CEI Labor and Employment Scorecard: Insourcing Amendment to Intelligence Authorization Act

This week, the Competitive Enterprise Institute (CEI) will score a vote in the U.S. House of Representatives in its consideration of the Intelligence Authorization Act for Fiscal Years 2014 and 2015 (H.R. 4681).

The intelligence authorization is considered annually, though there is some history of the process falling short of annual enactment. The vote below pertains to employment considerations for America’s labor force, both governmental and private. The score will be incorporated into CEI’s Congressional Labor and Employment Scorecard, which can be seen in full on CEI’s labor and employment policy website, WorkplaceChoice.org.

In the course of government operations, work and employees are transferred between the federal government and private employers through “insourcing,” whereby activity once performed by the private sector is brought under government control, and “outsourcing,” whereby the private sector takes over some functions formerly performed by government employees. When deciding whether to insource or outsource, policy makers should follow a basic principle: Businesses should not be subjected to unfair competition from government entities.

A good guide is the “Yellow Pages” test, which has been applied by mayors and governors around the nation, both Democrat and Republican. It operates under a simple premise: If you can find a private sector firm providing products or services that the government is also providing, then the service should be provided by the private sector. This would insert market competition into the government procurement process, break up government monopolies, and provide better value for taxpayers.

The Center for Naval Analyses found benefits of competing work, in its 1996 examination of the issue. The visibility and identification of alternate providers were beneficial aspects of the process identified by the Center. As a bottom line, the Center for Naval Analyses determined a 30 percent average savings resulted from this beneficial focus on competition, with savings persisting over time.

Government workers cost more per hour worked than private sector employees. As the Congressional Budget Office concluded in 2012,

On average for workers at all education levels, benefits for federal employees cost about $20 per hour worked, whereas benefits for private-sector employees cost $14, CBO estimates. Thus, benefits for federal workers cost 48 percent more per hour worked, on average, than benefits for private sector workers with similar attributes. Benefits also constituted a larger share of compensation for federal workers, accounting for 39 percent of the cost of total compensation, compared with 30 percent in the private sector.

A leaner, more efficient government is a worthy goal. The Competitive Enterprise Institute opposes the following insourcing- and outsourcing-related amendment:

Jackson Lee (Texas) Amendment #15 (REVISED) – requires the Director of National Intelligence to conduct an assessment and report to Congress on the reliance of intelligence activities on civilian contractors to support Government activities, including intelligence analysis.

  • This amendment is in furtherance of Rep. Jackson Lee’s stated goals to insource—to shift commercial activities from private sector firms to government operations.
  • The amendment directs the Director of National Intelligence to conduct an assessment of the reliance of intelligence activities on contractors to support Government activities, including an assessment of (1) contractors performing intelligence activities (including intelligence analysis); and (2) the skills performed by contractors and the availability of Federal employees to perform those skills.
  • In her press release of January 22, 2014, Rep. Jackson Lee stated,
    • “Congresswoman Sheila Jackson Lee calls for passage of legislation reducing the number of for-profit private contractors engaged in the conduct of intelligence activities.”
    • “When it comes to the conduct of intelligence activities, we should have greater faith and place more reliance on federal employees rather than for-profit private contractors… One such reform is to limit the number of private, for-profit contractors engaged in the conduct of intelligence activities.”
    • “I agree with the President when stated publicly on August 6, 2013 that it is important that the intelligence community ‘reduce the reliance on contractors.’ I share the concern expressed by the President over whether we should ‘be farming that much stuff out,’ particularly when we have so many ‘extraordinarily capable folks in our military and our government who can do this, and probably do it cheaper.’”
  • This amendment is part of the longstanding policy debate over insourcing and outsourcing, with overwhelming evidence demonstrating the benefits of market competition, including in the national security context.

The Competitive Enterprise Institute opposes the Jackson Lee (Texas) Amendment #15 on H.R. 4681, the Intelligence Authorization Act for Fiscal Years 2014 and 2015.

See more at WorkplaceChoice.org/Scorecard.

Cross-posted on Openmarket.org