David Songco, CIO of the National Institute of Child Health and Human Development at the National Institutes of Health, supervises just six federal employees but works closely with dozens of contract employees from several companies. It’s a managerial balancing act that he and a growing number of executives in government are confronting every day. He is careful to delineate the boundaries between his federal employees and contractors. “You go to lunch with the [contract workers] on site, and you build a team with them. But they still understand that they don’t work directly for you,” Songco said. “Maybe that’s the fine line people talk about. But I’m conscious of that fine line.”

Increasingly, the federal government has become a blended workforce—federal employees and an ever-growing number of contractors from private industry who work side by side, virtually indistinguishable from each other.

For federal managers, managing this mix of feds and contractors poses special challenges. Respective roles and responsibilities, for example, must be meticulously defined and assiduously m

The sound bite is that we reduced the government workforce, but we leave out the part about the head count going up. —NIH’s David Songco (Image: Drake Sorey)

anaged.

Since 1990, the federal workforce has decreased from 3.4 million to 2.7 million. At the same time, the government’s services to citizens have, if anything, expanded, creating an even greater dependence on contractors to meet goals and fulfill missions.

NASA, for example, contracts with the private sector for more than 90 percent of the products and services it uses, a NASA spokeswoman said. In 2006, NASA’s contract employees numbered more than 38,000.

Songco is well acquainted with mixed-workforce issues. Responsible for IT support for 1,600 people, his offices are scattered throughout 11 NIH buildings in the Maryland suburbs of Rockville, Bethesda and Poolesville. He works with about 30 on-site contractors who provide network support and desktop support. Almost two-thirds of Songco’s contract employees, about 50, work off-site on applications development.

Working so intimately with contractors, “it’s important you define responsibilities clearly,” Songco said. He tells the project leaders what needs to be done but is careful not to tell them how to do it.

Songco uses a small company for independent validation and verification support. It’s this company’s job to help him manage the bigger companies and interpret their deliverables.

“When somebody presents me with an analysis of whether to use [a Java or a Microsoft platform], I need to make sure I’m getting this information from someone who doesn’t have a vested interest,” he said. The IV&V company is there to help him do that.

“You could do this with just your government staff,” Songco said. “But you need more agile staff resources. You may need somebody for only two or three months.” Labor Department chief financial officer Sam Mok has seen role confusion occur when federal employees and contractors work side by side for years. “Sometimes consultants are there for so long, they start behaving as federal employees do, and that’s where the troubles start,” Mok said.

“You cannot treat consultants as enemies—they are there to help us,” he said. “But we also must remember that they are not part of a family per se. They could be cousins, but they are not immediate members of the family because they are here to make money.” (See Mok’s commentary, Page 18.)

Drawing Lines. There are definitely “some boundary issues” with the blended workforce, said David McClure, research director of government IT management at Gartner Inc. of Stamford, Conn.

In the IT arena, questions frequently arise over whether an operation can be performed by a contractor or whether it’s something unique and closely tied to the mission, in which case only a government employee can perform it, McClure said. For example, a contractor can run a data center, but the government manager is accountable for the data.

Management techniques such as earned-value management, the accurate measurement of work performed against a baseline plan, can help managers better define costs and outcomes for contractors, McClure said. EVM can act as an early warning system for a project that is veering off course.

“Considering what’s happening in technology and communications, and how rapidly citizens expect improvements, government has no choice but to work with a diverse set of contractors,” said Ira Goldstein, national director of federal practice with Deloitte & Touche USA LLP of New York.

But at the end of the day, the government manager is the one who has to make the decisions, Goldstein said. “The contractor has to frame when there is a clear decision-making point and support the government’s ability to make that decision.”

Steve Kelman, a professor of public management at Harvard University’s Kennedy School of Government, sees the blended workforce as something that “looks terrible in theory, but works pretty well in practice.”

Frequently the government will issue a request for proposals for “staff augmentation,” Kelman said. “People come in for program support. A lot of times it’s administrative work.” These people are in effect government employees.

Although this sort of arrangement usually works fine, Kelman thinks that agencies should look more closely at the real reasons why they are bringing in so many contract staff.

Many contract employees are “de facto temps,” Kelman said. If an agency needs temporary help, fine, hire some contract staff. That’s a good reason to hire contract staff.

But there are also bad reasons to hire contract staff, Kelman said. “If your budget account is set up so that you have money to hire contractors but don’t have money to hire employees, that’s bad,” he said. That’s because Congress gave that agency insufficient funds to hire federal employees, but plenty of money to hire contract staff.

“You hear people say, ‘I have trouble controlling contractors,’ ” Kelman said. “I believe a federal supervisor in reality has more control over a contractor than a civil servant.”

Due Process. Take, for example, the case of a GS-13 manager who oversees a blended workplace of federal employees and contractors. When his organization had a security breach, he suspected two employees—one was a contractor, the other a federal employee. “The contractor was gone the next day,” Kelman said. “But six months later, the manager is still going through due process to get the civil servant removed.”

Most federal agencies have a statutory prohibition against personal-service contracts, which let the government manager give direction directly to the contractor, Kelman said. Because this type of contract is illegal, agencies have created a “Procrustean bed” where they “have to go through the fiction that there are deliverables” for these sorts of contracts, he said.

Some of the problems the federal government has encountered with its contractors are really “self-inflicted wounds,” Kelman said. “Government has created problems for itself with its inflexible civil-service system.”

But the government needs contractors, and contractors need the government, Kelman said. “In a good contractual relationship, 80 percent of the government’s interests and the contractor’s interests are the same, 20 percent are different.

Government has to be careful,” he said. “If the government assumes there are zero-percent common interests, it will get in trouble. If it assumes there are 100 percent common interests, it will get in trouble.” But the 80 percent/20 percent balance is about right, Kelman said.

Federal managers and industry analysts agree that the government’s rigid employment rules about hiring and firing contributed to the rise in government’s use of contract staff.

“Once a person has been a federal employee for three years, it’s very difficult to remove them unless you have a reduction in force or other big cause,” Songco said. “If you have a changing workload, you can’t add or subtract people easily.

So that’s why you bring in contractors, which you can add and subtract easily. But that works so well that you just keep adding more and more contractors. You cut the number of government employees. But the numbers don’t tell you that the head count went up. The sound bite is that we reduced the government workforce, but we leave out the part about the head count going up.”

Contractors and federal employees do have different callings. The federal employee takes an oath; the contractor does not. The stereotype that contractors just want to make money persists, Songco said. “Saints versus sharks,” some have called the tension between feds and contractors. But stereotypes cut both ways. The stereotype of government employees is that they’re “fat, dumb and lazy,” Songco said.

A government employee since 1960, Songco has seen “many pockets of excellence. People stay at NIH a long time because they have that passion and commitment.”

But Songco also worked for three years in industry, where he said he did worry quite a bit about “billable hours. You always want to keep billable hours up.”

The other part of the contractor’s equation, though, is performance, Songco said. “If you don’t satisfy your client, and you aren’t delivering quality work, you won’t get the billable hours. I think good government managers understand that. Some government managers try to squeeze the vendor down to the lowest possible rate. But if you want high quality you have to pay for high quality.”

Most contractors are just as much invested in the government mission as federal workers are, Kelman said. “Contractors are just as committed to the idea of preventing another 9/11 or helping the elderly or advancing scientific research” as their federal counterparts, he said.

“If you end up in a situation where the contractors are the ‘sharks,’ you either don’t have a good contractor or you’re not managing the contractor well,” Kelman said.

There are always some bad apples, Deloitte’s Goldstein said. “You’ve got to find them and get them out of the business.”

Kim Nelson, former CIO of the Environmental Protection Agency and now Microsoft Corp.’s director for e-government in the public sector, worked with a ratio of 10 contractors to one federal employee at EPA. She describes her experience with contractors at EPA as quite positive. For example, Lockheed Martin Corp. had a contract to run EPA’s data center. “Lockheed Martin didn’t win the contract when it was rebid, but they handled the transition in such a way that it was entirely seamless to the EPA employees,” Nelson said. Two years later, Lockheed Martin won another contract with EPA, and the same thing happened. “When it came time to turn [the contract] over to another contractor, they were so professional about it that they went on to win another contract with EPA.”

When an agency has a large ratio of contractors to federal employees, the manager’s job is to a large degree contract management, Nelson said. “As the federal workforce changes, and there are more and more contractors, it becomes a management responsibility to clearly articulate the expectations of each and every employee.”

Mike Cameron, program director for Booz Allen Hamilton Inc. of McLean, Va., sees more cooperation than competition between government employees and contractors. “I honestly think most camps are more concerned with getting it right than maintaining party lines and finger-pointing across the aisle,” he said.

To Cameron, the blended workforce is just one aspect of why an acquisition either works or doesn’t work. “We think acquisition is just government buying something,” he said. “But there’s something else—the delivery. Most acquisition programs that struggle, struggle during the delivery phase. Most of the challenges I see are management challenges.”

“Management is an overlooked aspect of the acquisition lifecycle,” he added. But animosities between federal employees and contractors are not unheard of.

“In our case, federal civilians see contractors as ‘scrubs,’ ” said a contractor at a federal agency who requested anonymity. “It is now three years after contract start date and there continues to be a large animosity toward contracted staff.

Politics come into play as well. If a federal employee does something wrong, it is glossed over. If a contractor makes the same mistake, it is basically viewed as breach of contract.”

This contractor said he thinks the Office of Management and Budget and the Government Accountability Office “need to establish an audit team that annually visits and reinforces requirements.”

Outside the Boxes The agency’s mission can sometimes be a factor in the outcome of federal versus contractor partnerships. Some missions seem to transcend the proscribed roles of feds and contractors.

For example, David Songco is currently working on a huge project, the National Children’s Study, to examine the effects of environmental influences on the health and development of more than 100,000 children throughout the United States, following them from before birth until they turn 21.

He will work with employees from Booz Allen Hamilton, Westat of Rockville, Md., and a number of government agencies ranging from EPA to the Centers for Disease Control and Prevention.

“When you have a mission like that—to improve children’s health—people have a passion about it,” Songco said. “Everybody needs to make money, but these people go the extra mile.”

No doubt, “there are dangers when you bring government and federal contractors together,” Songco said. “What you need are people who’ve had experience doing this.” Songco also said the government needs strong technical representatives—the federal officials responsible for evaluating the performance of the contract—and contractors who cooperate with them.

Another factor that sometimes complicates the federal-contractor relationship is the “revolving door” of vendors becoming federal employees and vice versa.

“A lot of consulting firms hire people with a long history of government experience and then turn them back to their fellow agencies to become consultants,” Mok said. “Many longtime distinguished federal government retirees, or those who spent a long time in the government, have never closed a deal in their life. Suddenly they are thrust into a corporate environment and expected to go out there and make money for this for-profit entity. It’s a very difficult cultural change, and I’m not sure many consulting firms invest in training them to make that paradigm shift,” he said.

According to Cameron, focusing more on the output, not the labor category, will help federal managers forge more productive partnerships with contractors. It can also prevent the blurring of roles that can occur when feds and contractors work side by side.

The key area where role confusion between feds and contractors is likely to proliferate is when agencies think of contractors as “just additional labor,” Cameron said. For example, if a federal manager needs software development, he has several choices. “I could say, ‘Find me a Java programmer with a B.A. and three years of experience.’ If I think of it that way, there’s nothing to distinguish between hiring a person in industry or a person in government,” he said. “But if I look at that same need and say, ‘I need someone to come in, write software and accomplish the following five tasks’—then I’m looking at the benefit provided by that specific person. If I focus on the output of the person’s efforts as opposed to the labor faction, there’s no confusion” between feds and contractors.

Kim Nelson said she thinks “it’s very healthy for both sides to get a feel for the other side. But I do wish the government made it easier for government employees to go out there, get industry experience and come back.”

Contractors coming back to an agency as a federal employee give an agency “mobility,” said Goldstein, an assistant controller general at GAO in the late 1980s. He found that the “best GAO teams were the ones that included some people who had experience operating in the program that GAO was reviewing.”