Governments Outsource for Several Reasons:
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They think they will save money,
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To hire skills the government lacks,
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To build a new industry in the private sector,
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To get the government out of a particular business,
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To transfer more jobs to industry that was supportive in election campaigns,
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To avoid the government’s personnel regulations, union pressures, procurement regulations, and other headaches associated with managing government personnel,
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To hire bodies for wars to avoid a domestic and unpopular draft,
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To favor an ideology that advocates small government and a robust private sector.
Among nations, the United Kingdom has been the leader. Since Prime Minister Margaret Thatcher’s reign in the 1980s, the UK has outsourced government jobs to focus on core business functions and to “get the government out of [that] business.”
Some governments identify core jobs that government employees must perform. This has not been the case in the federal government in the last two decades as most Democrats and Republicans occupying the White House ignored the question about which jobs are the core jobs.
In its first year in office, the Obama administration encouraged agencies to in-source critical jobs. A year later Obama’s director of federal procurement policy settled on a single, old definition of core government jobs from the 1988 FAIR Act, which defined inherently government functions as being those so intimately related to the public interest as to mandate performance by federal employees. Taxpayers should note that it took 20 years to make this decision.
In his guidance letter accompanying the new policy, the OFPP administrator provided his insights, which government employees could regard as an inconclusive example of “it could be this, or it could be that.” While this was a good first step after years of inattention to the issue, successive presidents since the Carter Administration have done considerable damage to the government workforce; so, one important new policy letter will have few measurable affects for years to come, if ever.
By the end of the George W. Bush administration, the government had reached the point where there were no core jobs. All government jobs were candidates for outsourcing. The Department of Justice used contractors to provide litigation support. The Department of Homeland Security used contracts to buy the services of 20 lawyers. GSA employed 60 specialists from a private company to perform government contracting responsibilities, and IRS bought credit collection services from 10 companies.
The Departments of Defense and State use contractors to handle increasing amounts of the nation’s national security business, to provide security for key personnel and locations, including embassies, to feed and house the troops, train army and police personnel, and manage other contractors. Defense hired contractors to interrogate and torture prisoners. The State Department hired contractors to perform security and intelligence functions, and sell democracy—once regarded as diplomatic functions.
Further, the IRS asked tax lawyers and accountants to draft some of its new tax rules. These same invited officials create tax shelters and exploit loopholes in tax law and regulations for corporations and wealthy citizens. Quoted in the New York Times on March 9, 2007, Paul Light, a professor of political science said, “it’s not the fox guarding the hen house; it’s the fox designing the hen house.”
To provide perspective on the extent of outsourcing in the federal government, contractors in 2009 accounted for 48 percent of the DOD workforce in Iraq and 57 percent in Afghanistan. In addition, roughly 80 percent of the State Department’s budget went to contractors in 2008.
At the same time, the number of federal employees in 2009 was the same as it was in 1963, although Congress created many new programs and the federal budget tripled in real terms in the intervening years. Contractors doing the work of government fill the gap.
Thomas Friedman warns that the government is allowing a contractor-industrial–complex to grow in Washington D.C., with an economic interest in foreign relationships and warfare. Congress, partly to maintain government jobs in its districts, often prevents or delays White House efforts to outsource government jobs. A report prepared by the Congressional Research Service in 2005 identified eight outsourcing bills, later signed into law. The bills place limits on, or delay, outsourcing actions. For example, Congress required the Pentagon to submit annual reports on anticipated savings before any additional jobs could be outsourced. These requirements had the desired effect—delayed outsourcing. But, the overall trend is to outsource more and more government jobs.