The Project on Government Oversight did a study, Bad Business: Billions of Taxpayer Dollars Wasted on Hiring Contractors. "POGO’s study analyzed the total compensation paid to federal and private sector employees, and annual billing rates for contractor employees across 35 occupational classifications covering over 550 service activities. Our findings were shocking—POGO estimates the government pays billions more annually in taxpayer dollars to hire contractors than it would to hire federal employees to perform comparable services. Specifically, POGO’s study shows that the federal government approves service contract billing rates—deemed fair and reasonable—that pay contractors 1.83 times more than the government pays federal employees in total compensation, and more than 2 times the total compensation paid in the private sector for comparable services."
There's a lot more interesting stuff in there and it's not completely one-sided (though mostly it is). "Federal government employees were less expensive than contractors in 33 of the 35 occupational classifications POGO reviewed." The thing is, with contractors, they make a profit and have overhead and the government isn't good at negotiating rates.
"POGO found several failures in government procurement, employment, and data systems that limit the government’s and the public’s abilities to assess and correct excessive costs resulting from insourcing or outsourcing federal services. Failures included the lack of standards for calculating cost estimates and justifying insourcing or outsourcing decisions; the lack of data related to negotiated service contract billing rates; not publishing government information about the number of actual contractor employees holding a specific occupational position under any given contract; and that there is no universal job classification system."
2 comments:
I certainly wouldn’t argue that the government contracting system isn’t broken, but I’m not sure moving the load to federal employees is the best answer. One of the basic premises of hiring a contractor is that you pay them more, but you only pay them for the work. The report seemed to want to discount the cost of federal employees between tasks, which I don’t think is a fair assessment. You can’t just expect a pool of suitably trained workers to be available to hire when you need them. Also, some of the specific recommendations seem like they might increase transparency, but I think they really highlight why government contracts cost more than they should. All the legislation, process, and reporting requirements are just extra costs layered on top of the actual cost of work. It also reduces free market competition because only companies specifically dedicated to understanding the complex web of government contracts can play. It seems like a better idea to streamline the regulations focusing on those that actually have proven value and eliminate practices which don’t.
I agree with a lot of this. Of course it matters what the position is. Some stuff doesn't have a lot of downtime.
I like what Obama did with recovery.gov. All the stimulus funds had to report spending in an xml file format (I think that was it) which made it easy to quickly get all the spending transparent on the web. I'm not sure what the burden was, whether it was higher or lower than previous things but it seems about right.
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