Lack of Savings and Impact on Economy Crucial Rationale for Administration to Reverse Course
Washington, DC, August 19, 2010 – A broad based coalition of 36 national and regional business, taxpayer and free market organizations has sent President Obama a letter urging an immediate moratorium on insourcing – the conversion of work currently performed by private sector contractor firms to performance by Federal government employees.
The coalition’s action comes on the heels of comments from two key policy makers. Last week, Defense Secretary Robert Gates said, “We weren’t seeing the savings we had hoped from insourcing.” When asked in June about the effect insourcing had on small and minority owned business, Senator Robert Men�ndez (D-NJ), Chairman of the Democratic Senatorial Campaign Committee, said insourcing was “counter-intuitive to the President’s goal of creating opportunities in the federal contracting system for diversity. We already have a much more limited universe than we should, and if [insourcing] is being pursued, then it is only going to erode what exists, so it doesn’t make a lot of sense.”
“More than 17 months have passed since the March 4, 2009 publication of your Administration’s memoranda on government contracting. That memo highlighted the insourcing agenda. This shift to government performance of commercial activities not only hinders the private sector, including small and minority owned business, but places additional costs on taxpayers during a lengthened period of a steep decline in the nation’s economy, a staggering national debt, and a high national rate of unemployment. The government intrusion and competition in the private market that insourcing brings is having a detrimental effect on capital investment and job creation,” the coalition stated in its letter to the President.
Business Coalition for Fair Competition President John Palatiello said, “Given Secretary Gates’ recent acknowledgment that insourcing does not save money, Senator Menendez’s concerns that insourcing is ‘counter-intuitive’ to the Administration’s goal of creating Federal contracting opportunities, particularly for small and minority owned businesses, and the current state of the nation’s economy, these groups respectfully urge the Obama Administration to issue an immediate moratorium on all insourcing efforts throughout the Federal government.”
The letter noted that insourcing is occurring without public-private comparisons or cost analysis, and that a clear and objective metric for justifying and determining cost-effectiveness of government performance of commercial activities should be developed to protect the interest of taxpayers. The coalition suggested that the Obama Administration use the moratorium period to develop a policy, similar to that which in effect beginning in 1955, that recognized that real economic growth and job creation is in the private sector, and emphasized that government should rely on the private sector to the maximum extent possible and not compete with its citizens.
Signing the letter was 60 Plus Association, Alliance for Worker Freedom, American Congress on Surveying and Mapping, American Council of Engineering Companies, Americans for Tax Reform, The American Machine Tool Distributors’ Association, Business Coalition for Fair Competition, Center for Fiscal Accountability, Charles W. Baird Ph.D., California State University, East Bay, Coalition for Government Procurement, Competitive Enterprise Institute, Construction Industry Round Table, Design Professionals Coalition, Fairfax County Chamber of Commerce, Fairness in Procurement Alliance, Grassroot Institute of Hawaii, Grassroot Voices, Hispanic Leadership Fund, Indian American Conservative Council, Institute for Policy Innovation, Latin American Management Association, Management Association for Private Photogrammetric Surveyors, National Association of RV Parks & Campgrounds, National Child Care Association, National Emergency Equipment Dealers Association, National Taxpayers Union, Northern Virginia Technology Council, Property Rights Alliance – Hawaii, Public Service Research Foundation, Reason Foundation, Small Business & Entrepreneurship Council, TechAmerica, The Associated General Contractors of America, The Frederick Douglass Foundation, United Motorcoach Association, and U.S. Chamber of Commerce.