Government by Contract: the White House Needs Capacity to Account for the Legacy of 20th Century Reform

• Publication year: 2017

Government by Contract: The White House Needs Capacity to Account for the Legacy of 20th Century Reform

Dan Guttman

GOVERNMENT BY CONTRACT: THE WHITE HOUSE NEEDS CAPACITY TO ACCOUNT FOR THE LEGACY OF 20TH CENTURY REFORM^†

Dan Guttman^*

Introduction

Signature priorities of the Bush and Obama administrations highlighted the deep and oft unaccountable roles of private contractors in the basic work of government, including national security activities and public welfare activities of highest level White House priority. Following 911, the country learned that, in addition to designing and building weapons, much of the work of war fighting is contracted out—through companies like Halliburton, Blackwater, CACI—contractors in the mess halls, on the battlefield, in Abu Ghraib prison. The "roll out" of the Obamacare, the domestic policy signature of the Obama Administration, was jeopardized by the reliance on contractors whose work was seemingly beyond official control. The post 911 dependence of national security cyber intelligence gathering on contractors was punctuated by the ability of a contractor employee—Edward Snowden—to access and release a trove of ostensibly deep national secrets.

In fact, today's Federal reliance on grant and contractor employees to perform such basic work of government is neither an accident nor a recent

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development. It is the predictable and predicted product of mid-20th century reform that produced profound successes, but left a legacy of fundamental questions that have lain ill addressed and oft unexamined by Congress and the Executive. Indeed, President-elect Trump's post-election tweets about "out of control" military weapons costs resonate with a "back to the future" mid-20th century Congressional investigations, and promised Pentagon reform, of military contract "cost overruns." The White House needs the capacity to understand this legacy and revision the reform for the 21st century.

At the dawn of the reform some reformers were aware that, as a 1962 cabinet level report to President Kennedy warned, the "blurring of the boundaries between public and private" would erode the ability of the official workforce to understand and account for the work of government. These early concerns were ignored. For decades, third party government has grown on automatic pilot. Driven by the inexorable force of bipartisan limits on the number of officials ("personnel ceilings"), the creation of new programs or agencies has meant that work is necessarily contracted out without due regard to its "inherently governmental" nature or the ability of officials to account for contractor work. Now, President elect Trump, as incoming President Bill Clinton, promises to cap and/or reduce the civil service workforce—but there is yet to be clear regard to the capacity of the civil service to account for contractors who, by default, will increasingly become the government with reduced civil service capacity.

Thus, over the past seven decades, contractors have come to play a daily role in the basic work of government—drafting rules, plans, policies, and budgets, writing statutorily required reports to Congress, interpreting and enforcing laws, dealing with citizens seeking government assistance and with foreign governments, managing nuclear weapons complex sites and serving in combat zones, providing the workforce for foreign aid "nation building," and selecting and managing other contractors and the official workforce itself.

By consequence, today:

(1) We have a White House that, for over half a century, has declared governance principle that is increasingly a fiction

Since the Eisenhower Administration, White House policy has been that only officials can perform "inherently governmental" work—even as limits on official personnel have made this policy a mantra detached from reality.

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The White House needs capacity to know which vital government functions may no longer be within the grasp of officials—and the extent to which longstanding White House policy is a placebo or fig leaf.

(2) We have a Government the bulk of whose workforce is too often invisible to even the highest political appointees.

The most basic data on Contractors and contractor work is too often invisible at the highest levels of government, as well as the public at large. Prior to the onset of the Iraq War the Secretary of the Army informed top Pentagon officials that the Army lacked basic data on the numbers of people employed under contract, their pay or location.¹

The White House needs the capacity to know whether top officials know the basic dimensions and identity of the human resources at their call.

(3) We can no longer presume that those who do government's most basic work are themselves governed by the laws enacted to define the limits of government and to protect citizens against "official" abuse.

Key rules governing officials (and soldiers) do not govern private actors who perform the work of government. These include the Bill of Rights, Freedom of Information, ethics, and pay laws. Where third parties are relied upon solely for "commercial" assistance, and accountable to officials, it makes sense to have one set of rules to govern the civil service and another to govern third parties. Where third parties do the work of government, this logic requires review.

The White House needs the capacity to know when those doing sensitive government work on taxpayer dollars are not subject to rules enacted to govern such activities.

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(4) We have an official workforce whose ability to account for the government and its private workforce is increasingly problematic.

With the added impetus of personnel ceilings, the dual sets of rules governing officials and contractors have, for decades, stimulated, a migration of talent from the official workforce into the contractor/grantee workforce.

The White House needs the capacity to know whether resources needed to use and account for contractors are adequate.

(5) In the absence of an adequate official oversight workforce and a rule of law tradition to apply to contractors who do the work of government, we rely on tools of accountability—competition, performance management, and transparency—that do not or cannot bear the weight placed on them.

The White House needs the capacity to determine how well the central tools of accountability are working.

In short, the next President needs the capacity to provide for a truth in government review of the legacy of 20th century reform.

I. Background: Where We Are and How We Got Here— A Capsule Summary

A. Contracting Out: Mid-20th Century Reform of Constitutional Dimensions

The writings of the public servants, businessmen, and scholars present at the creation show that the post-World War II growth of the contract bureaucracy was the product of design, not bureaucratic happenstance. At the Dawn of the Cold War, reformers believed that the harnessing of private enterprise to public purpose would serve two complementary purposes. First, the private sector would provide both technical expertise and powerful political support for increased federal commitment to national defense and public welfare tasks. Second, the private bureaucracy would countervail against the dead hand of the official bureaucracy and alleviate concern that a growing government meant a centralized Big Government. The officials, consultants, and scholars saw themselves as engaged in reforms of profound, even Constitutional dimensions

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In his 1965 The Scientific Estate, public policy scholar Don Price, first dean of the Kennedy school, described the transformational import of the "fusion of economic and social power" and the "diffusion of sovereignty":

. . .the general effect of this new system is clear; the fusion of economic and political power has been accompanied by the diffusion of sovereignty. This has destroyed the notion that the future growth of the functions and expenditures of governments . . . would necessarily take the form of a vast bureaucracy.²

This basic and benign reconstitution of government, marveled John Corson, a New Deal civil servant who, at mid-century, opened the management consulting firm McKinsey's Washington office, took place with "little awareness." Post-war contracting, Corson proclaimed in his 1971 book Business in the Humane Society was a "new form of federalism" under which the federal government gets its work done by private enterprise.³

At the same time, others saw developments differently. Most famously, in his 1961 Farewell Address President Eisenhower warned of the military industrial complex.

Less noticed, but no less insightful and prophetic, was a 1962 Cabinet level report to President Kennedy (the "Bell Report," after Bureau of the Budget Director David Bell) on the use of contractors in "R and D." The Bell report reported the following three things:

(1) declared that reliance on contractors has "blurred the traditional dividing line between the private and the public sectors of our Nation;⁴

(2) deemed it "axiomatic" that government officials (i.e., civil and special services and appointees) must have the competence required to account for all work of government;⁵ and

(3)

...