Think the Insourcing War is Over? Think Again

Government

The debate continues over which part of the government workforce is most cost effective for taxpayers- civilian government employees, military personnel, or contractors. There are many factors to consider, and the resulting data can be confusing and misleading.

The U.S. Government Accountability Office (GAO) released a report last month which addressed the issue of insourcing within the Department of Defense (DoD).

The results of that study, and the impact of subsequent recommendation related to the civilian, military, and contracted workforce within the department, are of keen interest to those affected by the findings.

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Insourcing is defined as a cost comparison set out to determine whether civilian personnel or a private sector contractor would perform the function at a lower cost.

The purpose of the study was to ascertain and provide guidance on the issue of cost-effectiveness within the department, and to compare cost estimates among military, civilian, and contract workers. The study was mandated by the National Defense Authorization Act (NDIA) for Fiscal Year 2013, to review and provide recommendations and guidance on the quantifiable costs to taxpayers for the work performed by the workforce.

DoD is not the only agency being directed to assess and perform audits on their workforce. As noted in a recent study performed by Congressional Research Service, ‘members of the 112th Congress enacted legislation (P.L. 112-239) calling for the Office of Management and Budget to establish “procedures and methodologies” for use by agencies in deciding whether to insource functions performed by small businesses- including procedures for identifying which contracts are considered for conversion, and for comparing the costs of performance by contractor personnel with the costs of performance by government personnel.’

DoD established a methodology and business rules to estimate and compare the full cost of the workforce- military, DoD civilian personnel, and contractor support.

The report explains how the data was evaluated, and the extent to which DoD’s methodology reflects the cost to taxpayers, and how it compares to costs gathered from other government entities.

The GAO performance audit was conducted from December 2012 to September 2013. The report states that the audit was performed in accordance with “generally accepted government auditing standards.”

The report noted that according to DoD Instruction 7-41.04, workforce decisions are not to be based solely on cost alone, but do require consideration of cost in the decision making process if the function in question is not required by law, regulation or policy, to be performed by inherently governmental or military essential functions.

It goes on to say that in certain cases, the cost of using personnel to perform work may not be a part of the decision making process.

The report gave an example of a recent Assistant Secretary of Defense memorandum, from June of this year, that stated that during civilian furloughs, military personnel and/or contractors are prohibited from being compensated for workload resulting from the civilian furloughs.

A few key points form the GAO report:

  • DoD methodology for estimating and comparing the full cost to the taxpayer for work performed by its workforces is limited in certain aspects
  • DoD instruction includes improvements, but does not provide guidance on estimating and adjusting certain cost elements related to overhead, advertising and recruiting, and training costs

GAO recommended DoD provide additional guidance on the following areas: training, development of business rules for National Guard and Reserve costs, reassessment of sources for contractor data, and other cost elements currently being implemented. GAO stated that it is their belief that DoD must fully address the recommendations in order to achieve the desired results.

Sources:

  • U.S. Government Accountability Office (GAO) Report to Congressional Committees- September 2013; Human Capital Opportunities Exist to Further Improve DoD’s Methodology for Estimating the Costs of Its Workforces

Diana M. Rodriguez is a native Washingtonian who works as a professional freelance writer, commentator, and blogger; as well as a public affairs, website content and social media manager for the Department of Defense.