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Romney win would likely mean more outsourcing, privatization

Sep. 25, 2012 - 11:52AM   |  
By SARAH CHACKO   |   Comments
Then-Republican presidential candidate Mitt Romney waves as he arrives in Portsmouth, N.H., on Aug. 25. If Romney is elected president in November, contractors anticipate more government work and less regulation.
Then-Republican presidential candidate Mitt Romney waves as he arrives in Portsmouth, N.H., on Aug. 25. If Romney is elected president in November, contractors anticipate more government work and less regulation. (Jewel Samad / AFP via Getty Images)

If Republican Mitt Romney is elected president in November, contractors anticipate more government work and less regulation.

The Republican Party platform calls for at least partial privatization of airport security and the U.S. Postal Service, and Romney himself has said he would like to completely privatize Amtrak.

The Republicans point to the Transportation Security Administration's unpopularity among travelers as reasons to turn that function over to the private sector. They also criticize the Postal Service for having an underfunded pension system, although the Postal Service inspector general has verified it is overfunded.

Amtrak, which operates as a for-profit, federally chartered corporation with the government as majority stockholder, receives about $1.6 billion in taxpayer funds each year, Romney said in his plan for jobs and economic growth.

“If given a shot, the private sector will certainly do a better job,” Romney said.

Contractors also expect more work because a Romney administration would likely outsource more federal work to them. This would reverse the Obama administration's course, which directs agencies to insource work that is “inherently governmental” or closely associated with inherently governmental work, such as security operations that involve combat, and consultant services that influence agency policies.

Industry groups have countered that the administration is insourcing jobs that are neither inherently governmental nor closely associated with inherently governmental work.

Managing inherently governmental functions has been a perennial challenge for both Republican and Democratic administrations, said Ray Bjorklund, chief knowledge officer at market research firm Deltek.

In the wake of 9/11 and the spending required to support the wars in Iraq and Afghanistan, work was pushed to contractors that previous administrations had considered inherently governmental, Bjorklund said. But even former Republican President George W. Bush decided that some functions, such as TSA, should be done by government employees. Bush also added federal workers to the Border Patrol.

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“That's the balance that always has to go on,” Bjorklund said. “Republican intentions within the platform probably do not reflect the total ecosystem that's involved in outsourcing. That ecosystem has to recognize there's things like [conflicts of interest], has to recognize inherently governmental functions, and ideally it should recognize whether a job can be done more effectively and more efficiently by the contractor or by government.”

John Palatiello, president of the Business Coalition for Fair Competition, criticizes President Obama for insourcing work that he argues is not inherently governmental and could be done at a lower price in the private sector, such as training, food service and loan processing.

Palatiello said he has discussed some contracting reforms with Romney's campaign staff, such as whether Romney would revive competitions between the federal workforce and private sector for work.

Romney also proposes cutting the federal workforce by 10 percent by hiring one new employee for every two who leave federal service to allow new hiring in “areas where additional resources could be put to most effective use,” according to his plan for jobs and economic growth.

But there is at least one sector of the federal workforce that needs to grow, Palatiello said: the acquisition workforce.

“Instead of having a good, strong core of federal employees to manage acquisition, we're putting it on the back of the contractor with more regulation,” Palatiello said.

Romney has said he would eliminate regulations passed by the Obama administration that “unduly burden the economy,” particularly those brought about by the Dodd-Frank Act to reform the financial industry, health care reform and the Environmental Protection Agency. Romney would require congressional approval of all new major regulations.

Obama has asked agencies to review their regulations and eliminate rules that are outdated, unnecessary or too costly. However, regulations on government contractors have nearly tripled over the last four years, according to figures compiled by TechAmerica, an industry association representing information technology contractors. Having to comply with more regulations raises contractors' costs, which are then charged back to the government in overhead rates, industry groups say.

But regulations are not all bad, Bjorklund said. Many are intended to either promote fair competition in the system or prevent waste, fraud and abuse, he said.

“In the procurement world, regulations are there for fairness, for predictability and also for safeguarding the interest of both parties to the contract — safeguarding the government from poor performance by a contractor and safeguarding the contractor from abuse by the government,” Bjorklund said. Ë

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