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Despite Gate’s Proposals SETA Contracts Still Being Awarded

by: Matthew Potter
August 30, 2010

Category: Business Line, Companies, Congress, Contract Additions, Contract Awards, Department of Defense, Events, Federal Budget Process, General Dynamics, Industry Analysis, IT, logistics, MDA, Proposal, S&T, Services, SETA, U.S. Army | RSS 2.0

Over the last two years the U.S. Defense Department has been reviewing how it handles its support contractors. These Scientific, Engineering, Technical and Analytical (SETA) contractors work side-by-side with government employees and military in acquisition and management offices to aid them in carrying out their work. These contractors have grown in size as part of the workforce and in the amount of money they receive often on time and material contracts where they are paid for the work they do by the hour rather then fixed price.

In 2009 the Department began to “insource” these contract jobs where they were converted to civil service positions. This was driven by the need to increase the size of the government’s acquisition workforce and also to counteract claims that these contractors were doing “inherently government” work that should be done by an official. Insourcing has seen the elimination of several thousand contractor jobs. There have been complaints that insourcing has not necessarily been done fairly with the government choosing positions based on cost estimates rather then their real role. The loss of a contractor position means a company loses revenue and often an employee. Sometimes whole contracts have been insourced leading to serious problems for smaller companies.

Two weeks ago Secretary Gates’ announced a new initiative that rather then just insourcing jobs he plans to cut thirty percent of the contracts over the next three years. He has realized that converting the slots to government may not be saving money in the long run which is his goal and has decided to minimize future conversions. This has roused the ire of the Unions who represent Federal workers who fell that there should be more insourcing.

Despite these moves the government still relies on SETA contracts and continues to announce contracts for them.

In the middle of this month the Missile Defense Agency (MDA) awarded Tetra Tech (TTEK) a support contract through their Missile Defense Agency Engineering and Support Services (MiDAESS) vehicle. This contract if all options are exercised is worth $270 million. Like many large commands that award these kind of contracts MDA set up an omnibus contract in this case MiDAESS that allows qualified companies to bid on tasks that minimize the source selection process.

Last week General Dynamics (GD) won an IT support contract from the U.S. Army Intelligence and Security Command. This is an over $60 million contract to provide help-desk and network support for the organization. IT services are one of the areas that were being considered to insource as they are often contract provided mainly due to the flexibility and pay structure of contractors compared to government. The government has always had a hard time fitting IT into the GS pay scale due to the compensation for these skilled and in-demand personnel.

Until the Defense Department can decide on what its workforce balance should be and what tasks are needed then these kind of contract awards will continue. Gates’ plans to reduce may see smaller contracts but at the same time a smaller contract will provide less support to the government. It may be that a return to the Nineties of “doing more with less” may be happening again as the defense budget restructures to reflect the ending of operations in Afghanistan and Iraq.

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