The PMSC fox in the government henhouse

December 9, 2013

The PMSC fox in the government henhouse

By David Isenberg

Although he may not have intended it as such, all the publicity surrounding the recent published book by Erik Prince, founder of the private security firm once known as Blackwater, has actually served a useful public policy purpose; namely, highlighting the near ubiquitous presence of private military and security contractors (PMSC), as well as other types of private contractors, and the cost and benefits of using them.

When it comes to the costs of outsourcing formerly inherently governmental functions there are many different ways to calculate them but one relatively under-examined way is to consider the dangers of allowing what in almost any other industry would be considered a conflict of interest.  Or. To put it more colorfully, does it really serve the public interest to allow a PMSC fox guard the government hen house?

Specifically, does anyone really think it is reasonable to assume that placing personal services contractors (Note: “personal services” is the umbrella category that all PMSC contracts fall under) in government procurement offices will produce dispassionate, objective assessments of the pros and cons of using PMSC?

Does anyone think that is a good idea; anyone, anyone at all?  Hmmm, your silence is deafening.

Well, if you think this is an absurd idea rest assured you are not alone. William Charles Moorhouse is in the house. Major Moorhouse serves in the U.S. Army Judge Advocate General’s Corps and is currently the Chief of Contract and Fiscal Law for the U.S. Army Expeditionary Contracting Command.

Last year he published an article in the summer issue of the Public Contract Law Journal. The basic thrust of his article, “Expediency At The Expense Of Governmental Propriety: Personal Service Contractors in the Procurement Office” is clear and blunt.

Government outsourcing has made almost unavoidable the potential for improper personal services contracts, contractor performance of inherently governmental functions, and organizational conflicts of interest. Placing service contractors in government contracting offices has exacerbated this problem. This Article takes the position that the commingling of government and contractor  personnel within the procurement office is not only a bad idea, but that it also violates the laws and regulations designed to ensure fairness and protect sovereignty.

Moorhouse notes some practical difficulties that arise when private contractors are placed in procurement office to make up shortages in the acquisition workforce.

First, putting a contractor to work in the procurement office creates yet another contract for the Government to oversee. Despite efforts to increase the number of government contracting professionals and the quality of the training they receive, the Government does not have an adequate number of appropriately trained personnel to oversee the contracts within its current portfolio. Consequently, the already overwhelmed government procurement workforce often fails to properly oversee contractors working right in its own offices.

A second practical difficulty stems from the differing basic motivations between Government and private enterprise. On the one hand, a government employee serves his or her agency and is ultimately responsible to the Government and the taxpayers. In contrast, a contractor, managed by his or her supervisor, is responsible to the corporation and ultimately to its board of directors or shareholders. The bottom line is that the contractor’s raison d’être is the bottom line.

The final practical difficulty in using service contractors to solve the acquisition workforce shortage is that agencies are struggling to recruit qualified acquisition employees. Almost fifty years ago, Budget Bureau Director David Bell warned President Kennedy that higher salaries and fewer ethical constraints in the contractor community would drain the Federal Government of its resident expertise. This prediction has become a reality, as the Federal Government is now forced to hire, at an increased rate, contractor employees that it formerly trained and employed.22 As a result, not only do agencies find themselves complaining that they cannot compete with the private sector employers that hire away government contract specialists, but they also see their employees leave, only to return as contractors.

To help understand why this is important, and not just theoretical discussion about proper ethical standards, consider the old British expression, “Those who take the King’s shilling do the King’s bidding.” Unfortunately the King’s bidding, which in this case could be a PMSC board of directors, might be quite different from the public interest. As Moorhouse writes:

Government employees and their contractor counterparts often work side-by-side and perform the exact same functions, blurring the lines between their respective roles. Yet, the Government lacks actual authority to hire anyone directly via a procurement contract because, absent explicit congressional authorization, a contract may not create an employeremployee relationship between the Government and a contractor. Contractor personnel are, at all times, to remain “subject to the direction and control of the contractor” itself.34 Muddling the functional and organizational lines separating those beholden to their federal supervisors and the American taxpayers from those beholden to their corporate managers and shareholders threatens the American democratic ideal that places the rule of law and accountability to the people above all else.

Or, to paraphrase the slightly misquoted expression attributed to former Secretary of Defense, and former General Motors CEO, Charles Erwin Wilson, what is good for KBR, Academi, DynCorp et cetera is not necessarily good for America.

Another problem, aside from the issue of different motivations, is that putting contractors in procurement offices dilutes the ability of the government to exert proper control over their use.

As contractors step into the shoes of their federal predecessors, taking jobs formerly performed by government employees, they assume murky administrative authority and dilute the Government’s sovereignty. In many respects, Contracting Officers reduce the importance of public duties when they substitute contractors for governmental personnel and allow the contractors to develop, issue, and administer contracts. By entering into services contracts to perform procurement functions, a contractor assumes the Government’s decision-making authority while remaining largely “unmonitored, unchecked, and without accountability to the American people.” Such an arrangement can “[create] conflicts of interest and [undermine] the integrity of the competitive contracting process.” It wrests governmental accountability away from appropriately designated officials in favor of outside managers. As such, the Government becomes no more than a mask for a network of contracted decision makers.

Even more troubling according to Moorhouse is that allowing contractors to make procurement decisions subverts the intent of the Constitution.

Transferring government decision making to private industry, regardless of whether an agency official grants final approval, threatens the Constitution’s concept of government by tending to convey excessive authority to private actors. Empowering a contractor employee with the ability to formulate contract requirements and to conduct solicitations, competitions, and evaluations takes the responsibility to govern away from those charged with carrying out the purposes of Government. The Constitution’s establishment of three branches of Government, the system of checks and balances, the Appointments Clause, and the Impeachment Clause all create a system of accountability for public officials among themselves and to the citizenry. But allowing private actors to perform inherently governmental functions, such as making procurement decisions, obscures the original framework.

What is Moorhouse’s solution when it comes to addressing the deficiencies in the current acquisition workforce? In part, he relies on the advice of former First lady Nancy Reagan; just say no. “When it comes to using contractors in the procurement office, government officials should be empowered to say no,” he concludes. The other part is equally simple. If you need more federal contracting officers, then just hire them. He concludes thusly:

If, as suggested, the Government does not hire contractors to do certain work, what are federal managers to do? This Article proposes that if extra personnel are needed in the procurement office, the hiring process must begin as soon as possible. In the face of a drawn-out hiring process, outsourcing the work is not the answer, and neither is contracting for a replacement in lieu of a federal employee.

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