Following the first installment in the Washington Post’s investigative series, “Top Secret America”, the Office of the Director of National Intelligence released a statement yesterday clarifying the relationship between the intelligence community and contractors.

ODNI dispelled several common “myths” surrounding IC’s relationship with contractors in the document. Of the misconceptions, contract budgets, federal oversight of the private sector, “inherently governmental” functions and cost of contractors were addressed and clarified.

In regards to the IC budget, the document explained that 70 percent is spent on contracts as opposed to contractors. “Those contracts cover major acquisitions such as satellites and computer systems, as well as commercial activities such as rent, food service, and facilities maintenance and security,” the document said.

ODNI clarified the oversight of the contractor community by referring to the annual inventory of core contract personnel, which instituted in 2006. The inventory led to intelligence policy directive 612, according to ODNI, which reinforces the prohibition on the use of contract personnel to perform inherently governmental activities, prescribes the circumstances in which contract personnel may be used to support IC missions and functions and, beginning in Fiscal Year 2011, requires IC elements to plan for and project the number of contract personnel they require, as part of their strategic workforce plans.

In regards to the myth that private contractors are inappropriately performing “inherently governmental” functions, ODNI stated that IC does not condone or permit contract personnel to perform inherently governmental intelligence work, but contractors may perform actions like collection and analysis.

Addressing the costs of contractors, ODNI explained that the average high costs of contractors save in the long-term by the nature of short-term work, commercial availability and unique expertise for immediate needs. Contractors allow for IC to expand when necessary and quickly shift resources when needed.

We’ve reported on the intersection of government and Web 2.0 technologies before on this blog. It’s an important and shifting landscape and nowhere is this dichotomy more evident than in Washington D.C.

Most of the applications are born in the private sector. Wikipedia, for example, became widely used well before Intellipedia, the intelligence service’s equivalent information sharing website.

“Web 2.0 applications are being created on the private side of things,” Ramesh Ramakrishnan, division director at Citizant, a Chantilly-based government solutions provider, said. “We then look at how a particular tool can be applied to a variety of federal agencies.”

“So much of the federal government information is stacked in individual silos. But wikis are getting more popular from the standpoint of collaboration,” Ramakrishnan says, pointing out that the greatest benefit is that a wiki can turn a Web site into a knowledge repository, allowing interdepartmental collaboration.

Mashups, an application using data from more than one source, are among the best examples of government’s adoption of ‘Gov 2.0′. Citizant recently worked to develop enterprise mashups to create a National Housing Locator system for Housing and Urban Development (HUD). Using the Google Maps API and the NHL database, an information data sharing tool was born. (see picture).

“HUD was looking at all the services it provides within its program areas and identified an office that did a lot of geocoding [assigning geographic identifiers],” Ramakrishnan said. “We didn’t want to reinvent the wheel of geocoding. What better way than to take the geocoding already done from one office and use it as a service within all of HUD.

Essentially other users can leverage the existing program and applications by using it as service across the board, and so now, in this case, the geocoder becomes a service center of sorts and the housing locator platform is able to combine its data with an already existing map.

To be sure, there’s a menu of government-specific constraints with Web 2.0 applications. For example, on gov’t wikis, deciding who can and cannot edit or view a page could potentially be a matter of national security. Issues also abound with privacy issues and determining moderators, especially with social networking sites.

“Full cross pollination from private to gov’t is a long way off,” Ramakrishnan said. Citizant is currently working with employees in various gov’t agencies to establish an integrated platform model for Gov 2.0 solutions.
For more on this, check out our recent interview with Sean Dennehy, Chief of Intellipedia Development.

More than 60,000 federal workers retired in 2006 according to a recent BusinessWeek article. That leaves a lot of unoccupied desks across the federal government. While Uncle Sam scrambles to recruit a new generation of workers, contractors have already begun to replace many of the vacancies.

Contracting firms, often with larger wallets and stronger on campus recruiters, have started to supplant the traditional federal employee. Firms like Booz Allen Hamilton and Accenture have extended their reach beyond the typical administrative and tech-focused duties and have begun to shoulder an variety of jobs typically reserved for the feds.

Lockheed Martin tops the list with over $33 billion in government contracts.

In turn, the contractors have begun to look to the next generation of workers. Two recent Lockheed Martin contracts were shaped by some of the younger members of the team, Linda Gooden, Executive Vice President of Lockheed Martin’s16,000 person Information Technology unit told The Washington Post.

Gooden utilized recent college graduates to develop an online payment system for a Social Security contract. Gooden wanted it to be Web-based and figured she would leverage their experience growing up with the Web, she told the Washington Post in an interview last year.

Though, many government agencies seeking to recruit the new talent face an uphill battle. “It’s a big sacrifice to work in government,” says Harvard public management professor Steven Kelman in an interview with BusinessWeek.

One of the other side of the contractor debate is David M. Holtsclaw, president of Local 145 of the American Federation of Government Employees. “This is costing us a lot more money in the long term,” Holtsclaw told BusinessWeek. “A lot of folks are retiring on a Friday and coming back on Monday working for contractors”

The balance between federal workers and contractors isn’t likely to be struck anytime soon; the height of the federal worker exodus won’t hit until 2009, with over 61,000 feds retiring.