CONTRACTING OUT PROCUREMENT FUNCTIONS: AN ANALYSIS (DAU 06-001)

ABSTRACT:  The overall procurement function is clearly an inherently governmental function. However, it can be argued that some functions within procurement are not inherently governmental. Many have identified that Department of Defense (DoD) personnel levels have dropped and that activity rates for procurement organizations have increased. This has driven a gap between the requirements and the organic capability in many DoD contracting offices.

This dilemma of an overall inherently governmental function, yet a shortfall in personnel to perform the overall function, provides the motivation for this study. Eighteen DoD agencies/commands and six non-DoD agencies responded to a survey to determine the current practice. The study determines that government agencies display considerable variety in their use of contractor support for procurement functions. The government must be very careful when contracting out procurement functions. Government leaders must maintain their ability to thoroughly control their policy and management functions. Contracting out a function must not inappropriately restrict agency management in their ability to develop and consider options. This report does not identify or recommend specific procurement functions that should or should not be contracted out. Less sensitive procurement tasks such as contract closeout and market research seem to be appropriate. More sensitive tasks such as negotiation and reviewing contractor performance would be less likely candidates.

This report recommends the manager retain the ability and the option to assess the local environment and requirements, and to make a proper choice. For management purposes, it is recommended that each contracting activity be limited in the percentage of their workforce that may be contracted out.