Is the In-sourcing Pendulum Swinging Back?

December 5, 2014

So the Obama administration came in, guns blazing, contractors = bad, in-sourcing is good.  And every contractor ran scared to hide under his/her desk, lest they be noticed and in-sourced.  And, in the early days of idealism and grand-standing, a real push for in-sourcing did cost jobs and contracts.

 

However, the fears of in-sourcing becoming a trend seem to be largely unfounded, for a couple of reasons:

 

1. Government is Slow. If you need a toilet fixed, you don’t open a plumbing manual or go out and interview plumbers for a permanent job.  When your toilet gets fixed, the plumber doesn’t hang out at your house waiting for it to break again.  He has other homes, other contracts — and isn’t on your payroll til he retires.  And — if you’re a government agency that needs a major improvement to your infrastructure, a new airplane or tank, the most efficient thing to do is hire someone who already has the skills and workforce who knows how to do it.  Then when the job is done, the contract is over.

 

2. Government is More Expensive Than You Think. The in-sourcing flag-wavers were adamant that contract labor was expensive because the FAR requires contractors to disclose all their costs, including overhead, rent, benefits, etc.  When you compare that to a govvie’s salary, yep – that IS expensive.  What those advocates failed to count was the WHOLE COSTof the “cheaper” government worker — including the square footage that her desk takes up (and the appropriate utility costs), the overhead for several layers of government managers, the health insurance and the retirement benefits that she would be collecting for years and years.  Since those costs were not directly borne by the contracting agency, but rather by the OPM, in-sourcing advocates turned a blind eye – even though ultimately the $ was coming out of the taxpayers’ pockets one way or another.  All costs considered, contractor personnel are often the less expensive option.

 

3. Government Needs to do Government Work. Nowhere in the constitution does it say that  federal agencies need to have CMMI V compliant processes.  Nor should they need to.  Federal agencies should do the basics – protect the nation, print money, provide essential services — and where they need support in fulfilling those functions, they should hire experts that can help.  Inherently governmental functions, such as decision-making and money-obligating functions are the government’s purview.  But putting down fiber? Not so much.

 

4. Government is Not Hiring. There’s a freeze in Washington.  And as long as we in a state ofcontinuing resolution, the freeze will continue – which means no new jobs are available.  So what do you do when a problem arises and you don’t have the skills or resources to do it internally?  You capitulate / see reason and hire a contractor.

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