Accenture Federal Services
Delivering Public Service for the Future
Beyond Headcounts:
Rethinking Services Contracting to Improve
Government Efficiency
SITY
UNIVER
Many federal government leaders express dissatisfaction with the support
services they receive today. They are concerned about the costs and critical
of their quality. This raises an important question: By focusing more sharply
on outcomes, can agencies reap broader benefits and seize much greater
value from these services?
In a recent survey by Government Business Council, a clear majority
of federal managers—92 percent—say they contract for services today.1 Their three
primary means for procuring services is through staff augmentation, intra- or
inter-departmental shared services, or a commercial vendor.
Agencies have an opportunity to achieve targeted outcomes by leveraging their
service providers more strategically. By using federal centers and commercial
vendors adroitly, government agencies can avoid major capital expenditures
on systems, save operational costs, improve service delivery and gain valuable
expertise.
More importantly, outlining expected outcomes up front, aligning costs closely
with these services and holding their service providers responsible for delivering
these outcomes—on time and on budget—will not only save agencies money but
also help them reach mission targets more efficiently.
A question of cost-effectiveness
Staff augmentation is the most common form of services contracting, with 68
percent of federal managers indicating they hire contract labor for missionsupport services.2 They ostensibly use contract labor to gain temporary access
to outside expertise. But more than a third of federal managers (37 percent) say
their top reason for using contract personnel
is actually to bypass headcount limitations.3 This strategy, however,
is proving to be short-sighted with few benefits, costing as much as 80 percent
more than in-house employees to perform comparable functions.4 In addition, as
short-term labor often becomes long-term, contracting costs continue to drain
agencies’ budgets.
“Staff augmentation gave us a very flexible hiring model and expertise on
demand,” says Andrew Jackson, Assistant Secretary of Education for Management.
However, Jackson also recognizes the tradeoff from using contract personnel.
“Where we see we have a long-term need, we can usually acquire expertise
through fulltime employees and lower our costs by bringing them onto our payroll,”
he says. “But that’s the tension: either more flexibility or more stability in the role
and potential cost savings.”5
Shared services—whether from a center within a department or agency, or from
another agency—can deliver services more cost effectively by leveraging technology
platforms and solutions across multiple clients. Commercial providers can
also help their clients achieve even greater savings by maximizing efficiencies
from scale and specialization. Federal managers recognize that shared services
centers—for IT infrastructure, finance and human resources—offer tangible
benefits, including higher efficiency, standardization and cost-effectiveness.
Staff augmentation
refers to the use
of contract labor
to acquire needed
expertise or manpower
on a short-term basis.
Within the federal
marketplace, shared
services refers to the
provision of applications
or business services
across a single
department or agency,
or by one agency to
other departments and
agencies. A commercial
provider frequently
offers support to
a shared services
operation. In some
instances, a government
agency may hand over
the execution
of a specific function
or business process
to a commercial
provider—frequently
offsite—and delivered
on an outcomes basis.
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Ned Holland, Assistant Secretary of Health and Human Services for Administration, has benefitted greatly from shared services.
Holland, whose department oversees HHS’s Program Support Center (PSC), says, “Among the 40 to 50 services we provide,
our rates for just about all of them are going down.” Among its portfolio of services, PSC provides traditional back-office
functions, “ranging from paper shredding and mail processing, to disposal of excess property.” In FY 2013, PSC managed
approximately 73 percent of all federal government grants, resulting in estimated cost savings of $11 million.6
A better way
Federal agencies have the opportunity to vastly improve the way they buy mission-support services. Managers would
benefit from assessing their needs more holistically and identifying the appropriate mix of internal and external capabilities
to address them. They may consider consolidating staff augmentation contracts and moving them to a federal shared
service center (FSSC) or commercial provider. Most FSSCs charge a set fee, based on the agency employee population or a
percentage of the agency’s budget. Similarly, most commercial firms charge on a firm, fixed-fee or transaction basis. They
can also hold contractors more accountable for their work, specifying outcomes and tying those outcomes to real costs.
Some federal agency managers are looking at reorganizing their workforce by first conducting an analysis of which functions
are best performed by full time employees and which are best performed by contractors or other service providers. This gives
them insight into how to employ more outcome-based support services with greater cost savings.
That said, FSSCs and commercial providers can certainly do a better job of articulating the costs and benefits of their
services offerings. If federal managers’ chief concern with services contracting is fear of overpaying, providers must
demonstrate that this is not the case. Providers can also make contracts more attractive by offering to lower fees
(or even waive them) if services are not delivered as guaranteed or do not achieve specific objectives.
Optimizing services contracting may seem like a steep hill to climb for many federal agencies. But by better articulating their
needs and setting clear goals as well as expectations, organizations can perform more effectively while staying within
budgets and delivering public service for the future.
Accenture Federal Services: Can Federal Agencies Get More Out of Contracting to Improve Government Efficiency? A Candid Survey of Federal Managers; 2015
Ibid
Ibid
4
Ibid
5
Government Business Council: “Inside Services Contracting: Best Practices for Staff Augmentation and Shared Services”; 2015.
6
Ibid
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2
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For More Information
About Accenture Federal Services
To discuss how to improve performance and operations
to reduce costs within your organization, please contact:
Accenture Federal Services is a U.S. company, with offices in
Arlington, Va., and is a wholly owned subsidiary of Accenture
LLP. Accenture’s Federal business has served every cabinet-level
department and 30 of the largest Federal organizations with
clients at defense, intelligence, public safety, civilian and military
health organizations.
Glenn Davidson, Managing Director
[email protected]
Lon Anderson, Senior Manager
[email protected]
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accenture.com/federal
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