Outsourcing Government's Brain

This Wall Street Journal article asks if the government is "outsourcing its brain," that is, assuming it has one:

Is U.S. Government 'Outsourcing Its Brain'?, by Bernard Wysocki Jr., WSJ: ...Since the 2001 terrorist attacks and wars in Afghanistan and Iraq, the federal government's demand for complex technology has soared. But Washington often doesn't have the expertise to take on new high-tech projects, or the staff to oversee them. As a result, officials are increasingly turning to contractors ... that operate some of the government's most sensitive and important undertakings.

The risk of this approach, in the words of Warren Suss, a ... consultant and expert on federal computer outsourcing, is that the government could wind up "outsourcing its brain." The number of private federal contractors has soared to 7.5 million, four times bigger than the federal civilian work force itself... Congress, meanwhile, is learning how hard it is to keep tabs on these activities. ...

The government still buys pencils and office furniture, but now relies on others for sophisticated technology work, especially what's known as "systems integration" -- pulling together complex information networks for the military, homeland-security personnel and others.

"Our ignorance is their gain," says Richard Skinner, inspector general at the Department of Homeland Security. Projects currently under way range from the design of next-generation military computer networks to the oversight of a $30 billion electronic "fence" being built along the Mexican border.

Outsourcing originally sprang from concerns about overspending and mismanagement by the government itself. Starting in the 1980s, agencies realized it was cheaper to buy certain services directly from companies. In the 1990s, teaming up with the private sector became a popular idea, in part as a way to reduce the number of federal employees on the books.

Today, the potential pitfalls are legion. Big contracts are notorious for cost overruns and designs that don't work, much of which takes place under loose or ineffective government scrutiny. ...

Democratic Rep. Henry Waxman of California, new chairman of the House Oversight and Government Reform Committee, has castigated the Department of Homeland Security for lax oversight... Outsourcing details to private contractors "can be a prescription for enormous fraud, waste and abuse," Rep. Waxman said... One flashpoint ... is whether contractors hire other contractors without enough controls or competition. In March, Rep. Waxman introduced a bill that would put limits on contracts awarded without competitive bidding. ...

Fueling the growth ... is a move toward giant, complex projects, awarded by Uncle Sam but pulled together by what's called a "lead systems integrator." Big contractors have become even more powerful in the post-9/11 era, some say, because the government has turned conservative, preferring to award contracts on critical national-security projects to proven players, especially as knowledgeable civil servants retire.

The U.S. government "is losing their system engineering, program management, acquisition expertise," said Kenneth Dahlberg, CEO of Science Applications International Corp., of San Diego... He vowed that his company, one of the biggest federal contractors with 44,000 employees, would be there to fill the void. ...

When there is lack of accountability and market-imposed discipline due to political connections, uninformed oversight (perhaps due to appointing non-experts into critical government positions, which may again relate to political connections), lack of competition in the contract award process, market failure, or for other reasons, there's no reason to believe that private companies will perform better than government. I'm not opposed to privatization when it's done properly, but large, politically connected, private sector firms lacking the proper incentives can be every bit as wasteful and inefficient as government. [There are several examples of this in the article].

One minor quibble. The article says, "The government still buys pencils and office furniture, but now relies on others for sophisticated technology work." Pencils and office furniture aren't a counterexample, instead they are good examples of when the government should privatize. Buying pencils and furniture from the private sector means the government is relying on others for the work of producing these goods, as they should. It's unlikely that the government could produce either pencils or furniture cheaper itself. But it's a mistake to conclude from cases such as these that the private sector is better at producing all goods and services.

Comments

[ilsm]

Having been a military officer, a civil servant, a production contractor employee and an Advisory and Assistance Services contractor over a long "career":

It is all about jobs, profits and sending the taxpayers' dough out the door despite war profiteering and shoddy effects.

The problem is not so much lack of brain power, rather it is denying the brain power the government had from making good decisions.

I have a post on A-12 at Angry Bear.

The Navy team would have gotten away with delivering a mess in the A-12 however, the contract audit brain power was listened to and it was killed.

Now no one listened to the brains we had.

There is too much money and too much politics for the government to retain any one who will be honest and tell the truth.

The brains were fired.

[evagrius]

It's not only the Feds doing this but also state government.

Here's the latest on Texas' experiment with privatizing
social services;

Texas Ends Landmark Experiment to Privatize Social Services

(“State Ending Contract with Embattled Consulting Firm,” chron.com, March 13, 2007)

The Texas Health and Human Services Commission (HHSC) is ending its contract with the Texas Access Alliance, a group of contractors led by Accenture, which was hired by the state to determine eligibility and process applications for food stamps and other benefits. From its start in 2005, the project evoked criticism from policymakers and advocates for the poor who blamed Accenture’s computer system for multiple technical and operational problems that lead to a drastic decrease in enrollment for the state’s Children’s Health Insurance Program. Several lawmakers said the contract’s demise should be a lesson to state leaders who want to privatize public programs. “All that glitters isn’t gold, and privatization is not gold,” said Democratic state Rep. Garnet Coleman. “It is fraught with inefficiency and poor operation and this has been the poster child for privatization in Texas.” State officials and Accenture are working on a timeline of handing over responsibility for the project. The state will decide whether to hire more state employees or use different contractors, according to HHSC Executive Commissioner Albert Hawkins.

http://www.chron.com/disp/story.mpl/ap/tx/4626711.html

[real person from the real world]

IT is mostly a lot of SHIT jobs that require knowing where to click. There are a FEW top people that know and get the bucks, while more and more, they are GREEN CARDS, there are a few Americans brave enough to try the waters of Globailization. Should we have more of our people doing the work in-house? SURE, but a coder sitting in a cubical working on a stub or module is not leaking "TOP SECRET" stuff.

[real person from the real world]

OTOH, this whole Billy Gates world of buy-to-rent glorifies the entrepreneurial spirit of outsourcing to "save bucks." Some aspects of IT are too complex for the workforce in place, and besides, how would the hot-shots gouge and game the system if you didn't have outsourcers?

[save_the_rustbelt]

Can you imagine a government agency, say the IRS, putting together a team to complete a sophisticated IT project?

Now that is really scary.

Which is not an excuse for lax oversight.

[jm]

This problem is not unique to government. It is just as common in private industry. Companies run by people who have no software development expertise are usually unable to hire and retain people who really know what they're doing, and when they give up on internal development are likely to be no more competent at hiring the right outside contractors to do the job. In this context, competent software development people are at a competitive disadvantage relative to brash, glib incompetents -- the latter can stand up in a conference room with a PowerPoint slides presentation and speak with great confidence of how they will build Rome in short order using the latest whizbang buzzword technologies, and make the tide recede to boot, so it can be built on cheap tidal flat land; good, competent people can't bring themselves to make such claims.

[Callahan]

A good example of how leadership 'brains' work, not only in guv'munt, but also in bizniss can be found by looking at the practices of Circuit City, and Walmart.

Pay cheap wages and gain huge profits. $Muney$, that is what it is about in, around, through and all over Washington, and many of our wonderful employers. The gap between rich and the rest of us is now near those levels of the 1930's.

[calmo]

While I read this article, I wondered what the campaign contributions were from the WSJ to the GOP and to the Dems (a fairly complimentary piece to Waxman).
Could this article have been published before the 2006 elections?

I didn't research Bernard Wysocki any further than this piece (note to robertdf) but thought he might have tied this "brain outsourcing" to Suskind's Loyalty and O'Neill's condemnation of public policy formation in this administration, in particular.
No time/effort is expended on information gathering to ensure you have a grasp of reality (and not some aspirational sphere). As a political entity you have your goals which are not about to be informed/reshaped by examining what outsiders have the audacity to call "reality". For you, the government bureaucracy is an obstacle not a resource. You hire contractors ...from Attorney Generals to mercenaries to pencil purchasing agents...to execute your aspirations.
Brain dead or brain diseased?
As we follow Waxman uncovering the corruption (see, there is another way to say 'brain outsourcing') of this administration, I'm hoping that we see it as the latter and the process provides some retracement. A healthy media would be such a help esp now with a very brittle economy and growing tensions in the Middle East.

[Callahan]

In case you have not heard, Circuit City is offering veteran employees a chance to hire back at lower wages right after they get laid off. Somebody awt to be shot.

Unfettered globalization and immigration (legal and otherwise) are setting us back 70 plus years, and our "leaders" from business and government seem to like it.

Think you are insulated? Hang on to your hat, ... while you still have one.

[cm]

jm: It extends further. By the same token, principled people are at a similar disadvantage against those unconstrained by principles. But checks/balances, where available, seem to work, as things are not nearly as bad as one would expect them to be when extrapolating from our experiences in these matters.

[calmo]

Good to hear your pov cm, but wish "principled people" was cashed in/out more specifically (it ain't just my reluctance to use one of w's favorite terms)...likewise those "checks/balances, where available" (what exactly are the means of redress for workers like Circuit City? CC just following GM's strategy?); those extrapolations "from our experiences"...
So about that extension...what are you sayin? --exploitation of principled people by unprincipled ones is the distinction to witness, not workers vs owners?

[evagrius]

"Can you imagine a government agency, say the IRS, putting together a team to complete a sophisticated IT project?

Now that is really scary.

Which is not an excuse for lax oversight."

The EITC program is an outsourced computer program. It took quite a few months last year for the bugs to be worked out and they have great cover. If someone's found guilty of fraud it's not the program's fault, of course.

[ilsm]

"Fueling the growth ... is a move toward giant, complex projects, awarded by Uncle Sam but pulled together by what's called a "lead systems integrator."

What is happening is that government has decided a contractor can manage a conglomeration of things like a sensored, barrier" 1200 miles long as a single entity.

Right or wrong it creates a huge jobs program to integrate the mess and there is not much talent for integrating various functions on either side of the contract.

Innovation is they can now hire Boeing, who never made a tank, to integrate all the communications, military functions and guns into the 'future combat system'.

It is a new concept that is not tried and will cost huge sums.

Regardless the outcome will not be pretty.

The contracts are cost plus, meaning best effort no harm no pain to the contractors when they fail.

The government guys let the ocntractors have a blank check and they task eachother with no competition and allowing for kickbacks.

And the government people get jobs when they retire in the new contractor run parallel management system.

The government continues to need the people they did to manage the losses.

[Noni Mausa]

Callahan says... "In case you have not heard, Circuit City is offering veteran employees a chance to hire back at lower wages right after they get laid off. Somebody awt to be shot."

Has anyone ever proposed a setup where employees must receive a fixed percentage of the gross, or a living wage, whichever is less.

Nahhhhhh......

Noni

[BTW, nice bar you got, Callahan.]

[annie]

The U.S. government "is losing their system engineering, program management, acquisition expertise," said Kenneth Dahlberg, CEO of Science Applications International Corp., of San Diego... He vowed that his company, one of the biggest federal contractors with 44,000 employees, would be there to fill the void. ...

yikes, did that name ever jump out at me, i'll bet SAIC will be there to fill the boid. that is what scares me...

check out the vanity fair article.

"SAIC, which employs 44,000 people and took in $8 billion last year—sells brainpower, including a lot of the "expertise" behind the Iraq war."

what scares me the most, is this "systems integration" ....

[calmo]

Thanks for that link annie.

[cm]

calmo: After reading your response (and perhaps sadly only then), I'm compelled to apologize for dwelling on generalities without addressing the subject matter (which I'm confident was not the first time). On the matter of "W" terminology, it was neither intended nor was I aware "principled" was a thus overloaded term (but then that's one problem with generalities). What I meant as you were asking, there are certain things in communication style and business conduct that people "with principles" will shy away from (like slander, backstabbing, making promises with the intent to break them, abusing trust, bullshitting the gullible, ...) that will help those unconstrained by such scruples to move ahead, if only by trampling all others (and perhaps in good part by those they are dealing with being of the same variety of person). Without going into detail, I do know of cases where bullshit and "elbows" (apparently) went only so far in somebody's making of their career, but it is probably impossible to know whether it was because of checks/balances or because a more ruthless player simply outmaneuvered them.

Unfortunately, CC's "overpaid" ex-workers have no redress, and neither do I believe will CC as a corporation benefit from the move. Perhaps a few executives and other members of their top echelon can benefit by cashing in some stock options if they act quickly enough. Otherwise it is quite likely a lose-lose. The message is mostly "if you merit a raise you merit being fired" (as an individual contributor at least). That both inside and outside of CC. It is not that people will consciously apply this tidbit of information, but I'm sure it will find its way into aggregate "culture".

Neither am I sure avoiding CC in the future will be effective payback/feedback, but one can try. How many will do this, and this is likely to be an instance where "the market" does not provide effective checks/balances.

[calmo]

Thanks cm.
First, this business about "principles" (and "humble", maybe others) --this is just my reaction to President Bush's use of these terms...and that is I consider them tainted and unfit for my personal use. When I hear them I am always reminded of w --a horrible distraction, but as I say, my problem only.
Secondly, I agree that CC (formerly Radio Shack) has committed a PR blunder of staggering proportions with this firing and re-hiring. So much of government was recently privatized employing the same tactics, but the perception there was that the government employees were overpaid while everyone knows CC staff were not well paid. CC executives in this move demonstrate that they have no ethics: business ethics (a recent thread here) means, for them, maximize profits.
You start in on ethical behavior in a world that has mounting pressures on career advancement where helping your colleagues and being a good team player are important but not at the expense of your self-interest, your career and your families financial security. It is a tenuous balance navigating those waters between being ruthless (the CC CEO) and being run over by a co-worker who is nothing more than a predator posing as a colleague. I think we will see more of this shortly: unhappy and back-stabbing workers as profit margins dry from a consumer that is spending less.

[cm]

calmo: Perhaps we will never know a blunder of which extent that was, in these short-lived and sensational times, esp. as we can reasonably expect that this is not a story that will be hyped in the same way as the recent demise of an illustrious ex Playboy model. Or should I say Gary Condit vs. Chandra Levy prior to a major event in 2001. (But then who remembers that one?)

Which is not to say it won't have an aggregate effect.

I'm not sure "business ethics" means anything in particular for CC's (and other) executives, beyond asking the general counsel, "is my butt covered".

[calmo]

I know this will sound cheap and nasty but CC (not a terribly large or profitable company, in my correctable opinion) loses money by such a flagrant dismissal of ethics. GM and Ford were not so flagrant, but then they are large enough to have informed PR departments that know the costs of trashing ethics.
This CC example lets me see what PR departments are all about: buffers for insulating the business from the ethics.
Press Secretaries too.

[Davol]

Americans have been brainwashed in this matter of Privatization since Reagan and it's time we all woke up from the delusion. Most here in Montana are wide awake after Governor Roscoe in the late 90's Privatized our utility industry that provided our state with more energy then we knew what to do with. Now our power bills from some Pennsylvania company are through the roof, and plans are being debated in our Congress to buy back our industry. Now our war is controlled by interests who profit more from the US loosing then we would from that illusive victory they can't seem to get anywhere near. Time for Americans to see Privatization as the US Treasury raping swindle that it is, before our infrastructure is sold to the Carlyle group where Blair and probably Bush too are destined to retire. It has pretended to be interested in efficiency all the while being driven by classic Republican greed. Wake up lemmings.