Advocate says stimulus law causes outsourcing; contractor group disagrees

A transparency advocate says the economic stimulus law causes outsourcing federal jobs, but a trade group for contractors isn't convinced.

About $15 billion in federal contracts awarded under the stimulus law have been reported on the official Recovery.gov Web site to date. Of the total, about $800 million worth of contracts is going to 50 companies that are members of the Professional Services Council (PSC), a trade group that represents many federal contractors, Philip Mattera, research director for Good Jobs First, wrote in a blog entry Oct. 22.

Good Jobs First is a watchdog group that is part of an organization called the Coalition for an Accountable Recovery.

Considering all joint ventures and affiliations as well, the tally is 470 contracts worth about $3.5 billion attributed to PSC members, Mattera wrote. And Mattera says those PSC contracts suggest a trend of increased outsourcing.

“Some of these involve engineering and construction services, but others deal with functions that are more inherently governmental,” Mattera wrote. “In an economic crisis such as the current recession, all job creation is to be welcomed. But it would be a shame if some portion of Recovery Act money is being used in ways that do little more than shift work from the public sector to the private sector.”

Mattera cites a contract for “program management oversight” for stimulus grants made by the Federal Aviation Administration as a possible example of the type of contract that implies outsourcing.

But Stan Soloway, president of the PSC, said there is no indication of outsourcing of inherently governmental work. The PSC member contracts were awarded legitimately to meet the goals of the economic stimulus law, including job creation and revitalizing the economy, he said.

“I don’t think this is an outsouring/insourcing issue at all,” Soloway said today. “The government does not build roads, they don’t renovate buildings and they do not create broadband networks…This is not necessarily inherently governmental work at all.”

As for the program management contract, Soloway said that federal authorities have made it clear that they will need more assistance in program management, engineering and cost estimating to help manage all the stimulus law projects.

“This was designed to be a relatively rapid expenditure of funds that could generate employment,” Soloway said. “To think there is a bench of people in the federal government available to do that work is naïve.”

Soloway said PSC member companies are performing a significant portion of the economic stimulus law contracting work because that is their niche.

“It should come as no surprise that the firms that are qualified, have the capabilities and the knowledge of the complex rules associated with government contracting, as well as with American Recovery and Reinvestment Act contracting, are those that are currently in the market.” Soloway said.

The Obama administration has been pushing for greater attention to insourcing inherently governmental work. Although the Office of Management and Budget has offered guidance and federal agencies are supposed to be developing insourcing plans, those plans are not yet complete.

However, an informal survey shows that about 60 percent of PSC members have experienced some degree of insourcing in the last six months, Soloway said. The results are not definitive and could be as few as one or two positions insourced out of 50 or more, he added.