In-sourcing efforts require careful, balanced approach.

• Author: Farrell, Lawrence P., Jr.
• Position: PRESIDENT'SPERSPECTIVE

* The Defense Department is now putting the final touches on its sweeping "in-sourcing" initiative that the Obama administration launched in early 2009.

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The plan is to bring in-house 33,000 contractor jobs between 2011 and 2015. Of these, 10,000 will be acquisition workers. In addition, the Pentagon intends to create 10,000 new acquisition positions. Bottom line: the defense procurement work force will grow by 43,000 and the acquisition sector will expand by 20,000.

Some growth in personnel seems necessary and prudent. Everyone agrees that shortfalls in the government acquisition work force--in both skills and numbers--must be fixed. Of particular concern is having sufficient expertise in key areas such as systems engineering, contracting and program management.

It is important, however, to make sure that in-sourcing does not have detrimental effects on the industrial base. The government should ensure that the justifications for in-sourcing are fair and do not unreasonably punish the private sector.

Stan Soloway of the Professional Services Council points out that the administration is assuming a 30 to 40 percent savings from non-competitive in-sourcing, and that these savings don't reflect the government's true costs. He also concludes that some in-sourcing decisions are made arbitrarily, without careful study of what actual skills are required. One needs to keep in mind that the ultimate goal here is to increase efficiency in federal programs and to make the government a smarter buyer.

Loren Thompson of the Lexington Institute cites distrust of contractors as one justification for in-sourcing. This is not a valid reason. Thompson also lists several downsides to in-sourcing: Public-sector workers are almost impossible to displace once hired, so the government loses flexibility in adjusting the work force to the demand. It also drives up its long-term costs. Other negative consequences are the loss of industry expertise and a likely decline in private-sector investment.

Along with all of this have been scattered industry complaints about the government "poaching" industry employees. Although defense officials deny the accusations, it must be acknowledged that the only place where government can recruit qualified acquisition workers is industry. So some of this is, in fact, occurring.

Unconnected to the in-sourcing program, but also worrisome, is the movement of government depots to bring in-house the workload that...