Defense Sec. Robert Gates’ Aug. 9 admission that “we weren’t seeing the savings we had hoped from insourcing” should come as no surprise to those who follow PSC’s advocacy on this issue.
For more than a year, we’ve warned that the Gates’ plan to insource critical management functions was devolving into a quota-driven, arbitrary budget exercise that would cost the government more than it would save. In letter after letter, we asked the department to show how it would achieve the 40 percent savings it claimed insourcing would bring, but PSC never received a response.
But while we welcome Gates’ acknowledgement that his insourcing initiative failed, PSC is concerned with his Aug. 9 announcement that he’s cutting 10 percent of service contracting dollars a year for the next three years to achieve the budgetary savings insourcing could not muster. And he’s not replacing those contractors with federal employees.
This raises some critical questions. First, what support work is currently being done by contractors that the department can legitimately do without? Second, how did DoD arrive at the conclusion that making such cuts would make the department more efficient?
Gates offered no answers when he declared:
“The problem with contractors is, and what we’ve learned over the past year is, you really don’t get at contractors by cutting people because you give contractors a certain amount of money and they go hire however many people they think they need to perform that contract. So the only way, we decided, you get at the contractor base is to cut the dollars. And so, if you add it up, we’re looking at cutting one-third of the budget for services and support contracting over the course of next three years. That, we are convinced, is a way to get a handle on this problem.”
Lack of support apparently doesn’t bother Gates since he offered no evidence to justify these assumptions. And that’s troubling.
Although the department appears to have learned that arbitrary insourcing won’t achieve savings, it did not learn that a significant problem with its insourcing initiative was its arbitrary nature. Smart contracting—the kind that both saves money and achieves the mission—requires strategic thinking. Sadly the department doesn’t seem to be doing much of that as it continues its slog toward budgetary savings.
