Posted on 09/14/2011 7:19:30 PM PDT by JHL
As Washington's use of private contractors grows, the government is paying those contractors billions more than it would pay their government workers to do the same job, according to a new study released Tuesday..
In an attempt to verify frequently made claims that the government can save money by outsourcing its work, the nonprofit Project On Government Oversight (POGO) compared the total annual compensation for federal (and private sector) employees with federal contractor billing rates.
The group found that in 33 of the 35 occupational categories it reviewed, federal government employees were less expensive than contractors. On average, the federal government pays contractors 1.83 times more than it pays federal employees and two times more than what comparable workers in the private sector are paid.
For instance, the government on average pays contractors $299,374 for accounting services, while it pays federal employees $124,851 for accounting services. By comparison, workers in the private sector (not under contract by the government) make on average $83,132. The government on average pays contractors $198,411 for information technology management, while they pay federal workers $124,663.
That discrepancy is significant, given the federal government spends over $320 billion on service contracts each year, and about one-quarter of all discretionary spending goes to service contractors. According to POGO's report, the contractor workforce rose from an estimated 4.4 million in 1999 to 7.6 million in 2005 -- while the size of the federal employee workforce has remained relatively steady at about 2 million.
The POGO report stands as a rebuttal to reports such as the one released last year by the Heritage Foundation, a conservative think tank, which concluded that the average federal employee receives as much as 22 percent more in wages than an equally skilled private sector worker.
POGO's report contends that "the focus on comparing federal and private sector salaries needs to shift because they have nothing to do with what the government actually pays for services. Instead, the focus properly belongs on analyzing the full costs of paying contractors to perform federal services."
The American Federation of State County and Municipal Employees seized on the report to argue that the government should stop privatizing services.
"In the wake of the worst recession in our lifetime, federal, state and local governments should not be doling out billions of dollars to private contractors to perform services that can be done more efficiently and at lower cost by public workers," AFSCME President Gerald McEntee said in a statement.
In 2009, President Obama directed government agencies to review contracts to identify wasteful or inefficient efforts. However, Mr. Obama also signed a two-year federal pay freeze last year, making it more likely the government could turn to contractors. The 2012 Defense budget passed by the GOP-led House this year includes a "sense of Congress" provision that states that the Defense Department should only use in-house workers when the work involves inherently governmental functions.
POGO concludes that the government improve its data collection and reporting systems so it can better evaluate its private contracts. "The federal government has failed to determine how much money it saves or wastes by outsourcing, insourcing, or retaining services, and has no system for doing so," the report says.
I work for a defense contractor, and I can tell you that the contractor rates cited are very high-end, and not representative of the typical contractor rates. I suspect there are other flaws in the study, but I haven't the time time do a detailed analysis of the data. I'm hoping that someone will take the time to do so -- maybe the Heritage Foundation or some other conservative think-tank can take this apart. It needs to be rebutted, as the Obama regime and the Dems in Congress are going to jump all over this report as justification for continuing the rapid expansion of the federal workforce at the expense of the private sector.
It just takes the government worker 3 times as long to do the same job. We’ve all seen this!!
O.K. Who the hell is POGO? (Union flunkies?)
Where do they get their “non-profit” funding? (Soros?)
Just a hunch.
Contract workers can be fired or let go with relative ease. Try that with a Government worker.
My experience with contractors is that those workers for the contracted company who are rated lowest bail and magically become govt workers supervising the contractors.
And yup, they’re not exactly the sharpest knives in the drawer.
(There are some good ones there...but our wonderful congress has managed to strangle them so that the creativity is soon stifled.)
Exactly! When the work is done, you send the contractor away! With government workers, we continue to pay them to pollute the environment by BREATHING! No thank you, we got enoughs people taking six coffee breaks to every 15 minutes of “productive” work!
Remember, the contractor has a retirement program, supervisors, home offices, and a whole host of other expenses that are covered under those per hour rates.
Over the years I worked out what the agency had to spend to support me in my position. First there was my salary and fringe. Then there was the space, office furniture, equipment, secretarial support, LEGAL SUPPORT (Yup, my job required frequent and repeated reference to full time lawyers ~ on staff of course, but still not cheap ~ sometimes depending on what I was doing I might be tying up two full time lawyers for a year or more).
I had to have a supervisor ~ he had a full studio of electro shock therapy equipment ~ not for me but him ~ and a marvelous office looking out over the Potomac River!
My parking space was good ~ and then when working downtown, there was the federal subsidy for Metrorail to consider.
I cost the government several times my salary and benefits EVERY YEAR ~ but, my efforts saved the government many times that EVERY MONTH.
It's difficult to evaluate what a job really costs the employer. If it has to do with collecting money and paying people, that job is vital. if it has to do with appearing before Congress and begging for beneficial legislation, maybe not so vital. But all the lawyers are support personnel. In a typical agency they make no decisions at all ~ unless they take a non-lawyer type job.
It is probably because the government forces extreme regulations on the private contractor.
Excellent points. It reminds me of the push after 9-11 to create the TSA. We were told that “to professionalize, you must federalize.” Does anyone really believe today that the TSA is a more professional organization than the contractors they replaced?
Are we really safer? And, I’d sure love to see a comparison of the costs to run the TSA vs. what was spent before on contract security screeners.
They are comparing apples and oranges.
The contractor’s bill is the total expense, no future costs, it is a done deal.
The fed worker has retirement, health care, and other expenses not mentioned, some that kick in years later. It is not uncommon for a fed worker to retire after 20 years and collect retirement pay for 40 years.
Without getting into the question of which costs more, it’s safe to say that everything the government does is extremely expensive.
Bingo! You hit the nail on the head. Productivity is a huge issue when comparing government and contract workers, and that is ignored in this report.
Why are so many federal workers located in DC? Can’t they do the same thing from Mississipi or West Virginia or some other low-cost state? Relocate all these slots to low cast areas, then DC can become a low cost area and you can cut their pay also.
Private contractors will be paid millions to improve these systems and then more to conduct another study. LOL
The average "contractor pay" of $198,411 for information technology management, actually seems a bit on the low side at least for civilian agencies if this is for management level services as opposed to IT support. This would be a fully burdened rate charged by the company, not what the individual contractor earns. $250K would be more representative IMO for this type of work. Fed pay of $124,663 seems about right as a basic salary however the actual cost for benetis, etc. would significantly increase that amount by around 50%.
In general, feds love having contractors around to do their work. It's a symbiotic relationship. Not saying this is good, it just is what it is.
“Why are so many federal workers located in DC? Can’t they do the same thing from Mississipi or West Virginia or some other low-cost state?”
Actually lots of feds have been relocated to places like West Virginia and other lower cost areas but the moves are usually because of the power of certain politicians that want employment in their district, not for cost savings. Of course there are legions of feds in DC as well. There are just a lot of feds everywhere! And where there are feds, there are lots of contractors.
I worked for a government contractor for several years after retiring from the Army. On a highly technical project two of us contractors did all of the work. We were supervised by 15 - 30 government employees. The higher end when travel to conferences and meetings in sunshine states were required. Now what did that study say again?
Oh, by the way, we always provided the Visine for morning meeting prep and excuses for those who did not deem it necessary to show.
And where there are feds, there are lots of contractors.
Ultimately few feds is better, but even more distributed feds is a decent interim step.
Should we relocate the NLRB to South Carolina after Perry gets in?
Focusing on in house or out sourcing misses the point. Most of the work being done doesn’t need to be done by anyone.
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