On June 18, the Commission on Wartime Contracting in Iraq and Afghanistan (CWC) held the first of two hearings to examine the proper role and oversight of private security contractors (PSCs) in wartime contingency operations. The commission called six individuals from the private, academic, and nonprofit sectors to testify about the thorny issue of defining and enforcing what should and should not be outsourced to PSCs. While disagreement abounded on the issues, commissioners were able to pick out a few lines of consensus among the witnesses.

It is illegal for functions that are defined as "inherently governmental" to be outsourced, yet there was little dispute that contractors are performing inherently governmental tasks in Iraq and Afghanistan. Witnesses, however, did differ on how the government should go about determining whether it contracts out a function or keeps it in-house. Some witnesses, such as Al Burman – president of Jefferson Solutions, a government acquisition consulting firm – and John Nagl – president of the Center for a New American Security, a security and defense policy nonprofit – advocated for the government to stop focusing on the definition of inherently governmental.

Burman argued that because the definition of inherently governmental is so narrow and so few functions fall under it, the government should instead concentrate on a policy that scrutinizes critical functions. The criticality of a function would determine if the government should keep it in-house or contract it out. Experts generally define a critical function as one that is so intimately related to an agency’s mission that the agency must keep at least a portion of the function reserved for government performance to ensure sufficient internal capability to effectively maintain control of the function.

Nagl advanced a similar idea and advocated that the government pick out core functions that it would want to be able to perform without the need for contractors. Theoretically, under this policy, federal agencies would dramatically grow their in-house aptitude to perform these tasks because of their importance.

Commission member Clark Kent Ervin, however, questioned these two approaches. Ervin probed Nagl as to why the government – in a world of constrained resources and budgets – would move toward developing security as a core competency when PSCs are available as an easy alternative. Ervin also asked why focusing on core or critical functions would move the debate over defining inherently governmental beyond its current sticking points of trying to pick between tasks for outsourcing. Nagl failed to formulate a compelling answer for either question.

Other witnesses, like Danielle Brian – executive director of the Project on Government Oversight (POGO) – and Deborah Avant – a professor at the University of California-Irvine – promoted the idea that the government should examine the context of a situation to help determine whether to outsource a function. Commission member Charles Tiefer – a law professor at the University of Baltimore – later summed up this approach as an examination of three risk factors: the likelihood of contractors injuring or killing civilians, whether the operation is taking place in an area with little or no rule of law, and the risk that a PSC could significantly damage U.S. policy.

Allison Stranger – a professor at Middlebury College – advanced an idea that separates so-called "moving" security from "static" security, and classifies the former as an inherently governmental function because of the increased dangers a protection detail faces when moving in a hostile environment. Static security, such as providing security for a base, could be outsourced. Several commission members, and even a few witnesses, however, panned this approach as too simplistic to help with clarifying what most consider an extremely complicated and nuanced issue.

There was also disagreement about at which level of government the decision to outsource a function should be made. Some witnesses, like Stan Soloway – president of the Professional Services Council, the largest government contracting trade group in the country – stressed that the decision should occur as close to the ground as possible, leaving it up to individual commanders. Commission member Dov Zakheim questioned the rationale behind this argument and pointed out that many dubious contracting decisions have been made because the commander in the field often defaults to contractors to perform support activities, since it is easier for the commander to do so.

Most of the other witnesses argued that the decision to outsource a function should happen at a higher level within government, either at the agency level or at headquarters. Similarly, many also advocated for hard and fast inherently governmental rules, which, theoretically, would provide federal agencies with clear guidelines on which functions could be contracted out.

The major consensus of the day was the need for in-sourcing and creating management competency within government to better oversee contractors, as well as the need for more transparency of the contracting process overall, especially in the use of subcontractors. The importance of these reforms is immense, seeing that the State Department – a budget-crunched, human resources-lacking agency – is taking over contracting oversight responsibilities from the Department of Defense in Iraq as the United States begins to draw down combat troops.

Moreover, the issue of how the government decides to outsource functions is not simply an academic matter: the Office of Federal Procurement Policy (OFPP) recently released a proposed policy letter on reformulating the definition of inherently governmental and is currently evaluating the subject. Later in 2010, the CWC will release its final report to Congress, and depending on the final policy letter from OFPP, recommendations could include further congressional action on inherently governmental policy.