Tuesday, September 9, 2008

DHS Inspections: Contract Inspectors

In a continuing look at some of the issues surrounding the upcoming DHS inspections of high-risk chemical facilities I would like to take a look at the potential use of contractors to perform those inspections. This is not a new idea, and certainly not my idea. It was incorporated into the stalled HR 5577 legislation (see: “Third Party Entities under HR 5577” that would extend and make permanent the CFATS regulations.


Inspection Problems


One of the problems that has plagued the regulation of the chemical industry has been an inadequate force of inspectors for EPA and OSHA, the two federal agencies most intimately involved in the regulation of that industry. Inspections have historically been infrequent and cursory. Only when an incident makes the news through a massive chemical release or severe injury of workers does either agency conduct an in depth review of facility operations.


Inevitably, about two weeks to a month after a chemical incident makes the news, there is an announcement of agency detected deficiencies that result in fines. In many cases, if these deficiencies had been noted prior to the incident, the release and/or injuries never would have taken place. Reports about very serious chemical incidents investigated by the Chemical Safety Board repeatedly point out regulatory shortcomings that contributed to the incident.


DHS has the same potential problem, an inadequate inspection force. The plans for ten regional inspection teams (see: “DHS Chemical Facility Inspectors”) of 5 inspectors each means that there would be a total of 50 inspectors to make a detailed look at more than 7,000 high-risk chemical facilities. That means that each inspector would be responsible for 140 facilities, allowing no more than two days per facility per year for travel, inspection and report writing.


More Employees


Off the top of my head I can think of two different ways to ease the inspection problem. The first is to hire more inspectors for DHS. How many new employees? Well figure out how much time a reasonably detailed inspection of the security at a high-risk chemical facility should take; say five days (one day travel to and from, one day to prepare the inspection report and three days to inspect). Each inspector would work 240 days per year (48 weeks + 2 weeks vacation + 2 weeks holidays) so each inspector would be able to inspect 48 facilities per year.


That means that an inspection force of 149 inspectors would be required (7000 facilities/48). Add 30 supervisory inspectors (span of control is normally 5 people per supervisor) with 6 chief inspectors to watch over those supervisors. This means that there would be 185 inspection personnel. If each inspection team (five inspectors and one supervisory inspector) had a field office you would expect an additional 60 administrative support personnel; two per office. Add another 18 personnel for the 6 ‘regional’ offices and you have 263 personnel in the inspection division plus 5 people in the ‘Inspection Directorate’ office in Washington, DC. This completely disregards the requirement for the additional (IT personnel, HR personnel, Congressional Liaison, etc.) that any bureaucracy requires.


This assumes, of course, that the list of high-risk chemical facilities remains nearly constant at the current 7,000 or so high-risk chemical facilities. If water treatment and waste water treatment facilities are added to CFATS coverage as many (myself included) suggest, the number of high risk facilities could easily triple. That of course will more than triple the number of people required for the ‘Inspection Directorate’.


Cost of New Employees


Congress has been reluctant to authorize the head count necessary for an adequate number of inspectors in OSHA, EPA or DHS. The reason is simple, people are very expensive. The paychecks are only a very small part of their cost. Social Security, Medicare, Insurance, and other programs increase the immediate payroll cost significantly. Then add in paying for retirement programs and personnel become very expensive. Then of course, there is the cost for office space, equipment and transportation; factor all that in and inspectors become very expensive. Those costs increase every year. It is no wonder that Congress is very stingy with their headcount authorizations.


Use Contractors


In the last twenty or thirty years the use of contractors has become increasingly more common in government operations. A company would be hired to perform inspections. Their contract would call for a fixed number of inspections to complete in a predetermined amount of time. For that they would be paid a set amount of money. In all likelihood there would be a number of different companies performing the inspections; each operating in a particular industry or area of the country. Each company would be responsible for hiring, training and supporting the people that would actually be doing the inspections.


Congress likes contractors because they are a fixed cost for a fixed period of time. They make it easy to terminate unsuccessful programs; just don’t renew the contract. They give administrators an easy scapegoat to use to explain away problems. Contractors also provide an easy way to fix program problems; simply blame the contractor and then get a new one.


Contractors hold down their personnel costs through a number of measures unavailable to government personnel offices. First the bulk of their employees are working on short term contracts with very limited retirement programs. Many contract firms search out prospective employees that already have medical coverage through government or union retirement programs or their spouses. This eliminates the high cost of medical insurance. Finally contractors normally have leaner organizations with a higher ratio of workers to administrative personnel.




Now that is the simple picture. Of course it is more complicated than that. There are advantages and disadvantages other than cost for either method of completing the inspections of the high-risk chemical facilities. I’ll try to look at some of those other factors in future blogs.

No comments:

/* Use this with templates/template-twocol.html */