The Office of Federal Procurement Policy (OFPP) finally issued its long-awaited, and fairly lengthy,
policy memo governing the use of contractors to perform critical functions and functions closely associated with inherently governmental functions. But the policy memo is
not fully functional because it tells agencies to determine the costs associated with in-house performance of non-inherently governmental work but lacks guidance on how they are to estimate and compare the costs with the private sector.
While the true cost to the government of contractor performance is fairly clear, the true costs of in-house performance has never been adequately determined using any of the existing methodologies.
Earlier this year, the Center for Strategic and International Studies (CSIS)
recommended the most comprehensive public-private cost comparison methodology to date and
PSC endorsed it. It is troubling that OFPP did not mention this or any other methodology, let alone adopt the sound, evidence-based CSIS analysis.
Additionally, there is strong evidence to suggest that the private sector is more efficient and cost effective for performing these functions. Even the Commission on Wartime Contracting reached this conclusion in the appendix to its Aug. 31
final report.
We look forward to seeing further guidance from OFPP on the cost comparison methodology. Until such guidance is issued, OFPP’s final policy memo on “Performance of Inherently Governmental and Critical Functions” cannot be considered truly final.
