The Coming Government Insourcing

Date: February 5, 2010

Thousands of Government Positions Are Expected To Come Here Under BRAC 2005. Contracting Agencies Are Scrambling to Fill Those Positions. Will the Government Be Taking Your Employees as Well?

At a time when many of us in the Washington, D.C./Baltimore metropolitan area are anticipating a flow of local government contracting opportunities occasioned by BRAC gains in the region, the Department of Defense (DoD) has been following an initiative to in-source "inherently governmental" jobs currently being performed by private contractor employees. By all accounts, this in-sourcing initiative is a high priority for DoD in 2010.

DoD spends up to 80% of its annual budget on contracting with private companies for supplies and services. Contracts for supplies will not be affected by DoD's in-sourcing initiative. However, DoD contracting agencies are now in the process of reviewing all current contracted services, intending move those positions that are determined to perform "mission critical" or "inherently governmental" functions out of the private sector.

On a local level, what impact will in-sourcing have on BRAC opportunities in the area? Given the lack of clarity in what positions are likely to be determined to be "inherently governmental" or "mission critical," the impact is hard to predict.

An "inherently governmental" function is one that, as a matter of law and policy, must be performed by federal government employees and cannot be contracted out because it is intimately related to the public interest. The definition is fairly flexible, but examples of an "inherently governmental" function would be conducting criminal investigations or contractually binding the U.S. government. Administrative and advisory services - those services that primarily support the government's acquisition process - could easily be considered "inherently governmental" functions.

The further trouble is that the government has yet to clearly define what constitutes a "mission critical" function. "Mission critical" services could be any function that is essential to support the operational activities of the agency. Many of the contracting opportunities brought here by BRAC will be focused on R&D, sophisticated defense engineering, information technology, information and enterprise security and defense communications services, among others. Many of these BRAC contracting opportunities will entail services where the skills and resources necessary to provide them are difficult to acquire and in short supply. Contractors spend large amounts of time and money recruiting to fill these highly skilled positions in order to support government customers. Can they expect to see the government in-sourcing the position - and recruiting the contractor employee as well? Let us know.