Army renews effort to count contractors

In what amounts to a sweeping indictment of the downsizing strategy pursued by the Army in the 1990s, Army Secretary Thomas White has said contractor employees should not be off-limits to downsizing initiatives and has revived a controversial Army effort to count its contractor workforce.

But Angela Styles, the government's top procurement official, immediately questioned White's decision to restart the Army count, arguing the project has little to do with the private sector's ability to fulfill government contracts.

In a March 8 memorandum to Defense officials, White announced the Army is re-establishing a project to collect labor information from its contractors, including how many hours their employees work and who their customers are within the Army. A previous version of the study was shut down last summer when officials at the Pentagon and the Office and Management and Budget found it violated federal rulemaking procedures.

The study is necessary to illuminate the scope and cost of the contractor workforce for Army planners at the departmental level, where budget and force reduction decisions are made, according to White. In the 1990s, the Army sharply cut its civilian and military ranks without considering whether the contractor workforce should also be downsized, he said.

From 1989 to 2001, the Army cut its civilian workforce by 44 percent and active military by 38 percent, according to John Anderson, assistant deputy for manpower management at the Army. Over the same period, the Army "slightly increased" the amount it spent on contractors, he said.

White's decision adds to a long-running debate over whether the size and composition of the contractor workforce should have any bearing on how the government manages its contracts with the private sector. Critics, including Styles, say contractors should be judged by their ability to fulfill a contract, not by how many employees they hire to do it.

"I may hire a lawn company to take care of my yard for a price of $50 a week," said Styles. "As long my lawn is properly maintained, I don't care if 20 people or one person performs the contract. As long as the private sector is delivering in terms of cost, quality, and delivery, why should we be expending scarce government resources to determine how many people the private sector engages to perform particular government contracts?"

But project supporters note that many contracts do not require contractors to work to a fixed price, and some contracts are issued without competition, meaning the government may not be getting the best deal on its contracts. "The vast majority of contracts are noncompetitive in the first place, " said Bill Johnson, legislative director for Rep. James Hansen, R-Utah, who supports the study. Incompatible procurement and accounting systems also make it difficult to pinpoint the true customer of contract services within the Army, which means the service has no way of knowing whether some contractors are performing duplicative work unless they report to the Army.

"This information will allow us to divest unnecessary, costly, or unsuitable contracted work, or duplicative in-house and contract efforts," said White. Styles did not say whether OMB would ask White to reconsider his decision.

Others were quick to praise White for reviving the study. "It takes guts to ask for greater transparency on the number of contractors," said Paul Light, a Brookings Institution scholar who has compiled several estimates of the federal contractor workforce. "There are an awful lot of people in this town who like to play 'hide the federal employee.' Our leaders are scared to tell the public how many people it really takes to deliver the federal government's mission."

But Stan Soloway, president of the Professional Services Council, a trade group representing contractors, suggested that White might not be aware of what the Army study seeks to accomplish.

"I'm not so certain he fully understands the ramifications of what he signed, and if he has been given the full picture to make a decision," he said.

Army planners believe the new study will be less burdensome on contractors than the previous effort. The service plans to pay contractors for reporting information and will only collect direct labor data for employees who work on a contract. In the previous study, the service asked contractors to report indirect data that captured overhead as well. Army officials hope to start collecting information later this year.

Mark Filteau, president of Johnson Controls, a Florida-based contractor, said the changes should make it fairly easy for contractors to comply with the study. "So long as the Army doesn't invent new categories or require cross-correlation from old contract categories to some new set of definitions, then there won't be a significant cost impact on new bids or current contracts," he said. While noting that contractors already report on a variety of topics to the government, Filteau praised the concept behind the study.

"Frankly, the Army ought to know what it is paying for contract labor," he said. "As a citizen, a taxpayer and an all-around fan of good management practice, I support what the Army is trying to do here."