Blending Workers

As contractors perform more government work, federal managers struggle to take charge of them.

After the International Trade Commission contracted out its help desk, callers from throughout the agency noticed their problems weren't getting solved very quickly. As the list of people waiting for help grew, employees in the network services office wanted to step in and respond to calls themselves.

The problem, says Stephen A. McLaughlin, ITC chief information officer, was that the federal workers eager to help would have been doing the job the agency was paying the contractors to do. Even worse, he says, the contractors could have received a bonus for good performance based on the work of federal employees. After realizing the problem, the agency suspended the contract before any monetary award was paid.

The challenge of managing contract employees working side by side with federal employees is an increasingly common one. Even though contract employees often look and act like federal workers, they're not-which means managers can't give them orders or add more work to their schedules without going through their supervisors, who might not even be in the same city. Some managers also say because they don't control contract employees' promotions or salaries, they have less power over their daily work schedules. Contract employees often are unfamiliar with agencies' missions and cultures or they require more on-the-job training. Tension between contract employees and federal managers can be especially acute under performance-based contracts, which give companies and their staffers more freedom to design their work as they see fit.

Some say this new blended workforce represents bureaucracy at its worst-draining time, adding paperwork and sometimes creating confusion about who is responsible for government projects. Advocates insist it's the ideal marriage of public sector goals and private sector expertise.

"The requirement that there be federal agency knowledge, combined with knowledge of what has been done in comparable projects in the private sector, means you end up having to [use] integrated contract-federal teams," says Ira Goldstein, national director of federal business for Deloitte Touche Tohmatsu, a U.S.-based professional services firm. "It's clearly the newest management model," he says, and it is driven partly by the need to address complicated challenges, such as creating the Homeland Security Department.

But even an enthusiast like Goldstein acknowledges that the kinks have not been fully worked out. Contract employees can be unfamiliar with an agency's programs, for example. The workers' compensation division of the Labor Department found that the contract employees hired to handle medical bill payments didn't understand how to determine eligibility or mediate disputes between health care providers and claimants.

"You end up spending a lot of effort to train contractor staff-that's expensive," says Shelby Hallmark, director of the Office of Workers' Compensation Programs. "As a result, it's more expensive to do some tasks using contractors," he adds, particularly because they are more likely than government employees to leave and be replaced with untrained workers. Hallmark says managers also are less likely to hold contractors accountable. "[Managers] know they're not the boss, so oftentimes, nobody's the boss. It becomes a black hole of management," he says.

Most government managers have not been trained to manage blended workforces, says Carol Bonosaro, president of the Senior Executives Association, a Washington-based professional group for federal executives. Contractors themselves are starting to fill that training void. A year-and-a-half ago, McLean, Va.-based consultancy Booz Allen Hamilton began offering a workshop on how to manage contractors working under performance-based contracts. Mike Cameron, a Booz Allen senior associate, says the workshop focuses on two areas: how to define the problem a contract is intended to solve, and how managers will know when they have solved it.

With those skills, managers can more effectively communicate what they want from contractors. Beyond that, managers should be relatively hands off, Cameron says. "They're not supposed to treat the contractors like they were just another employee."

About 500 people from intelligence and other agencies have taken the course, he says. Deloitte also offers training on managing performance-based contracts and expects to launch a new seminar on managing workers from both inside and outside agencies this fall.

For now, some executives are working out problems on their own. After ITC discovered its help desk troubles, CIO McLaughlin realized that the contract needed to specify that contractors would earn awards only if they performed at an outstanding level-merely good work wasn't enough. If results are unsatisfactory, the agency retains the right to intervene or terminate the contract.

McLaughlin says there is one benefit to hiring contractors: You can fire them more easily.