Feds, get used to outsourcing

"It will happen. The pressures on government to downsize, focus on mission and
balance the budget are all driving us in that direction," said Bruce McConnell, chief
of the Office of Management and Budget's Information Policy and Technology Branch.
"We're very bullish on outsourcing as a general proposition, especially in IT-related

Speaking at an information technology budget briefing hosted by Federal Sources Inc. in
McLean, Va., McConnell, Emmett Paige Jr., former assistant secretary of Defense for
command, control, communications and intelligence, and Marvin Langston, the Navy's chief
information officer, discussed how agencies should handle outsourcing decisions.

President Clinton has advocated outsourcing as a major budget-balancing tool and the
National Performance Review urged agencies to consider farming out common computing tasks
wherever feasible.

OMB Circular A-76 requires agencies to conduct market research and do a cost-benefit
analysis before contracting out significant computing jobs. Nevertheless, McConnell said
outsourcing targets include personnel and payroll systems.

"The criteria for outsourcing is noncore government functions," McConnell
said. "For example, the Agriculture Department is supposed to run a loan program, but
not necessarily run a data center. The bulk of commercial operations that are heavily
dependent on IT are prime candidates."

Langston said the Navy has adopted an IT utility strategy with outsourcing as a key
element. But Navy officials are being careful not to cede responsibility for technical
tasks to any one contractor.

"It will not be a single large contractor but a family of contractors,"
Langston said. "Whenever we're dealing with network control or network administration
there needs to be a military component. But there can be a strong relationship and shared
responsibility to measure the outcome."

Paige, however, warned that major outsourcing initiatives will remain on hold until
more members of Congress endorse the concept.

The history of outsourcing has been wrought with political gamesmanship and
bureaucratic infighting, as evidenced by the Defense Department's longstanding battle to
reduce the number of its megacenters, he said.

"Anything not involved in warfighting should be outsourced. Something industry
does as a regular business practice is a candidate," Paige said. "The fight
really hasn't begun yet. You can expect Congress to defend their constituencies."

McConnell said the biggest concern about outsourcing is guaranteeing performance.
Although agencies can save money by hiring contractors to perform routine functions, the
government cannot afford service breakdowns, he warned.

"Government operations cannot fail. We have to limit how much responsibility we
can transfer and still maintain accountability," McConnell said. "We need
partnering arrangements where responsibilities are clearly understood and based on results
and outcomes."

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