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Federal agencies rely on a multisector workforce composed of federal employees and contractor personnel to perform services as they carry out their missions. Determining whether to obtain services through insourcing with current or new federal employees, outsourcing with private sector contractors, or cosourcing with a combination of the two is an important economic and strategic decision critical to the federal government's effective and efficient use of taxpayer dollars. The executive branch has encouraged federal agencies since the mid-1950s to obtain commercially available services from the private sector when outsourcing is cost-effective. In the last 5 fiscal years, civilian agencies have on average annually obligated about $100 billion to obtain a range of services from contractors. However, in March 2009, the President issued a memorandum on government contracting that, among other matters, expressed concern about the federal workforce as to whether agencies have become overreliant on contractors and have appropriately outsourced services. In particular, the President noted that the line between inherently governmental functions--those that must be performed by federal employees--and commercial activities that may be contracted for has been blurred. In the memorandum, the President directed the Office of Management and Budget (OMB) to lead a series of contracting-related efforts, including clarifying when outsourcing for services is and is not appropriate. Congress, also concerned with the federal workforce, in March 2009 enacted section 736 of the Omnibus Appropriations Act, 2009, which requires federal agencies, with the exception of the Department of Defense (DOD), to devise and implement guidelines for insourcing new and contracted-out functions by mid-July 2009. The statute further requires that we report on the implementation of section 736. In response, we identified (1) the actions taken by OMB to assist affected agencies as they develop insourcing guidelines and (2) the status of selected civilian agencies' efforts to develop and implement insourcing guidelines.

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