U.S. government 'outsourcing its brain'
Published: Friday March 30, 2007
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Due to its increasing practice of contracting out to private firms and agencies, the U.S. government is quickly losing its expertise and competence in vital national security and defense programs, according to a Wall Street Journal report.

"Since the 2001 terrorist attacks and wars in Afghanistan and Iraq, the federal government's demand for complex technology has soared," writes by Bernard Wysocki, Jr. for the Journal. "But Washington often doesn't have the expertise to take on new high-tech projects, or the staff to oversee them.

"As a result," he continues, "officials are increasingly turning to contractors, in particular the hundreds of companies in Tysons Corner and the surrounding Fairfax County that operate some of the government's most sensitive and important undertakings."

The number of private federal contractors has now risen to 7.5 million, which is four times greater than the federal workforce itself, the report indicates. Such a trend is leading the government to what Wysocki calls the "outsourcing [of] its brain."

The shift to private firms has not been without its problems, however, with faulty work and government waste becoming rampant.

"Today, the potential pitfalls are legion," writes Wysocki. "Big contracts are notorious for cost overruns and designs that don't work, much of which takes place under loose or ineffective government scrutiny." The outsourcing of these government programs "can be a prescription for enormous fraud, waste and abuse," Rep. Henry Waxman (D-CA), chairman of the House Oversight and Government Reform Committee, is quoted as saying during a hearing.

The trend in outsourcing has particularly favored large, established contractors such as Lockheed Martin, Northrop Grumman, and Booz Allen. Among Booz Allen's most notable contracts is the Total Information Awareness program, a Defense Department database intended to detect terrorists. That program has received criticism over concerns of privacy invasion.

Excerpts from the Wall Street Journal report follow...


One flashpoint today is whether contractors hire other contractors without enough controls or competition. In March, Rep. Waxman introduced a bill that would put limits on contracts awarded without competitive bidding. It passed the House by a wide margin and is raising fears among contractors that it could dent their growth. Federal procurement is already expected to slow because of budget constraints and the slowing of the post-9/11 spending boom.

Rep. Waxman's staff, in a Feb. 8 memo, said that "at least one contractor hired to engage in contract oversight on the border project, Booz Allen Hamilton, may have a conflict of interest with Boeing Co.," the prime contractor. Booz Allen has done consulting work for Boeing and has been a member of the Boeing team on other contracts.

Ralph Shrader, chief executive at Booz Allen, flatly denies the charge. "I take the greatest exception to the idea of conflict of interest," Dr. Shrader says, adding that Booz Allen is doing "support" and "coordination" work on behalf of the government, and doesn't "oversee" Boeing. He adds that Booz Allen has for decades taken pains to avoid conflicts of interest, and has a rigorous process to avoid such conflicts. (Dow Jones & Co., publisher of The Wall Street Journal, has hired Booz Allen to help the company with its news strategy.)