Tuesday, May 8, 2012

Paper: Tenure for Individual Government Contractors?

Theodore T. Richard, of the United States Air Force, has published an article about the federal government hiring individual contractors (as opposed to firms, which is the traditional rule): Government Personal Services Contracting and Antidiscrimination Laws: Tenure for Contractors?

This appeared in the Journal of Contract Management, Summer 2009, but was posted to SSRN only two weeks ago.  This makes a truly significant contribution to the literature in this field by addressing the distinction between individual contractors and corporate contractors, and the unique issues that can arise with the former.  Here is the SSRN Abstract:      
Civil service employees are thought to enjoy “tenure,” or job protection, which does not necessarily extend to personal services contract employees. Antidiscrimination laws, however, can be used to extend job protection to personal services contract employees. While contracting for personal services is generally prohibited, exceptions to the prohibition exist. As the federal government considers liberalizing the rules governing personal services contracts, policy makers must be aware of potential tangential effects, such as increased liability, that may nullify the benefits of these types of contracts. This paper discusses the prohibitions on personal services contracts and the applicability of antidiscrimination laws to the federal government when using personal services contract employees.
Hiring numerous individual contractors actually solves some of the chronic problems with government outsourcing or privatization - the lack of real competition between firms bidding for contracts (it is commonplace that there is a single bidder, or at most two or three), and the lack of available alternatives when the government wants to switch away from a contractor who is either deficient or has raised its prices.  Richard highlights some significant downsides to hiring individuals that government procurement officials might overlook.  Very worthwhile reading, likely to be controversial.

- Dru Stevenson

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