The Government Reform Series: Leviathan by Proxy and the Big Lobotomy

Editor’s Note: Government failure is something everyone complains about, but does little to address. Over the next two weeks, FixGov will review work on government reform: identifying problems in the federal government and offering solutions to get government back in working order. In this first installment, Elaine Kamarck looks at two works: John DiIulio’s
Bring Back the Bureaucrats
& Paul Glastris’ & Haley Sweetland Edwards’ “The Big Lobotomy.”

In John J. DiIulio Jr.’s new book Bring Back the Bureaucrats he calls the modern American government “Leviathan by Proxy.” Leviathan by Proxy refers to the fact that in recent decades the U.S. government has “…increased its spending more than fivefold while the full time civilian workforce remained largely flat.” Rather than hire more civil servants the government has contracted out an enormous amount of its work in what DiIluio calls “… a uniquely American, superficially antistatist form of big government.”

If you pair DiIulio’s new book with an important article by Paul Glastris and Haley Sweetland Edwards that appeared in the summer 2014 issue of The Washington Monthly called “The Big Lobotomy,” it becomes evident that the executive branch is not the only branch that’s in trouble. While the executive branch has been outsourcing its work to private and not-for-profit contractors, the Legislative branch has been cutting professional staff, reducing staff at organizations like GAO and CRS which were designed to help Congress analyze issues, and moving staff from committees to district offices—all of which they argue constitute a “self-lobotomy.” Glastris and Edwards argue that, like the executive branch, Congress has also outsourced too much. The decrease in professional staff has led to a “…massive falloff in congressional oversight.” Policy expertise has been outsourced to ideologically motivated think tanks and to K Street.

In general these authors’ appraisals of these trends are accurate. I can quibble with DiIulio’s argument by pointing out that the big gap between spending and bureaucrats doesn’t really take into account the enormous increases in productivity that resulted from the federal government entering the Internet age. For instance many government agencies have moved information and transactions that used to be done by employees in offices to the Internet—though notable exceptions, like OPM’s undergound processing facility, remain. But his analysis of how things are working on the discretionary side of the budget is powerful. For instance, at one point, the Department of Homeland Security had more contractors than employees. The Department of Energy spends 90% of its budget on contracts that implement its important nuclear missions.

But the real question is does any of this matter? Has outsourcing gone too far? DiIlulio points out that the massive outsourcing of government has not improved it—quite the contrary. Contracting has been implicated in a cascade of failures, from the botched health care roll out to the Veterans Administration scandals. And Congress has become so dysfunctional that it can’t even pass appropriations bills and a budget on time—let alone play the proper role in the system of checks and balances. At issue is the question of accountability. DiIluio argues that we need more bureaucrats and that the ones we have are stretched too thin to hold the many contractors accountable. And Glastris and Edwards argue that the depletion of talent on the Hill, especially in the Committee staffs has led to a “…massive falloff in congressional oversight.”

Figuring out how far is too far is complicated by the fact that there are no official statistics on the number of government contractors.  Estimates are that there are as many as 7.6 million contract employees and as many as 2.8 million grant-based employees.  This total, over 10 million, is more than twice the 4.3 million federal employees, including uniformed military.  One of DiIluio’s suggestions is to establish a new, specialized federal office to gather data on “…contractor personnel, productivity and compliance.”

This would be a good start in tackling the bigger question—one which has been largely ignored as the contracted-out state expanded—and that is, what is an “inherently governmental” function? For example, serving hamburgers to soldiers on an army base in Kentucky is clearly not “inherently governmental” and should be contracted out to Burger King or McDonalds as is currently being done. But how about interrogating captured terrorists in Iraq? Should that be contracted out?

To the extent that the debate has taken place at all it has centered on an obscure OMB directive called OMB Circular A-76 created in 1966 to provide guidance to government agencies on whether they should “make or buy” certain goods and services. In 1998, the FAIR Act required federal agencies to compile inventories of functions that could be performed by government or the private sector. At the time, it represented a compromise between government unions and business, which has increasingly seen the federal government as a ripe new “market.”

But contracting out was given new impetus during the George W. Bush Administration. As a matter of pro-business ideology the Bush Administration created a “competitive sourcing initiative” which expanded the inventories in FAIR and set targets for expanding the A-76 competitions. This greatly expanded the possibility for outsourcing and modified, without much attention by Congress, the definition of what was “inherently governmental.” In addition, the 9/11 attacks on America necessitated a rapid increase in military and intelligence capacity in the U.S. government. The quickest way to do that was by contracting out a wide variety of functions. By the mid 2000s the number of “blue passes” (government passes) and the number of “green passes” (contractor passes) at the Central Intelligence Agency were about equal in number.

The next administration will need to work hard to restore the proper balance between federal contractors and federal workers. First, as DiIlulio suggests in the most basic terms: the government needs to know how many contractors it employs. Second, it should create a “review board” to establish guidelines for what is inherently governmental on an agency by agency basis. This will make sure that we don’t throw out the proverbial baby with the bathwater. There are many things that the federal government wants done, from building housing for soldiers to doing research on nanotechnology, that should not be done by federal workers.

A few years ago I tackled this question in a book called The End of Government…As We Know It. In it I argued that the question of whether the government should perform a given task itself or outsource it to the private sector, the nonprofit sector, or to other levels of government depended in large part on the characteristics of the task. Things which require innovation and flexibility can be better done through a system of “government by network” which allows for creativity and experimentation. (No one would argue, for example, that scientific research, whether into cancer or into laser physics, should be limited to government laboratories.)

There are probably limits to how much we can role back DiIulio’s Leviathan, as even he admits. But there should be no reason why even conservatives wouldn’t agree that we need to greatly enhance the capacity of the federal government to oversee these contracts and, I would add, learn from them. In reality, the contracting business has become a world of its own, and staffs in the executive and legislative branches, charged with holding contractors accountable, don’t have the capacity to do so. That said, the simplest way to do that is to pay them more and protect them from the fallout of budget cuts. For example, every time the federal government embarks on a multi-billion dollar information technology acquisition, it should be able to hire the best from the private sector—no matter the price. But beyond that, government employees, whether congressional or executive branch, should be constantly evaluating the networks they fund, learning from them and adjusting spending accordingly.

It is ironic that, while the past few decades have seen an explosion in measurement of government operations—from street cleaning at the municipal level to transaction processing at the federal level—this penchant for measurement has eluded the outsourced government. That is the biggest challenge before us.