Coming soon: New guidelines on which federal jobs can be outsourced

The Office of Management and Budget plans to release new guidance later this month that will help federal agencies define which tasks should be performed by the government and which are suitable for outsourcing, according to the Obama administration's new procurement chief.

In an interview last week with Government Executive, Daniel Gordon, the administrator of OMB's Office of Federal Procurement Policy, spelled out his goals for increasing the size of the acquisition workforce, reducing high-risk contract spending, and rebalancing the relationship between industry and the government.

That relationship, Gordon said, fell out of balance during the George W. Bush administration. The government grew too reliant on the private sector and the line between services that should be kept in-house and those that could be contracted out blurred, according to Gordon.

"It's not a healthy situation," he said. "There are way too many stories where it looks like the government has lost control of its own operations."

In attempt to swing the pendulum back in the opposite direction, the Obama administration has instructed agencies to launch pilot insourcing programs and to find ways to cut their overall contracting budgets. But, many federal officials have been waiting for OFPP to provide a clearer definition of which jobs are inherently governmental, or so intimately related to the public interest they can be performed only by the government.

The inherently governmental standards were first introduced in 1992, but many experts suggest those guidelines are badly out of date. In the fiscal 2009 Defense Authorization Act, Congress asked OMB to begin reviewing the policy. And, in a July 2009 memorandum to federal agencies, OMB Director Peter R. Orszag laid out a new framework for managing the multisector workforce.

The administration now is nearing completion of its revamped inherently governmental guidance and plans to release the proposal in the form of a draft Federal Register notice sometime in March, Gordon said. The guidance will address three categories of work: inherently governmental, closely associated with inherently governmental and critical functions. Gordon declined to elaborate on specifics of the plan, but said comments will be solicited on whether the list of inherently governmental jobs should be updated.

"Agencies need detailed guidance from us," he said. "But this is not cast in stone in terms of being final. This will be a draft for public comment. We expect a lot of public comment, and we will give substantial weight obviously to every comment. But then we need to move promptly. Agencies are anxious to get guidance from OFPP and OMB."

Deliberate, well-schooled and somewhat guarded in his comments, Gordon represents a substantial shift from past OFPP administrators whose backgrounds were primarily in management, industry or law.

Gordon spent 17 years with the Government Accountability Office, where he held many of the watchdog's top legal and procurement positions. President Obama nominated him for the OFPP slot in October 2009 and the Senate easily confirmed him in late November.

"My background brings a particular point of view," Gordon said. "GAO is very data-driven and I am data-driven. I want to know the facts."

Contracting reform was a high priority for the Obama administration during its first year. In July, Orszag called on agencies to save 7 percent from their baseline contract spending -- 3.5 percent in fiscal 2010 and another 3.5 percent the year after. OMB also instructed agencies to reduce by 10 percent their use of high-risk procurements, including sole-source, cost-reimbursement and time-and-materials contracts. OMB expects these reforms to save $40 billion annually.

In December, OMB announced that agencies had identified $19 billion in acquisition-related savings. Many of the plans include a renewed commitment to strategic sourcing, a reduction in sole-source procurements and deeper discounts through the use of blanket purchase agreements.

"The dollar savings and risk reduction targets are extremely helpful and I think they are a national priority," Gordon said. "We have a very large deficit and the acquisition world is one area where finding savings is very important."

During his first 10 weeks in office, Gordon has devoted much of his time to dramatically increasing the size and capability of the acquisition workforce, which stagnated during the past decade while the cost of contracting spending soared to unprecedented levels.

The White House's fiscal 2011 budget includes $133 million to boost the size of civilian agencies' procurement workforce by about 5 percent. An additional $25 million is allocated for a central training fund the General Services Administration oversees. The administration plans to hire predominantly entry-level and midcareer employees from industry in a host of contracting-related positions.

"This is a once-in-a-generation opportunity for us," Gordon said. "And, it's a once-in-a-generation challenge for us. We have to recruit people in a smart way and then once they come onboard we need to train them, supervise them and promote them in a smart way. … This is a very limited investment, which will pay off both in terms of getting better contracts, more competition, reducing risk and saving taxpayer money."

While still relatively new to the position, Gordon has been making the rounds in Washington, visiting with contracting trade groups, federal labor unions, acquisition training academies and front-line government contracting professionals.

"It's all about finding what works and pushing it," he said. "And checking to see what's not working and saying, 'Folks, we are off course. We need to fix this problem.' "