Insourcing at Offutt Air Force Base, NE, has ravaged local contractors, the Omaha World-Herald reported.

While most Defense Department components have slowed or stopped insourcing, Strategic Command at Offutt is still bringing work in-house. The newspaper found that the base has hired 744 new civilian employees in the past three years. Many of them are doing the same jobs they did when they worked for contractors.

Offutt officials said the insourcing effort—officially called “contractor conversion”—saves the Air Force $45,000 for each job it insources. But then-Defense Secretary Robert Gates put the brakes on the department’s insourcing initiative in August 2010, saying the anticipated savings had not materialized. Since then the Army has all but halted insourcing.

Small contractors near the base are reeling. Retired Air Force Col. Tommy Garrett, co-founder of the Garrett Group, said the company has cut its workforce by more than half, to 38 employees, since many of its employees were insourced. “We’re just barely hanging on,” he told the newspaper.

Dave Everhart, former co-owner of VetDefense, said more than half of the small contractor’s staff was insourced. “The business is just left with nothing, no reimbursement, no recourse,” he said. VetDefense has since been sold.

Steve Callicut, who heads Offutt’s insourcing program, told the World-Herald that insourcing has been stretched out over several years to give contractors time to adjust. But one business executive, speaking anonymously, said “Morale is in the toilet. People’s livelihoods are at stake here.”

One business executive, speaking anonymously, said, “Morale is in the toilet. People’s livelihoods are at stake here.”