Presentation for ASMC PDI 2010 June 4, 2010 Thomas Hessel Office of the Under Secretary of Defense for Personnel and Readiness Requirements and Program & Budget Coordination Directorate In-sourcing in the Department of Defense

2 The In-Sourcing Challenge Questions

Key Themes & Messages OUSD(P&R) is lead for In-sourcing Initiative Teamed with OUSD(AT&L), OUSD(C), CAPE, Military Departments, and Other DoD Components 3

4 Sequence of Events January 6, 2006: FY06 NDAA directed in-sourcing –AT&L implemented – did not meet intent of Congress –Required reverse A-76, plus there were other limiting constraints January 8, 2008: FY08 NDAA direction to DoD: –Give special consideration to using DoD civilians instead of contractors (reiterated FY06 NDAA) –P&R directed to develop/implement in-sourcing policy (DepSecDef memo 4 Apr 08) –Mandated inventory of contracted services/subsequent review to provide basis for well-reasoned in-sourcing (AT&L lead) March 4, 2009: President Obamas memo on Government Contracting directed: –Only government personnel perform inherently governmental functions –Agencies ensure functions are performed well, and at best value –Reduced reliance on contractors and strengthened organic technical capabilities April 6, 2009: Secretary Gates FY10 budget announcement (RMD 802) –DoD to reduce support service contractors from current 39% of workforce to 26% (pre-2001) –Rebalance the workforce, ensure appropriate mix, and rebuild organic technical capabilities May 28, 2009: DepSecDef issued additional in-sourcing guidance incorporating lessons learned/best practices –Use a total force approach to obtain the appropriate mix of manpower (military/DoD civilian) and contractor support –Verify mission requirements, required level of performance, and workload; Eliminate functions that are no longer required, low priority, or of marginal value; Organize activities to promote efficient, effective, & economical operation and optimize personnel utilization; Consider the entire workforce and how the work is performed July 29, 2009: OMB Director memo on Managing the Multi-Sector Workforce –Policies must improve to achieve the best mix of public/private labor –Currently excessive reliance on contractors – internal capacity is lacking –Agencies dont understand how they use/integrate contracted services

5 DoD In-sourcing Initiative: FY10-14 Total in-sourcing ~ 33,400 (FY10~13,400; FY11~6,200) Total Defense Acquisition Workforce (DAW) Growth ~ 19,887 10,000 DAW in-sourcing Additional DAW Growth (non in-sourcing) 9,887 Non-acquisition in-sourcing 23,400 Component FYDP In-sourcing Goals Army: 8.8K authorizations Air Force: 13.8K authorizations DoN: 9.8K authorizations 4 th Estate: 0.8K authorizations In-sourcing initiative focused on contracted services/functions NOT on contractor employees or positions

6 In-sourcing Decision Tree From DepSecDef 28 May 09 Guidance Memo

Process and Considerations Use a total force approach to obtain the appropriate mix of manpower (military/DoD civilian) and contractor support –In-source services entailing inherently governmental functions –In-source services needed to support the readiness and workforce management needs, consistent with DoD manpower mix policy (including, in some instances, functions closely associated with inherently governmental) –For all other servicesconduct a cost analysis (full costs and like comparisons) to determine the most cost effective source of performance Determining/validating manpower for in-sourcing actions: –Verify mission requirements, required level of performance, and workload –Eliminate functions that are no longer required; tailor those of low priority or marginal value –Organize activities to promote efficient, effective, & economical operation –Optimize personnel utilization –Consider the entire workforce and how the work is performed Not all risks can be identified without a clear accounting of total force: –Inventory of Contracts for Services required by section 807 of FY08 NDAA –Inherently Governmental/Commercial Activities Inventory of military/civilian manpower Consider steps/length of time it will take to complete an in-sourcing action so there is sufficient time to transition to government performance and there are no gaps (or overlaps) in critical services –Develop transition plans to address temporary impediments so the work can be in-sourced 7

8 In-sourcing: A Collaborative Effort Stakeholders within DoD Components include, but are not limited to…IN-SOURCING

Questions? Thomas Hessel DoD In-sourcing Initiative Clearinghouse: