SETA Contractors Worrying About Jobs And Money

Last Updated Sep 25, 2009 5:59 AM EDT

The Obama Administration and the Democratic Congress have begun the process of ramping down the number of contractors working for the Government. This is being done in two ways. First the Department of Defense especially is "insourcing" where jobs currently filled by contractors will be replaced with civil servants. Second is that Congress has ended the practice for now of using the A-76 process to convert civil service jobs to contractors.

These two practices have led some in the Scientific, Engineering, Technical and Analytical (SETA) support business and the IT business to worry about the long term affects on their companies. SETA and IT make their money off of providing people to the Government. SETA provide the main support in acquisition and support offices of the services while IT support has often been contracted out due to cost and flexibility issues. Many of these jobs are easy to insource as they are similar enough to "inherently government work" that there is little argument from higher ups trying to meet "goals".

Stan Soloway the president of the Professional Services Council (PSC), a group that represents many of these companies, recently expressed concern that not only are the companies losing these jobs and revenues but that the Government will end up taking their best employees. Soloway has worked in the Pentagon in previous administrations as an expert on acquisition reform. The PSC is concerned that agencies are ending contracts and insourcing them rather then competing the work. In their eyes this re-competition would often be cheaper then hiring civil servants.

A-76 is the process which a Government office goes through to identify if current civil service efforts would be more efficiently done by contracting out. This is named for the Office of Management and Budget (OMB) circular that manages the process. If the end result is an identification that contracting would be cheaper the existing civil servant workforce has the right to bid as contractors for it. The Obama Administration also changed the rules to make it so that the winner would hire existing workers. The program is controversial as it is hard to quantify any savings or efficiencies through the process especially in the short term. Congress has ended the practice for now anyway.

Since there has been endless argument for the last twenty-five or more years between contractors and the Civil Service unions as to which is cheaper this argument in many ways is just an extension of that. Of course many small contractors especially those owned and operated by minority or disadvantaged persons rely on one or two main contracts to support the company. The business model is to leverage these to get bigger or perhaps be absorbed by a larger company. If these companies do lose one contract it may significantly harm their ability to operate. It is clearly in the PSC's interest to find these kind of situations.

The Department of Defense claims that there are no "quotas" to meet for insourcing, just goals. Of course these are often the same things because there is a top line number to meet as expressed by Secretary of Defense Gates earlier this year -- eleven thousand or so acquisition jobs a lone. In a situation where the Executive and Legislative branch leadership is clearly more hostile to contractors and pro-Union it would seem that Departments and Agencies would try to maximize the amount of contracting jobs going away.

It is clear that over the next few years there will be a contraction in this type of work. Many contract positions will be eliminated and many who are now contractors will become civil servants. That does not mean in the future when things swing back the other way reducing Government that these people will not become contractors again or that contract positions will be created but any major shift in policies will cause tension between those who think they are losing and those winning.

  • Matthew Potter

    Matthew Potter is a resident of Huntsville, Ala., where he works supporting U.S. Army aviation programs. After serving in the U.S. Navy, he began work as a defense contractor in Washington D.C. specializing in program management and budget development and execution. In the last 15 years Matthew has worked for several companies, large and small, involved in all aspects of government contracting and procurement. He holds two degrees in history as well as studying at the Defense Acquisition University. He has written for Seeking Alpha and at his own website, DefenseProcurementNews.com.