Janine Wedel - Shadow Elite - How the World's New Power Brokers Undermine Democracy, Government, and the Free Market

23. With regard to scaling back inherently governmental functions: Law professor Laura Dickinson suggests that “Congress might consider designating such [inherently governmental] functions as ‘core’ rather than inherently governmental, which would permit outsourcing but at the same time impose limits on the percentage of positions that may be turned over to contractors” (Laura A. Dickinson, Professor, University of Connecticut School of Law, Testimony Before the United States Senate Committee on Homeland Security and Governmental Affairs , Wednesday, February 27, 2008, p. 4, http://hsgac.sensmer-ate.gov/public/_files/022708Dickinson.pdf). An array of think-tankers and analysts advocate privatizing government functions, including intelligence ones (see, for instance, Michael Rubin, “Privatize the CIA,” Weekly Standard Review 12, issue 20 [February 5, 2007], http://www.michaelrubin.org/1029/privatize-the-cia). Army Special Forces Major Roger D. Carstens and think tank fellows Michael A. Cohen and Maria Figueroa Küpçü (drawing on a panel of experts from industry, government, and academe) prefer to “permit relevant government agencies to have broad discretionary leeway in determining where and how private contractors should be used” (Roger D. Carstens, Michael A. Cohen, and Maria Figueroa Küpçü, Changing the Culture of Pentagon Contracting [Washington, DC: A Publication of the Privatization of Foreign Policy Initiative, New America Foundation, October 2008], http://www.newamerica.net/files/Changing%20the%20Culture%20of%20Pentagon%20Contracting.pdf.) See also comments by Harvard Professor Stephen Goldsmith, “What’s Left for Government to Do?” The American (January/February 2008), http://www.american.com/archive/2008/january-february-magazine-contents/what2019s-left-for-government-to-do/article_print (accessed March 12, 2009), and attorney Tara Lee, “Redefining Inherently Governmental: The Push to Redefine the Function and Its Consequences,” Journal of International Peace Operations 4, no. 1 (July-August 2008), pp. 9–10, http://www.ipoaonline.org/journal/images/journal_2008_0708.pdf.

With respect to revisions of guidelines: In 1955, the Eisenhower Administration released the Bureau of the Budget Bulletin 55–4; in 1966 the Bureau of the Budget put out the policy as Circular No. A-76 (Office of Management and Budget, Office of Federal Procurement Policy, “Enhancing Governmental Productivity through Competition: A New Way of Doing Business Within The Government, To Provide Quality Government at Least Cost: A Progress Report on OMB Circular No. A-76, Performance of CommercialActivities” [Washington, DC: Office of Management and Budget, Office of Federal Procurement Policy, 1988]). The most recent updates are provided in: Executive Office of the President, Office of Management and Budget, “Circular No. A-76 (Revised) to the Heads of Executive Departments and Establishments” on the “Performance of Commercial Activities,” May 29, 2003, http://www.whitehouse.gov/omb/circulars/a076/a76_rev2003.pdf, and Congressional Research Service, “OMB Circular A-76: Explanation and Discussion of the Recently Revised Federal Outsourcing Policy,” Washington, DC: Library of Congress, September 10, 2003, p. 1, http://digital.library.unt.edu/govdocs/crs/permalink/metacrs-7717:1. See also FAR Subpart 7.5—Inherently Governmental Functions, (c)—functions considered inherently governmental, and (d)—functions “generally not considered to be inherently governmental.” Federal Acquisition Regulation, March 2005, 7.503, http://www.acquisition.gov/far/reissue/FARvol1ForPaperOnly.pdf.

24. Eric Lipton and Michael J. de la Merced, “Wall St. Firm Draws Scrutiny as U.S. Adviser,” New York Times , May 19, 2009, http://www.nytimes.com/2009/05/19/business/19blackrock.html?_r=1.

25. Liz Rappaport and Susanne Craig, “BlackRock Wears Multiple Hats,” Wall Street Journal , May 19, 2009, http://online.wsj.com/article/SB124269131342732625.html.

26. See for example, Eric Dash, “Bank of New York Mellon Will Oversee Bailout Fund,” New York Times , October 14, 2008, http://www.nytimes.com/2008/10/15/business/economy/15tarp.html?scp=4&sq=bank%20of%20new%20york%20mellon&st=cse.

27. With regard to the Pentagon employing contractors who choose other contractors, see Larry Makinson, “Outsourcing the Pentagon: Who Benefits from the Politics and Economics of National Security?” Washington, DC, the Center for Public Integrity, September 29, 2004, p. 4, http://projects.publicintegrity.org/pns/report.aspx?aid=385.

With respect to CACI, see Project on Government Oversight, “GSA Hired CACI to Process Suspension and Debarment Cases,” February 5, 2007, http://www.pogo.org/pogo-files/alerts/contract-oversight/co-gp-20070205.html.

28. With regard to contractors overseeing other contractors in Homeland Security, see GAO-08–142T, Department of Homeland Security: Risk Assessment and Enhanced Oversight Needed to Manage Reliance on Contractors Statement of John P. Hutton, Director Acquisition and Sourcing Management, Wednesday, October 17, 2007, p. 1, http://www.gao.gov/new.items/d08142t.pdf. GAO reported that “More than half of the 117 statements of work we reviewed included reorganization and planning activities, policy development, and acquisition support—services that closely support the performance of inherently governmental functions according to federal acquisition guidance.” See p. 2 for above quote; pp. 8–10 for overall analysis of the issue.

With respect to lead systems integrators, see Valerie Bailey Grasso, CRS Report for Congress: Defense Acquisition: Use of Lead System Integrators (LSIs)—Background, Oversight Issues, and Options for Congress, Congressional Research Service , The Library of Congress, February 10, 2009, pp. 1–2, http://www.fas.org/sgp/crs/natsec/RS22631.pdf. For analysis of how the government’s use of lead systems integrators raises the risk of organizational conflicts of interest, see Project on Government Oversight, “Stronger Contractor Organizational Conflicts of Interest Regulations Needed,” July 18, 2008, http://www.pogo.org/pogo-files/letters/contract-oversight/co-fcm-20080718.html.

The quote about defense contractors is from: David Hubler, “Six to Upgrade DOD Management Processes,” Washington Technology , December 19, 2008, http://washingtontechnology.com/Articles/2008/12/19/Six-to-upgrade-DOD-management-processes.aspx?p=1.

With regard to the NCS, see: R. J. Hillhouse, “Who Runs the CIA? Outsiders for Hire,” Washington Post , July 8, 2007, p. B5, http://www.washingtonpost.com/wp-dyn/content/article/2007/07/06/AR2007070601993.html.

29. Anitha Reddy and Sara Kehaulani Goo, “Database on U.S. Visitors Set for Huge Expansion: Reston Firm’s Contract Worth Up to $10 Billion,” Washington Post , June 2, 2004, p. E01, http://www.washingtonpost.com/wp-dyn/articles/A7961–2004Jun1.html.

30. With regard to the Secretary of Energy, see Paul R. Verkuil, Outsourcing Sovereignty (New York: Cambridge University Press, 2007), p. 45.

With regard to the Army’s Field Manual, see Dan Guttman, “The Shadow Pentagon: Private Contractors Play a Huge Role in Basic Government Work—Mostly Out of Public View” (Washington, DC: Center for Public Integrity), September 29, 2004, http://projects.publicintegrity.org/pns/report.aspx?aid=386. See also Headquarters: Department of the Army, “Contractors on the Battlefield,” Field Manual No. 3–100.21 , Washington, DC, January 3, 2003, www.osc.army.mil/gc/files/fm3_100x21.pdf.

31. The GAO on 117 contracts is at GAO-08–142T, Department of Homeland Security: Risk Assessment and Enhanced Oversight Needed to Manage Reliance on Contractors Statement of John P. Hutton, Director Acquisition and Sourcing Management , Wednesday, October 17, 2007, p. 2, http://www.gao.gov/new.items/d08142t.pdf. Information about the company being awarded $42.4 million is found in: GAO, Risk Assessment and Enhanced Oversight Needed to Manage Reliance on Contractors , October 17, 2007, p. 6, http://www.gao.gov/new.items/d08142t.pdf.