starting Thursday as president and chief executive officer of the Peter G. Peterson Foundation, a new organization focused on solving the nation's economic challenges.

"The closer contractor services come to supporting inherently governmental functions, the greater the risk of their influencing the government's control over and accountability for decisions that may be based, in part, on contractor work," Walker said in a report that accompanied his testimony. "This may result in decisions that are not in the best interest of the government, and may increase vulnerability to waste, fraud and abuse."

Subcommittee Chairman Rep. Solomon Ortiz, D-Texas, said these problems could be exacerbated when agencies rely on lead systems integrators to manage complex multibillion-dollar programs such as the Defense's Future Combat Systems.

"Just because work is called 'commercial,' does that mean only the private sector can or should do it?" Ortiz asked. "The flip side to that concern is this: If the needs of the warfighter are being taken care of, should we really care who is performing the work?"

Walker suggested, as he has in the past, that the Office of Management and Budget revise the definition of inherently governmental functions to clarify any ambiguity agencies could face when determining which tasks to outsource. Assad agreed that the process is worth a "hard look," but OMB has thus far resisted such an appeal.

As a general rule, Walker said, recurring governmental needs should be filled by federal employees while specialized short-term capabilities are best served by the private sector.

COMMENTS

• On Nov. 30, 2004 when Tom Ridge resigned General Hayden gave as an explanation to Fox News it was because Ridge failed to fund the next generation of technologies. In mid-Dec of 2004 Hayden gave a 2nd explantion that Ridge failed to dedicate staff to med and long-term planning. I head government operations for the company that made a decision that caused this and in fact, I'm who made the decision. We were taking a very old German state's financing package and the DHS was to shove its Buy American laws up its a*s! The day before Election Day the 1st of our saboteurs goes to trial so our invention won't be a secret much longer; the person to be tried amongst many evils had the German offer withdrawn for a 3rd government's benefit, so we stayed US based. It is 3 1/2 years since Ridge was fired and the DHS hasn't addressed why. I discovered that virtually every DHS Assistant and Under Secretary, lead General Counsel, etc. all work for contractors and aren't government employees! In just over 6 mos the public will learn that their fate is to trade-in biz suits for orange jumpsuits! Virtually everyone on the DHS Leadership webpage long ago earned corruption and racketeering charges! Dawn Dippell Posted April 19, 2008 11:07 AM
• Bravo Myan. It is so clear that DOD (and congress) are fixated on the SYMPTOMS of the problems (like having to contract out CS work) than the CAUSES (like broken personnel systems, cuts in the acquisition workforce coupled with increasing contracting workload). Jennifer Posted March 17, 2008 4:20 PM
• Patrick O.------Installation contracting offices do not make the decision to outsource under A-76. Trust me, the decision comes from a lot higher than the local contracting office. They are stuck with the job of doing it! DOC Posted March 13, 2008 3:34 PM