HEALTH AFFAIRS

1. TRICARE Management Activity HEALTH AFFAIRS Procedures on In-Sourcing New and Previously Contracted Out Functions

2. Background • National Defense Authorization Act (NDAA) for FY 2008 • Signed into law on January 28, 2008 • Section 324 – Guidelines on In-Sourcing New and Contracted Out Functions • DoD must consider using DoD civilian employees to perform new functions or functions that are currently performed by contractors. • The Under Secretary of Defense for Personnel and Readiness (USD(P&R)) was directed to devise and implement guidelines within 60 days • USD(P&R) guidance was issued as part of a Secretary of Defense memo dated April 4, 2008

3. Consideration for the use of Civilian Employees • TMA is to ensure consideration is given, on a regular basis, to using DoD civilian employees to perform new functions and functions that are performed by contractors but that could be performed by government employees • No limitations or restrictions are to be placed on the number of functions or activities that may be converted from contractor to DoD civilian performance.

4. Special Consideration for Certain Categories/Functions • Special consideration shall be given to using DoD civilian employees to perform any function that is performed under contract and: • (A) has been performed by DoD civilian employees at any time during the previous ten years; • (B) is closely associated with the performance of an Inherently Governmental (IG) function; • (C) has been performed pursuant to a contract awarded on a non-competitive basis; or • (D) has been determined by a contracting officer to have been performed poorly during the five years preceding the date of such determination, because of excessive costs or inferior quality.

5. Special Consideration for Certain Categories/Functions • In addition, special consideration shall be given to using DoD civilian employees to perform new mission requirements, particularly if the new requirements entail functions that are similar to functions previously performed by DoD civilian employees or are closely associated with the performance of an inherently governmental function.

6. TMA Interim Guidance • Issued by TMA Deputy Director on July 14, 2008. • Available at: http://tricare.mil/tma/ams/downloads/In-SourcingGuidance.pdf • Established interim ground rules and process for in-sourcing/economic analysis • Identified tools to support economic analysis • Addresses data for inclusion in TMA’s inventory of contracted services IAW Section 807 of FY08 NDAA • Adds new data elements • Raises the visibility over certain categories of contracts • Clarified circumstances warranting exemptions • TMA policy and procedures are subject to updates received from USD(P&R) and/or USD(AT&L) Interim Guidance Handout

7. Exemptions • The following cases normally do not require an economic analysis • Exercising an option; • Requirements for products, such as systems or software covered under DoD 5000 series; • One time requirements; • Intermittent requirements; or • Requirements that are not long term in nature. • Should the TMA requiring activity believe they are exempt from performing an economic analysis for a reason not stated above, they should request a written determination from TMA Human Resources. • If none of the above apply, an economic analysis should be done

8. Economic Analysis Tools • To aid TMA government officials in completing this economic analysis, AM&S COD-FC has developed three sets of tools to compare the cost of DoD civilian employees to contracting options under: • D/SIDDOMS-3, • TEAMS and • T/AARMS. • These tools are discussed within, and accessible via hyperlink at, paragraph 3.2.2 of the TRICARE Management Activity Non-Purchased Care Acquisition Desk Top Reference Guide, or paragraph 6.9.3 of the TMA Policy For The Acquisition Of Non-Purchased Care Support.

9. Economic Analysis • Qualified cost analysts/experts shall perform the analyses. • Use cost factors/models that account for the full costs of manpower. • Make “like comparisons” of all relevant costs. • Additional guidance on cost factors and cost models will be provided by a working group established at the direction of the Deputy Secretary of Defense. • If a decision is made to use DoD civilians, but the Director of the local Human Resources Office (HRO) determines that qualified DoD civilians cannot be hired to perform the function, officials may contract (or continue to contract) for the services provided the function is not inherently governmental or exempt from private sector performance.

10. Near Term Implementation Issues • Even if the economic analysis shows DoD civilians as the lower cost alternative, immediate conversion to civilian performance may not be possible • Current TMA facilities are at capacity and not eligible for expansion • TMA is subject to move under Base Relocation and Closure (BRAC) • Current Skyline facilities do not meet anti-terrorism standards • If conversion requires new space for civilian employees, TMA interim policy permits contractor performance until BRAC limitations are lifted, at which time the use of contract personnel will be reconsidered. • TMA HR may not be able to recruit the necessary Government staff. • TMA interim policy will be replaced with permanent policy once the BRAC situation is resolved Handouts

11. Identification of Contracted Functions • TMA and other DoD Components must identify their contracted functions in an inventory required by 10 U.S.C. §2330a(c), as amended by section 807 of the FY 2008 NDAA. • Input to the inventory is to be provided by requiring activities at the conclusion of proposal evaluation (as per Evaluation Guide). • Input form available at: http://tricare.mil/tma/ams/downloads/PurchasedServicesInventoryForm.doc • This inventory will be reviewed to ensure it does not contain: • Personal services contracts entered into or being performed in a manner that is inconsistent with applicable statutory and regulatory requirements. • Inherently governmental functions. • To the maximum extent practicable the inventory should not contain functions closely associated with inherently governmental functions. Input Form Handout

12. Identification of Contracted Functions (Continued) • If there are necessary functions or activities under contract that are determined to be inherently governmental or exempt from private sector performance, they should be converted to government performance. • The inventory will be reviewed to identify activities that should be considered for conversion to: • performance by DoD civilian employees; or • an acquisition approach more advantageous to the DoD. • TMA is required to develop a plan to provide for appropriate consideration to be given to the conversion of these activities within a reasonable period of time.