Even though Americans face a 9.6 percent unemployment rate, with almost 15 million out of work, President Obama and Congress are trying to take more jobs from private businesses through “insourcing,” which means taking contracts from private firms and giving the work to government employees.
The defense authorization bill, which passed the House on May 28 and which will likely be considered by the Senate during the lame duck session after the election, contains an amendment by Rep. John Sarbanes, D-Md., that would give preference to federal employees “to perform new functions and functions that are performed by contractors and could be performed by federal employees.”
The language mirrors a proposed policy change issued by the Office of Management and Budget on March 31, seeking to define a wide range of tasks as government functions and ensuring that they are performed by government workers rather than contracted out to the private sector.
Insourcing is one of the president's priorities, dating from the campaign, when he pledged to cut contracting dollars by 10 percent. Union membership is growing only in the government sector, so expanding government jobs is vital to the president's union base.
One of Obama's first actions, in March 2009, was to issue a memorandum to department heads stating that “government outsourcing for services also raises special concerns” and that “contractors may be performing inherently governmental functions.”
Previously, federal workers and private sector contractors would bid for jobs, and the lowest bid won. This kept costs down and quality up.
The Defense Department has estimated that increased efficiencies resulting from these competitions could yield substantial savings, regardless of whether the government or the commercial sector won, since bidding drives down prices.
Sarbanes wants to give federal workers “special consideration” to perform new tasks, and tasks that are now performed by contractors. That means fewer projects up for bid, higher-priced projects, more work for government employees, and less work for small business.
In the real world, that translates into higher deficits and more unemployment.
Already many small businesses are losing contracts because of OMB's push for insourcing. If amendment language were included in the Senate bill, many more small businesses would lose their contracts.
Defense Secretary Robert Gates admitted on Aug. 9 that “we weren't seeing the savings we had hoped from insourcing,” and Sens. Robert Menendez, D-N.J., Barbara Boxer, D-Calif., and Dianne Feinstein, D-Calif., have expressed serious reservations.
Earlier this year, Texas-based Rohmann Services won a court case — and its multimedia contract back — when the Air Force could not document insourcing savings.
In addition, insourcing can result in lower-quality services.
One example is Camp Smith, a National Guard base in Cortlandt, New York, where contracts with local civilian caterers are not being solicited because the provision of meals for the troops is apparently an “inherently governmental function.”
The New York National Guard is therefore not allowing small businesses to bid on all catering contracts, even though they can offer better meals at a lower price.
This means that rather than a lunch cooked on the base by a civilian caterer, troops must eat plastic-wrapped box meals at a higher total cost.
Surely the young men and women who are putting their lives at risk deserve hot meals with salad and dessert rather than prepackaged cold rolls and cans of tuna.
Government employees excel in some areas, and private sector workers excel in others.
It only takes a little common sense to conclude that government employees should focus only on those in areas where they stand out rather than requiring them by law to do everything. With sky-high deficits and high unemployment, let's hope a little common sense will prevail in Congress.
Examiner Columnist Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute.