Out- and In-Sourcing: True Confessions

Harvard Kennedy School professor Stephan Goldsmith recently shared an insight he learnedIt is always tempting to set arbitrary goals to drive organizational change. Like most temptations, this one should be resisted. . . . I fell into this trap in 2000, when I served as the chief domestic policy advisor to then-Governor George W. Bush during his presidential campaign. Looking ahead to how many federal officials would likely be retiring during the eight years of the next presidency, I suggested that candidate Bush pledge to replace only half of them, eliminating the remainder of these jobs through efficiencies and outsourcing.”

In mid-2001, President Bush set just such goals in his President’s Management Agenda by saying he would compete “commercial-like” positions in the government, based on the required Federal Activities Inventory Reform (FAIR) Act. This triggered agency foot-dragging and partisan objections.  Bush stuck with his agenda through his remaining years in office and in the end, instead of competing an estimated 425,000 positions, the Bush Administration competed nearly 51,000 as of the end of 2007.

But in the process, Congress put in place a number of barriers to make competitive sourcing and outsourcing more difficult, if not impossible.  The term “competitive sourcing” became so controversial that OMB changed the term to “commercial services management!”

So what is Goldsmith’s lesson?  “We had gotten it backwards. Any goals in reducing the federal workforce should have come only after an examination of the specific activities of the federal government and an analysis of the commercial availability (and suitability) of competitive services. Instead, goals were set in a vacuum, much like the debates about angels dancing on the heads of pins. . . . The pendulum has swung, and now OMB is pushing in the opposite direction. I made a mistake in 2000 when I proposed a percentage reduction in employees to President Bush, and I likewise believe that any arbitrary decision to pursue insourcing is equally ill-advised.”

But the pendulum has swung.  Here is a link to a series of Defense Department guides on the new emphasis on insourcing, and steps to take. . . . Who will write the next installment in True Confessions?

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