Over the past 12 months, the federal government has experienced a significant expansion. Stimulus funding is now funneling to new and augmented programs. The government has assumed an unprecedented role in the automotive and banking industries. Most recently, the Obama Administration has established a substantive, new direction for managing the multi-sector workforce, which includes the mix of public, private, and volunteer personnel who execute public missions. Taken together, these developments suggest the start of a new era for the federal government.
Economic challenges have clearly increased the role of government in the short term. This growth, however, has developed within a broader context of the federal government's increased reliance on external service delivery networks. Time will tell the extent to which the recent expansion of the federal workforce is sustainable.
One thing is clear: a careful review will soon be underway to optimize the workforce composition providing this expanding scope of government services. As federal managers seek to execute their missions through managing the multi-sector workforce, the need for cross-functional collaboration is more important than ever.
Optimizing the multi-sector workforce relies on the collaboration of program managers, human capital, acquisition, and business and finance professionals (see Figure 1). Additional stakeholders and functional areas, including senior leadership, performance management, information technology, and related logistics, also support the optimal management of this workforce. This collaboration is critical to effective and efficient engagement of the most appropriate service sectors.
Government organizations' reliance on a range of service sectors to deliver on their mission presents a number of important considerations. In his 2002 book,
The Tools of Government, Lester Soloman noted that challenges can arise from services delivered from third-party providers.
He acknowledged an evolving paradigm shift in the structures or 'tools' governments employ to deliver public services: " ... not simply the delegation of clearly defined ministerial duties to closely regulated agents of the state. That is a long-standing feature of government operations stretching back for generations. What is distinctive about many of the new tools of public action is that they involve the sharing with third-party actors of a far more basic governmental function: the exercise of discretion over the use of public authority and the spending of public funds."
[FIGURE 1 OMITTED]
In 2005 the National Academy of Public Administration (NAPA) initiated a study that defined the multi-sector workforce as "a mixture of several distinct types of personnel working to carry out [a federal] agency's programs." The NAPA study also noted that this situation presents certain challenges.
The term multi-sector workforce recognizes "that federal, state, and local civil servants (whether full or Part-time, temporary or permanent); uniformed personnel; and contractor personnel often work on different elements of program implementation, sometimes in * the same workspace, but under substantially different governing laws; different systems for compensation, appointment, discipline and termination; and different ethical standards." n
The Services Acquisition Reform Act (SARA) of 2003 created a panel to investigate government-wide acquisition practices, including issues created by the blended workforce. The panel reported its findings in 2007 and found that in some cases contractors were solely responsible for mission-critical functions that were traditionally performed by government employees, such as acquisition program management and procurement, policy analysis, and quality assurance.
The U.S. Government Accountability Office (GAO) agreed with the panel's findings and commented: "We found that there is a need for placing greater attention on the type of functions and activities that could be contracted out and those that should not, reviewing the current independence and conflict-of-interest rules relating to contractors, and identifying the factors that prompt the government to use contractors in circum-stances where the proper choice might be the use of government employees or military personnel."
In a July 2009 U.S. Office of Management and Budget (OMB) memorandum, budget director Peter Orszag outlined the Obama Administration's vision for how the federal government will engage the multi-sector workforce to execute its complex missions. The OMB memorandum recognized that "both federal employees and private sector contractors deliver important services to citizens. Agency management practices must recognize the proper role of each sector's labor force and draw on their respective skills to help government operate at its best."
The memorandum established a framework through which agencies can make sector-sourcing decisions, mandated a pilot human capital analysis related to in-sourcing functions currently performed by external service providers, and required agencies to create guide-lines for in sourcing procedures.
By outlining this multi-sector approach, the Obama Administration established a clear break from the management initiatives of past administrations. Both the Clinton and Bush administrations attempted to use competitive-sourcing to infuse competition as a driver for efficiency and effectiveness, as outlined under the OMB Circular A-76 guidelines.
Agencies conducted cost comparisons between industry and in-house personnel for functions available in the marketplace. These efforts primarily focused on federal workers performing activities available in the commercial marketplace.
The Obama Administration's vision for the multi-sector workforce takes a broader approach. Director Orszag writes that there should be no presumption of an outcome (in-sourcing, outsourcing, and so forth) when evaluating a program or activity's workforce com-position. The administration recognizes that too often public managers focus on the tactical challenges of navigating the personnel system to fill vacancies as they come available. Rather, mission requirements should drive the balance of public and private providers.
Agencies need to fully and effectively consider their program's goals and priorities, and the associated human capital needs to find the right balance. Government should retain a core capacity to both deliver mission critical services, as well as hold outside service providers accountable for performance. External service providers could perform non-mission critical services, especially those that are non-recurring and commercially available.
Roles of Key Decision Makers
By broadening the scope of services examined for sourcing efficiencies, the administration has created a shared responsibility for public sector managers requiring, "meaningful collaboration across many organizational lines." This collaboration presents a new challenge for agencies. Figure 2 summarizes key contributions from program management, human capital, acquisition, and budget and finance professionals.
Here's a closer look at the key collaborators and participants in the management process, as well as some critical considerations federal agencies must address to achieve an optimized multi-sector workforce.
Program managers retain ultimate responsibility for mission delivery. NAPA acknowledged the cascading accountability dynamic in the following manner: "The federal manager is responsible for spending public funds, exercising public authority, protecting the public's trust, and delivering results to citizens as part of the mission of each individual agency. Using multi-sector workforces requires a dispersion of administrative authority and reduces the level of control that the federal manager has over the process, yet this does not reduce the oversight responsibilities or the requirement for delivering results."
The OMB memo supports this accountability for results by acknowledging that performance and risk considerations may require federal performance. Such situations include areas where the agency needs to establish or build internal capacity to maintain control of its mission and operations, where the function is closely associated with an inherently governmental function, or where the continued use of private sector service providers would compromise a critical agency or administration policy.
Program managers are best suited to speak specifically to the mission requirements and specific program goals, the skills of government program personnel, and the capabilities of their staff to manage outside support. As those ultimately accountable for program results, these professionals will have important contributions for setting mission definition and goals, and determining the required skills and resources for delivery.
Workforce planning begins with the program itself. Organizational goals should align with a current and validated mission statement. Once the program has defined its mission and goals, the program can gauge the skill mix and labor required to achieve these goals.
Agencies should begin this analysis at a high level to benefit from broad efficiency opportunities presented through shared services agreements with other agencies, strategic sourcing procurements, and internal organizational and process redesign.
In addition, broad definition of program needs will enhance the organization's ability to hold the performing organization accountable through clearly defined organizational outcomes. Aligning individual, and organizational performance goals, establishing performance outcome expectations through inter-agency agreements, and creating performance-based contracts are all accountability structures that will minimize programs risk through clear expectations setting and controls. Human capital and acquisition professionals will provide important advice and guidance to the program in this process.
Human capital professionals will play a critical role as agencies evaluate whether or not to bring work in-house. In sourcing has gained momentum as a tool for managing the multi-sector workforce, with OMB now requiring all federal agencies to conduct a pilot human capital analysis to identify an organizational candidate appropriate for in-sourcing.
OMB had directed all agencies subject to the FAIR Act to "devise and implement guidance and procedures to ensure that consideration is given to using, on a regular basis, federal employees to perform new functions and functions that are performed by contractors and could be performed by federal employees."
Situations in which in sourcing may be appropriate include instances that contractors or external service providers currently perform inherently governmental work or provide personal services. Additionally, this may include situations in which internal control of mission and operations is at risk due to over-reliance on contractors or inability of federal staff to oversee con-tractors' performance.
The process of converting previously contracted functions in-house will have a substantial impact on an agency's human capital operations. From revised strategic human capital plans to tactical hiring practices, making this vision a reality will require significant effort. A program's human capital strategy should take a long-term perspective on skills and personnel development.
Skill requirements should look beyond current needs, and include potential future requirements that provide the program with flexibility to address changing mission requirements and functions currently performed by contractors. Agencies should have a forward-looking perspective that assumes government will perform additional mission critical work moving forward. Human capital professionals may provide programs direct guidance on establishing mission and performance goals that align to the agency's broad mission.
The OMB guidance states: " ... chief human capital officers can provide expertise in strategic human capital planning, strategies for attracting or developing employees with required technical skills and competency-based approaches to talent management."
Hiring organically is a common occurrence in the federal government, but in sourcing extends beyond filling a single position previously performed by a contractor. Public managers should prepare for the effects through proactive human capital planning and targeted hiring actions. Agencies need to engage human capital professionals in the strategic evaluations of not only work requirements, but also the tactical implications for these decisions for aggressive recruiting and sourcing actions.
Among the key considerations for determining the most appropriate sector of performance is the extent to which the work is inherently governmental or commercial in nature. Retaining inherently governmental work for government performance is not a new issue for government managers. The Federal Acquisition Regulation (FAR) clearly outlines the scope of services requiring in-house performance. Inherently govern-mental functions include
* binding the United States to take some action by contract, policy, or regulations
* determining United States' interests by military or diplomatic action
* significantly affecting the life, liberty, or property of private citizens
* appointing or directing officers or employees of the United States
* exerting ultimate control over the acquisition or use of property of the United States including the collection of federal funds.
While the Administration is currently reviewing these definitions, OMB provided guidelines to support sourcing determination decisions (see Figure 3).
Beyond providing expertise in assessing the inherently governmental nature of the work, acquisition professionals play a key role in evaluating whether industry is capable of providing a service.
Market research may show that regardless of the nature of the work, government performance may be the only option for delivery in remote locations or due to the level of risk or cost. Likewise, acquisition professionals will conduct procurements for services deemed most appropriately delivered by the private sector.
Acquisition professionals also will help develop, implement, and evaluate contracting vehicles to provide agencies with the needed competencies, surge capacity, and short-term technical expertise to deliver mission requirements. Acquisition professionals play a key role in assessing the nature of the work under review, and in tactically implementing sourcing actions where outside private sector service providers may be appropriate. Finally, acquisition professionals will help with the termination or phase out of a contractor or development of a transition plan if the government decides to bring work in house.
Budget and Finance
Budget and finance professionals provide the cost data needed to make informed management decisions, allocate budgets based on changing workforce dynamics, and ensure that programs have the appropriate federal billets or contractor funding streams in place to achieve the desired work-force composition. OMB has stated that cost comparisons are required for in sourcing determinations where either public or private sector performance may be appropriate.
In cases where government or contractor performance is acceptable, agencies must document a cost analysis that encompasses the full scope of the activity. This cost analysis should be reflective of the full cost of in-house performance and will rely on key data inputs from budget and financial professionals.
Cost comparisons carry the potential of creating substantial controversy. Documenting cost estimates and assumptions will require technical advice and guidance from finance professionals. Specific guidance on cost comparisons would further enhance the multi-sector workforce initiative.
OMB should release explicit guidance on the appropriate cost factors needed to compare equitably contractor or government performance. Once an organization decides to implement a change in workforce composition, budget and financial professionals will need to adjust budget forecasts accordingly. Program, planning, budget and execution processes should align with a revised human capital strategy that shifts work from contractor to government or vice-versa.
Though not specifically identified in the OMB memorandum, several additional functional areas support multi-sector workforce management. Key contributors for either decision making or execution include senior executives, performance assessment professionals, information technology, security, and related logistics personnel.
Senior executive leadership and buy-in is required for the successful implementation of any management initiative. Support from senior executives is achievable by integrating specific performance goals into performance plans for reviewing and supporting a balanced workforce plan. Executives such as the chief human capital officer, chief acquisition officer, chief financial officer, chief performance officer, and chief information officer all have roles to play in providing management resources and timely decision making.
The agency's chief executive officer should articulate a clear vision of mission performance and establish a culture for performance accountability. The agency's chief executive also should assign ultimate responsibility for decision-making and OMB reporting to a single, responsible official who can lead coordination efforts across all functional areas.
Performance management staff also will play a role in providing key information to support informed management decision making regarding multi-sector work-force redesigns. On going program monitoring will identify service areas that are being terminated, reduced, or changed in scope to better meet an agency's needs. As these changes occur, decision makers will need to assess performance information to ensure operations continue to support the agency's vision.
Other stakeholders abound in managing the multi-sector workforce. Earlier this spring, the Office of the Secretary of Defense issued implementation guidance on in-sourcing, which acknowledges additional supporting stakeholders.
The guidance stated, "Developing of an in sourcing plan requires collaboration among a number of stakeholders, including officials from programming and budget, resource management, contracting, manpower, and civilian human resource communities, as well as requiring officials. In addition, officials responsible for space and facilities management, security clearances, information technology, and other related functions should be consulted, as appropriate, so that proper consideration is given to these requirements."
These additional functional areas will have an important role in determining the feasibility of sourcing actions and in establishing realistic milestones for transition plans.
Federal agencies have an opportunity to establish the optimal balance of sector contributors for mission delivery. Each sector, from private to public to non-profit and volunteer, has an appropriate role to play in delivering services needed. Ultimate responsibility, however, invariably will fall on public managers to get the job done. Citizens have charged government stewards to deliver on mission goals while balancing cost and risk factors.
The Obama Administration has provided an initial framework through which public managers can achieve these goals and align strategic and human capital planning efforts. With the proper collaboration across functional lines, public stewards can design a more appropriate balance of sector workforce contributions.
With the appropriate emphasis on managing risk, cost and performance accountability, this initiative is poised to usher in a Golden Age of Government in which government performs the right level of service and engages outside service providers only when in the best interest of the public.
Federal Acquisition Regulation (FAR) Part 7.5. Government Accountability Office (GAO), Federal Acquisition: Oversight Plan Needed to Help Implement Acquisition Advisory Panel Recommendations. GAO-08-160, December 2007, 15.
"Managing Federal Missions with a Multi Sector Workforce: Leadership for the 21st Century," National Academy of Public Administration, Academy Initiative, November 16, 2005.
Office of the Secretary of Defense, Memorandum, "In sourcing Contracted Services--Implementation Guidance," May 28, 2009, Attachment 1, 2.
Peter Orszag, Memorandum for the Heads of Departments and Agencies (M-09-26), "Managing the Multi-Sector Workforce," July 29, 2009.
Section 736 of Division D of the Omnibus Appropriations Act of 2009, P.L.111-8
Lester Soloman, ed. The Tools of Government: A Guide to the New Governance. Oxford University Press, 2002, page 2.
Figure 2. Key Contributions for Multi-Sector Roles Responsible Multi-Sector Workforce Roles Stewards Program * Define mission and align organizational goals Managers * Match mission and goals with skills and resource needs * Support assessment of inherently governmental or commercial activities * Help identify program risk * Oversight of contractor performance Human * Provide skills assessment framework Capital * Develop organizational constructs Managers * Draft position descriptions and facilitate hiring * Plan for human capital needs Acquisition * Assess broad-based acquisition alternatives for mission Managers delivery * Provide market research analysis on industry offerings * Advise on Federal Acquisition Regulation (FAR) guidelines related to inherently governmental activities * Perform inventory of federal activities performed by contractors and feds (Contractor/Federal Activities Inventory Reform (FAIR) Act Inventories) Budget and * Provide data inputs for cost analysis and comparisons Financial * Align budget projections with sourcing decisions Managers * Match budget authorization with multi-sector workforce goals Figure 3. OMB Sourcing Guidelines If the function is Positions performing the function may be filled Inherently only with federal employees governmental Critical, but not only with federal employees to the extent inherently required by the agency to maintain control of governmental its mission and operations (or if required by law, executive order, or international agreement) and by either federal employees or private sector contractors once the agency has sufficient internal capability to control its mission operations Essential, but not by either federal employees or private sector inherently contractors governmental
Phil Kangas is a director within Grant Thornton's Global Public Sector practice with more than 13 years of professional experience in government and consulting. He has worked as a federal, state, and local employee prior to his work in consulting. He earned his master's degree of public administration from the Maxwell School of Citizenship and Public Affairs at Syracuse University, and is a Certified Government Financial Manager (CGFM), Project Management Professional (PMP) and Six Sigma Black Belt (SSBB). His recent work has focused on supporting multiple component organizations at the Department of Homeland Security to improve business operations and manage performance through investment management, business transformation and multi sector workforce analysis. He can be reached at Phil.Kangas@gt.com.…