Save money ? send work out

As the federal government brain drain looms, agency officials are looking for ways to fill needed positions with contractors.

In the process, agencies are taking on costs in the form of contract administration, payroll and benefits management that make the option less appealing.

Vendors are offering business services that use the Internet and other technologies to alleviate the headache of finding and keeping workers. MyBizOffice Inc. is one such service. Specializing in knowledge workers, MyBizOffice handles payroll and benefits for employees so agencies or commercial clients don't have to.

"We set each individual up as their own little business center," said Gene Zaino, the company's chairman and chief executive officer. "Think of it like a law firm, where you're a partner. You have to go find your own work, and we charge all your expenses to your business center, and whatever's left over is your W2 income."

MyBizOffice is not a placement firm, and the contractors have to find their own work, Zaino said. The company acts as the employer of record so the agency doesn't have to deal with much of the administrative work.

"I don't know of an agency that doesn't have a need for getting access to talent on an ad hoc basis," Zaino added. "We find many of the agencies have a lot of small invoices that are processed for individuals. We can consolidate that."

The U.S. Agency for International Development uses MyBizOffice to manage more than 50 independent consultants who run background checks on applicants for civil service, foreign service and other contract jobs. The investigators performed about 1,000 such background checks in fiscal 2003. So far, the service has proven to be a major timesaver, said Randy Streufert, chief of the personnel information and domestic security division at USAID.

With MyBizOffice handling the administrative chores, one high-level official no longer has to deal with it at all, and the program manager's time commitment is reduced significantly, Streufert said.

"There are a lot of administrative actions, and you multiply that times 50-plus investigators, and it's a huge workload," he said. "Each time we had to add money to a contract, that involved our procurement office, and there were 50-plus pots of money they had to be tracking. The big advantage is now we're dealing with one pot of money."

The program manager can review each consultant's performance online and make sure that MyBizOffice is distributing payment appropriately, he said.

Jeff Denale, who had been branch chief of personnel in USAID's security unit and now serves as the agency's coordinator for terrorism, hired MyBizOffice in May.

"Overall, I saw this as a win-win-win situation," he said. "The contract investigator world is getting highly competitive. The newer investigators are younger and not necessarily retired employees, and they're looking for a benefits package. We were looking for a reduced administrative workload."

"We had been exploring it with anybody who would listen and help offer a solution to [reduce] what we saw as a tremendous workload on us," Streufert added. "That was our selfish concern."

The system is a benefit for contractors, too. "It takes these guys 90 days to 120 days to get paid" under conventional arrangements, Zaino said. "With everybody being able to use the online system to submit their invoices, we save a lot of time on the administrative side. The individuals are getting paid within a week."

USAID is MyBizOffice's first federal client, Zaino said. "We've been traditionally serving the consulting community in the commercial world. About a year and a half ago, we started focusing on the federal market," he said. "We've finally penetrated it."

MyBizOffice has had some success in recruiting former federal employees who have unique skills after working with the government, he said.

"We found a niche in the federal government where we could provide value," he said. "There are a lot of retired federal employees who go back and work for the government in one form or other."

The company is in the process of getting on a General Services Administration schedule contract, he said.

"What I see going forward is a huge opportunity — the whole brain drain problem, the aging federal workforce," Zaino said. "We're doing a lot of work also with the federal integrators, just about anyone you can think of."

There are no restrictions on hiring because contractors are independent. The company charges 4 percent to 6 percent of the contractor's fee for its services, Zaino said.

Companies like MyBizOffice are responding to a widely perceived need, said David Wyld, a professor of e-commerce strategy at Southeastern Louisiana University. Although Wyld believes the feared exodus of workers may ultimately not be as severe as predicted, there is no question that agencies will have a continued need for talent.

"Within the next five years, you're going to see an explosion of this kind of contracting," he said. Agencies such as USAID "are just replicating what's been proven to be a best business practice in the private sector. They're not taking on more than the immediate costs."

***

Saving time and money

Hiring a service to manage contractors saved time for the U.S. Agency for International Development.

Before hiring MyBizOffice Inc. in May:

* A GS-11 employee spent 50 percent of his time on contract administration.

* A GS-13 project manager spent 20 percent to 25 percent of his time on contract administration.

After hiring MyBizOffice:

* The GS-11 employee spends no time on contract administration.

* The GS-13 employee spends about 10 percent of his time on contract administration.

Source: U.S. Agency for International Development