Insourcing at USAID

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Federal Times.com has a story this week about USAID’s moves to do more of their work in house instead of farming it out to contractors.

The U.S. Agency for International Development plans to bring in-house more work related to program design and monitoring and evaluation, Administrator Rajiv Shah said May 5.   Shah made the comment as part of a broader statement on the need to transform USAID’s operations, during a town hall meeting sponsored by the Global Leadership Coalition.

Not surprisingly, there was this reaction from an organization that represents contractors:

Stan Soloway, president and CEO of the Professional Services Council, wrote Shah the following day to urge caution during the insourcing process. Soloway said USAID should ensure that work is done in the most cost-effective way, and “ignore the myth” that contractors are more expensive than federal employees. PSC represents dozens of contractors that do work for USAID.

This move at USAID is part of an overall effort via OMB’s Acquisition and Contracting Improvement Plan and Pilotsthat seeks to cut costs, reduce high risk contracts and identify government agencies that may be over-reliant on contractors. It also follows a GAO report that focuses on DoD, State and USAID use of contractors in Iraq and Afghanistan.  OMB Watch has a good summary of that report here.

GAO found that these three agencies lacked any sort of overarching strategy in deciding when to use contractors to support contract and grant administration. It turns out that more often than not, “individual contracting or program offices within the agencies” made the decision “on a case-by-case basis.” Moreover, contracting officials within DOD, State, and USAID often chose to outsource administration functions because they lacked a sufficient number of government personnel or in-house expertise to oversee the contract or grant.

Because none of the three agencies has a strategic workforce plan that incorporates how, when, or why they should outsource the administration of a contract or grant, GAO also found that DOD, State, and USAID often did not do enough to mitigate conflicts of interest or oversight risks. Although the three agencies “generally complied” with statutory and policy guidelines, they often did not utilize their broad discretionary powers to limit these risks as much as they could.

I have written before (see post here)  about USAID’s over-reliance on contractors and Allison Stanger’s excellent book,  “One Nation Under Contract: The Outsourcing of American Power and the Future of Foreign Policy.”   Not all contracts or contractors are bad – but finding the right mix of public and private is an ongoing challenge for the Obama Administration.  These moves at USAID are a step in the right direction.