The Shrinking Work Force

Yes, we've heard it over and over again from the federal analyst firms: The government work force is destined to shrink considerably in the coming years as huge numbers of workers reach retirement age. The issue is losing its urgency--even if it's legitimate. But beyond that lies perhaps an even bigger issue exacerbating the problem; a growing number of federal officials (chief information officers, specifically) are bidding farewell to their agencies for positions in the private sector.

In the world of government contracting, there was a time when touting a federal CIO among the company's ranks was something of a novelty. These days, however, it's more of a standard. Among the more recent federal officials to pull up a swivel chair with corporate execs is Dan Matthews, the Department of Transportation's CIO who resigned only to return to Lockheed Martin, where he previously worked for 17 years.

Looking back farther still, Roger Baker initially left the Department of Commerce for CACI International, and has since joined General Dynamics; Woody Hall left U.S. Customs before it became part of the Department of Homeland Security and joined SAIC; and Gloria Parker left the Department of Housing and Urban Development for Chantilly, Va.-based Apptis. Then there's SRA International--perhaps the hottest CIO destination of all. Among its team are former U.S. Air Force CIO John Gilligan, Federal Emergency Management Agency CIO Ron Miller and White House CIO Timothy Campen.

Of course, the primary reason that CIOs make the switch from federal positions is--no surprise--money. According to federal pay scales, salaries range from $120,000 to $160,000. Compare that to the more than $200,000 that many CIOs at large IT companies rake in. On top of the financial incentives, a move to the private sector means less dancing along the political tightrope to ensure job security, and budgets determined by fair competition and Wall Street, not a watchdog of funds otherwise known as the Office of Management and Budget. Who wouldn't want to make the switch?

Needless to say, private contractors are quick to reap the rewards of taking on these free agents. After all, it doesn't take a genius to recognize the obvious advantages in adding former federal employees to the payroll. Just look at what Lockheed Martin now has in Matthews: a skilled IT professional that can pledge real-world experience on both sides of the fence. In a market that manages to stump even the most savvy of government contractors on occasion, such an asset is not taken lightly. Obviously, regaining an employee of nearly two decades after he's had a reasonable run inside the government isn't typical, but, regardless, contractors have much to tap into. Even a brief stint in the public sector can equip a CIO with insight into specific priorities not yet disclosed and the quirks associated with how a particular agency does business. It's like recruiting the quarterback from an archrival team midseason.

But really, the perceived advantage of luring a CIO away from a federal agency may also be both a double-edged sword and a red herring. The federal government is left with fewer capable bodies handling IT initiatives, while at the same time, attention is averted from the real issue of government as a substandard employer. Sure, that may mean more work (and dollars) handed off to the private sector, but anyone will tell you that stalled or botched contracts often come from a lack of leadership and support inside the agency.

The consequence for contractors is that active projects will be abandoned, and smaller IT offices will inevitably receive smaller budgets. And that, of course, would mean fewer contracts going up for bid. No amount of intellectual property can soften the blow of shrinking business opportunity.

That said, there's little that contractors can do to stop it--and if CIOs come knocking from the Hill, companies would be foolish not to take advantage of the opportunity. But at the same time, they should brace themselves. Indeed, the government work force will shrink, as 30 percent becomes eligible to retire in five years and an additional 20 percent qualify for early retirement. At the same time, the IT skill level could take a nosedive as more and more agencies see newbies at the helm, leaving industry holding the bag.