Blended workforce poses conflict of interest risks.

• Author: Hughes, James A.
• Position: ETHICS CORNER

Federal agency spending on contractor-provided services has grown dramatically, Services account for more than 60 percent of the dollars obligated through inter-agency contracts such as the General Services Administration schedules.

In 2005, the Defense Department spent 33 percent of its procurement dollars on services, excluding research and development, and construction services. These services ranged from grass cutting and food preparation, to maintaining major defense systems. Service contractors provide core logistics support for operations in Iraq and Afghanistan.

Federal agencies rely on service contractors for many reasons, including ceilings on the number of federal employees, lack of capabilities and expertise within the federal workforce, the desire to retain operational flexibility, the need for surge capacity, and unstable funding resulting from the annual appropriations process.

The Acquisition Advisory Panel noted the emergence of a "blended" workforce, where contractors work side-by-side with federal officials. The panel made several key findings about this blended workforce, observing that the lines between governmental and commercial functions have blurred.

Agencies are inconsistent in defining inherently governmental activities. An inherently governmental activity is one that is so intimately related to the public interest as to mandate performance by federal employees.

Agencies increasingly rely on contractors for functions previously performed by civil servants. The extent to which agencies rely on contractors to perform core missions varies widely both within and among agencies. Most importantly, the panel cautioned that agencies must maintain the integrity of the government's decision-making processes.

In this blended workforce, contractors shape and influence many decisions made by the federal government. In some cases, contractors make decisions once characterized as inherently governmental. While there is nothing inherently wrong with a blended workforce--except arguably higher costs and loss of core expertise within the federal workforce--a blended workforce must be vigilant about potential conflicts of interest.

Industry consolidation and soaring levels of contractor participation in the blended workforce have increased the occurrence of organizational conflicts of interest. These conflicts arise in many contexts: corporate financial interests, teaming arrangements, legitimate access to non-public information...