For more than two years now the Obama Administration has been seeking to redefine the role of private sector support of the Federal government. It has done so under various guises: the claim that inherently governmental work was being performed by private contractors, the assertion that private companies were subject to conflicts of interest in the work they performed and even the demonstrably false argument that the government could perform the same work cheaper. Some government representatives asserted that their studies showed that the same work could be performed by the public sector for 40 percent less than was being charged by private companies. This assertion alone is surprising since, according to a recent article in USA Today, based on U.S. government data, the average government employee receives a salary 20 percent greater than his private sector counterpart, or around $68,000. The average benefits package for federal works is over $40,000 making the total cost for a government worker over $100,000. It does not seem possible that government work can be cheaper than the private sector.
The U.S. Air Force has been particularly egregious in seeking to insource private sector work. It has done so claiming that it can perform the work more cheaply. However, as a recent Lexington Institute study demonstrated, the Air Force’s own data clearly shows that work performed by the Air Force alone is virtually always more costly.
Now the Air Force appears to be taking the next step in its war on the private sector. The Air Force has published a draft guidance memorandum that tries to assert that all software maintenance for any computer programs embedded in a weapons system should be considered core workload, meaning that it must be done in government facilities, the depots, and by government personnel. The term software maintenance is defined in this draft memorandum as all work done to correct, adapt, perfect or prevent software problems. In addition, all the hardware associated with software testing, modification, verification and simulation and training should be core.
For the Air Force depots to be able to perform so-called core functions related to software maintenance it has to own the source codes. But in almost all cases for existing weapons systems, it does not. Buying just software licenses, much less the full intellectual property (IP) associated with the software, has been a cost the Air Force has not wanted to incur. Also, the private companies that designed and built complex software for weapons systems have the skilled personnel and experience that the government simply lacks. So the Air Force appears to be declaring an intention to take over an area of maintenance and sustainment where it doesn’t own the property and lacks the adequate skills.
This draft memorandum may be the biggest attempt by government to seize private property since the Bolshevik Revolution. If software modification is a core function that must be done by the government and the barrier to taking on this responsibility is private ownership of the software codes then the government must make the effort to gain access to those codes. The software programs that are embedded in virtually all U.S. weapons systems represent many billions of dollars of privately developed and owned IP.
It is difficult to see how, in a time of growing constraints on defense budgets, the Air Force will come up with the funds to buy the full rights to dozens, maybe hundreds, of software programs. So, the draft Air Force memorandum could be setting the stage for an attempt to “seize” the IP represented in those privately-owned software programs. How else will the Air Force be able to perform its core mission?
Since taking office, the Obama Administration has been on a campaign to reduce the role of the private sector in support of the government and to expand that of government organizations and, consequently, grow the government work force. As one of his first acts on taking office, President Obama published a memorandum which directed that the entire Federal bureaucracy review its contractual relationships with the private sector. The review had three objectives: ensure that the American people were receiving value for money when services and activities were outsourced, that there was fair and open competition for private contracts and, most important, that inherently governmental functions were not outsourced. The last point is the most important because by definition if an activity is inherently governmental it must be done by government personnel regardless of cost.
Since the President’s Memorandum was sent out, the federal government has been struggling to figure out how to define what is inherently governmental. The Office of Management and Budget’s (OMB) Office of Federal Procurement Policy (OFPP) has developed a draft policy. The proposed policy proposes a sensible definition of inherently governmental as a function that is “so intimately related to the public interest as to mandate performance by Federal Employees” and that “requires the interpretation and execution of the law.” The proposed definition explicitly excludes activities intended to provide information, advice, opinions, recommendations or ideas to government officials and any jobs that are primarily ministerial and internal in nature. This would suggest that most technical and engineering support activities are not inherently governmental in nature.
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