Department of Defense: Contract Labor Sourcing (a)

Abstract

Contract labor services were typically sourced through small businesses, with large, nationally (and globally) recognized firms making up a small portion of total spend; however, large businesses could potentially provide DoD contract labor services at lower cost. By continuing to purchase contract labor from small businesses, DoD would be spending more money than necessary—in effect, taking money away from the overall budget that could be spent supporting the troops. Alternatively, a switch to cost-advantaged large businesses would negatively impact the socioeconomic goals expected in a government-procurement environment.

Excerpt

UVA-OM-1183

Rev. Mar. 1, 2013

DEPARTMENT OF DEFENSE: CONTRACT LABOR SOURCING (A)

It was November 2003, and Ed Turner, deputy assistant secretary of the Navy for Acquisition Management, was reviewing recommendations related to the sourcing of administrative services (contract labor) by the Acquisition Governance Board (AGB) of the U.S. Department of Defense (DoD). In March 2003, the DoD had launched its Department-Wide Strategic Sourcing Program (DWSS). As part of the program, Turner was asked to establish and lead a commodity team to strategically source administrative services on a DoD-wide basis.

Historically, contract labor sourcing was highly decentralized, with each of the military departments (navy, army, and air force) and agencies sourcing contract labor individually. Contract labor services were typically sourced through small businesses, with large, nationally (and globally) recognized firms making up a small portion of total spend. Large businesses, however, could potentially provide DoD contract labor services at much lower cost. Turner and his team felt trapped between a rock and a hard place. By continuing to purchase contract labor from small businesses, the DoD would be spending more money than necessary—in effect, taking money that could be spent supporting the troops away from the overall budget. Alternatively, a switch to cost-advantaged large businesses would negatively impact the socioeconomic goals expected in a government procurement environment.

The Commodity Team and the Strategic Sourcing Process

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Keywords: Strategic sourcing, contract labor services, government procurement