Army Insourcing Requires Top-Level Approval The Army is putting the brakes on insourcing. In a memo, Army Secretary John McHugh said he must personally approve any insourcing proposal anywhere in the Army. All insourcing actions that are moving through the system must be suspended until the secretary signs off on them. The Army has been leading the way in insourcing contract work. Last year McHugh told Congress that 18,000 positions would be brought in-house by 2015. He estimated insourcing would save $45,000 per job. (SAA, 3/5/2010) But in August Defense Secretary Robert Gates said DOD insourcing had not produced the anticipated savings. He ordered cuts in contract spending without replacing the employees. In the latest memo, made public Feb. 3, McHugh wrote, “In an era of significantly constrained resources, the Army must approach the insourcing of functions currently performed by contract in a well-researched, analytic and systematic manner.” He added, “Any proposal will include, at minimum, a manpower requirements determination, an analysis of all potential alternatives to the establishment of permanent civilian authorizations to perform the contracted work, certification of fund availability and a comprehensive legal review.” Industry representatives had complained that the Army and other DOD organizations were setting quotas for insourcing work rather than conducting an analysis of each contract. After an early push for what the Obama administration once described as its “insourcing initiative,” officials of the Office of Management and Budget have been backing away for several months. In his most recent statement, Dan Gordon, administrator of federal procurement policy, said “We don’t view it as a cost saving initiative. We view it as a cost management initiative.” Gordon has said insourcing will be aimed at inherently governmental jobs and those that are mission-critical. OMB is developing new guidance to determine what jobs fall in those categories. DHS Evaluates Contracts The Homeland Security Department has completed a pilot review of nearly 100 service contracts to see which ones should be insourced. “We’re not going to go out and set goals and say, ‘We’re going to insource thousands and thousands of jobs,’” Jeff Neal, Homeland Security’s chief human capital officer, told the newspaper Federal Times. “We’re going to look at what makes sense for the mission and have some documentation of how we got to that answer.” He said the department will now begin a similar review of its more than 10,000 service contracts, a process that might take years. “You have to work through budget cycles, you have to work with contracts and when contracts expire,” Neal told the newspaper. “We certainly don’t have any intention to go out and terminate contracts midcycle. That costs too much money.” DHS has come under criticism because its contractors outnumbered its employees.