Both Congress and the Obama Administration have taken steps to encourage “insourcing” – the use of government personnel to perform “inherently governmental” functions that independent contractors previously had performed on behalf of federal agencies. Insourcing is a centerpiece of the Administration’s procurement and acquisition policies in an effort to reduce the Federal deficit and spending.
Many in the government contracting industry are skeptical whether insourcing decisions are supported by thorough competitive and cost analyses. In addition, there is growing alarm regarding the lack of government transparency regarding insourcing decisions.
Insourcing at this point has not been a partisan issue. The Bush Administration promoted it vigorously under the name of “competitive sourcing,” and the Obama Administration’s FY2011 budget has urged agencies “to be alert for situations in which excessive reliance on contractors undermines the ability of the Federal Government to control its own operations.” Nonetheless many in the industry worry that without adequate assurances on competition, transparency and cost analysis, the procurement process could become more cumbersome and political. Contractors should be alert to any future actions by Congress, or decisions by the federal courts, that enhance or clarify the right to challenge an insourcing decision.