Page 2

Public-sector organizations, in contrast, have no bottom line comparable to the profitability of a business enterprise. The missions of governmental entities are focused on providing services related to public health, safety, and welfare; one objective is to do so cost effectively, rather than profitably. Thus, public practices are often very different from private-sector practices. They entail different risks, different operating environments, and different management systems.

Private corporations and the federal government have invested billions of dollars in facilities and infrastructure to support the services and activities necessary to fulfill their respective businesses and missions. Until the corporate downsizings of the 1980s, owners of large inventories of buildings usually maintained in-house facilities engineering organizations responsible for design, construction, operations, and project management. These engineering organizations were staffed by hundreds, sometimes thousands, of architects and engineers. In the United States during the last 20 years, almost all of these engineering organizations have been reorganized, sometimes repeatedly, as a result of business process reengineering. Some organizations are still restructuring their central engineering organizations, shifting project responsibilities to business units or operating units, and outsourcing more work to external organizations.

Studies have found that many companies are uncertain about the appropriate size and role of their in-house facilities engineering organizations. Reorganizations sometimes leave owners inadequately structured to develop and execute facility projects. In many organizations, the technical competence necessary to develop the most appropriate project to meet a business need has been lost, along with the competency to execute the project effectively. Even though many owner organizations recognize that the skills required on the owner's side to manage projects has changed dramatically, they are doing little to address this issue.

Federal agencies are experiencing changes similar to those affecting private-sector owner organizations. A survey by the Federal Facilities Council found that by 1999, in nine federal agencies, in-house facilities engineering staffs had been reduced by an average of 50 percent. The loss of expertise reflected in this statistic is compounded by the fact that procurement specialists, trained primarily in contract negotiation and review rather than in design and construction, are playing increasingly greater roles in facility acquisitions.

Outsourcing is not new to federal agencies. The government has contracted for facility planning, design, and construction services for decades. Recently, however, in response to executive and legislative initiatives to reduce the federal workforce, cut costs, improve customer service, and become more businesslike, federal agencies have begun outsourcing some management functions for facility acquisitions. The reliance on nonfederal entities to provide management functions for federal facility acquisitions has raised concerns about the level of control, management responsibility, and accountability being transferred to nonfederal service providers. Outsourcing management functions has also raised concerns



The National Academies | 500 Fifth St. N.W. | Washington, D.C. 20001
Copyright © National Academy of Sciences. All rights reserved.
Terms of Use and Privacy Statement