CQRTRICTING-OUT: a CASE for Reallsllc COWTRACT VS

Y’? CQRTRICTING-OUT: A CASE FOR REALlSllC COWTRACT VS. IN-HOUSE DECISION-MAKlRS STATUS OF FORCES AGREEMENTS AS A BASIS FOR UNITED STATES CUSTODY OF AN ACCUSED MARTIAL LAW TODAY TBE STAFF 1UD6E ADVOCATE AS LEGAL HE POST SUR6EOH: MlllfilACflCf, NESLICENCE AW0 RELATED MATTERS Cornme& DEFENSE IN OUTER SPACE c PREFACE The Military Law Review is designed to provide a medium for those interested in the field of military law to share the product of their experience and research with their fellow lawyers. Arti- cles should be of direct concern and import in this area of schol- arship, and preference will be given to those articles having last- ing value as reference material for the military lawyer. The Military Law Review does not purport to promulgate De- partment of the Army policy or to be in any sense directory. The opinions reflected in each article are those of the author and do not necessarily reflect the views of The Judge Advocate General or the Department of the Army. Articles, comments, and notes should be submitted in duplicate, triple spaced, to the Editor, Military Law Review, The Judge Ad- vocate General’s School, U.S. Army, Charlottesville, Virginia 22901. Footnotes should be triple spaced, set out on pages sepa- rate from the text. Citations should conform to A Uniform Sys- tem of Citation (11th ed. 1967)) copyright by the Columbia, Har- vard, and University of Pennsylvania Law Reviews and the Yale Law Journal. This Review may be cited as 49 Mil. L. Rev. (number of page) (1970) (DA Pam 27-100-49,l July 1970). For sale by the Superintendent of Documents United States Government Printing Office, Washington, D.C. 20402, Price : $.75 (single copy). Subscription price : $2.50 a year ; $.75 additional for foreign mailing. i Pam 27-100-49 PAMPHLET HEADQUARTERS DEPARTMENT OF THE ARMY NO. 27-100-49 I WASHINGTON, D.C., 1 July 1970 MILITARY LAW REVIEW-VOL. 49 Page Articles : Contracting-Out : A Case for Realistic Contract Vs. In-House Decision-Making Major John G. Wildermuth __..- - - - ~- - - ~ ~.- -. 1 Status of Forces Agreements As A Basis for United States Custody Of An Accused Major Stratton R. Heath, Jr. --.-..~~-- .-. 45 Martial Law Today Frederick Bernays Wiener ~ -.~ ~ 89 The Staff Judge Advocate as Legal Adviser to the Post Surgeon : Malpractice, Hospital Negligence and Related Matters Major Richard E. Cumming - - ~ - . .- .- 109 Comments: Defense in Outer Space (Lieutenant Colonel George D. Schrader) - -.- . 157 iii CONTRACTING-OUT: A CASE FOR REALISTIC CONTRACT VS. IN-HOUSE DECISION-MAKING* By Major John G. Wildermuth"':' Contracting officers frequently have to decide between using military or federal service employees and contracting out to private enterprise for support services. The author discusses the expressed policy in favor of contracting-out, and how it has been eroded by numerous decisions of the Bureau of the Budget, the General Ac- counting Office, the Department of Defense, and the Army itself. In conclusion, the author suggests that the decision be made easier by redefining the criteria on which it is based, and by elevating the decisionmaking function to an authority who has the necessary resources to make a sound decision. I. INTRODUCTION The Government of the United States currently spends an esti- mated twenty billion dollars annually for support services.1 Sup- port services are those operations ancillary to the function of a government agency, which do not involve a product and can be performed either by "in-house" personnel (active duty military and civil service employees) or by civilian personnel furnished by private contractors.2 Expenditures by all government agencies for support services obtained by contract approach eight and one-quarter billion dollars annually, seven and three-quarters billion of which are accounted for by the Department of Defen~e.~ Contracting-out, as the government practice of obtaining goods and services from private industry has often been labeled, is based primarily on a permissive policy declaration by the Presi- *This article was adapted from a thesis presented to The Judge Ad- vocate General's School, U.S. Army, Charlottesville, Virginia, while the author was a member of the Seventeenth Advanced Course. The opinions and conclusions presented herein are those of the author and do not necessarily represent the views of The Judge Advocate General's School or any other governmental agency. ** JAGC, U.S. Army; Assistant Command Staff Judge Advocate, U.S. Army Aviation Systems Command, St. Louis, Missouri; B.S., 1961, United States Military Academy; LL.B., 1967, Duke Law School; member of the North Carolina Supreme Court, the Federal District Court for the Eastern District of North Carolina, the North Carolina State Bar, and the U.S. Court of Military Appeals. 'Hearings on a Cost Profile for Support Services Before a Subcomm. of the House Comm. on Government Operations, 90th Cong., 2d Sess. 1 (1968) [hereinafter cited as 1968 Hearings]. 2H.R. REP. NO. 1850, 90th Cong., 2d Sess. 1 (1968). '1968 Hem'ngs 2. 1 49 MILITARY LAW REVIEW dent that the Government will rely prima$& upon the private enterprise system to supply its needs.4 Restricting this espoused policy in favor of the private enterprise system in the area of support services, and often in conflict with it, are administrative interpretations of various contracting-out activities by the General Accounting Office and Civil Ser- vice Commission. Decision-making organs of these agencies have interpreted existing federal personnel statutes to mean that cer- tain services-((personal services”-may be performed only by government employees and have often struck down contracts for such services as having effectively violated those laws.5 Inter- meshed between the initial policy in favor of contracting-out and decisions by the Comptroller General and the General Counsel of the Civil Service Commission restricting that policy is the cur- rent requirement for a cost analysis of in-house vs. contracted-out alternatives. Frequent conflicts between the policy, administrative decision and cost analysis procedures have created a number of problems, not the least of which is the difficulty operational-level personnel have performing their mission under existing regulations. Faced with time limits, such personnel often decide to follow the proce- durally easier path of contracting-out, ’in obvious disregard of in- terpretive and regulatory restrictions. Furthermore, such personnel do not always have the resources to make a sound decision between contracting out and developing in-house capabilities. This article analyzes the apparent conflict between policy and practice in the area of contracting-out in general, with special emphasis on contracting-out for support services, to determine : (1) Whether there still exists, in fact, a policy in favor of contracting-out to private industry and, if so, what the legal and practical limits of that policy are ; and (2) What corrective action, if any, is necessary, either under existing law or in the form of additional legislation, to resolve the problem of ambiguity and lack of definitive guidance in this area of policy vs. practice, and to permit realistic “contract vs. in- house’’ decision-making, either at the operational or at a higher level. ‘BUREAU OF THE BUDGET, CIRC. NO. A-76, POLICIES FOR ACQUIRING COMMERCIAL OR INDUSTRIAL PRODUCTS AND SERVICES FOR GOVERNMENT USE, para. 2 (Revised 1967) [hereinafter cited as CIRC. A-76 (Revised)]. ‘See note 126 infra and accompanying text. CIRC. A-76 (Revised), para. 6. 2 CONTRACTING OUT 11. DEVELOPMENT OF THE POLICY A. GENERAL Since the early 1950’s, the Government has initiated and pur- sued a policy which encourages the use of private enterprise to satisfy government requirements for goods and services. The policy, as first expressed, was grounded primarily on Executive concern about government competition with private enterprise.? Congressional support for the policy has been manifested by numerous committee hearings in both houses and various proposals of legislation.* Also, the various government agencies, including the important Department of Defense, have expressed their in- terpretive affirmance of the policy since its in~eption.~ An examination of the development of the policy will show that it exists now in much weaker form, having fallen victim to con- siderations of cost and those who desire to perpetuate the government’s imvolvement in business.10 B. THE BUREAU OF THE BUDGET The public first became aware of the Government‘s pro-private enterprise policy in 1954 when, in his first budget message to Congress after taking office, President Eisenhower stated : “This budget marks the begninning of a movement to shift to , . pri- ‘See note ll infra and accompanying text. STAFF OF SENATE COMM. ON GOVERNMENT OPERATIONS, 88th Cong., 1st Sess., REPORT ON GOVERNMENT COMPETITION WITH PRIVATE ENTERPRISE 14, 19 (Comm. Print 1963) [hereinafter cited as 1963 Comm. Print]. Congressional committees have studied numerous aspects of the problem of government competition with private enterprise in various hearings begun in an ex- tensive study in 1932 by a Special Committee of the House of Representa- tives, and have not since abated. During the referenced period, investigations were made by the Senate, and House Appropriations Committees, the House Armed Services Committee, the Senate and House Committee on Govern- ment Operations, and the Senate Select Committee on Small Businss. Id. at 14-24. Dep’t of Defense Directive No.

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