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Ok, as a defense contractor , I'm obviously biased, but my argument is this.

Yes, contractors are at first glance more expensive than their civil service equivalents. However, I would argue that they are more effective, as there are typically more stringent controls on their performance (read, financial incentives).

Also, contractors can be replaced at will (if the contract is written correctly), which is virtually impossible with the civil service "job for life" ethos.

Finally, there is financial risk associated with civil service employees. At least in my command, I've noticed that the deadwood GSs , the ones that have it the best , are also the first to file EEOC complaints, union complaints. There has been more than one instance when a project was delayed or cancelled due to the financial hit of a lawsuit against the command.

In the long run, contractors can be a more cost-effective solution provided that the contract is written correctly and performance monitored.

Perhaps. From what I see, most contractors seem interchangable in productivity with the GS folks. It is certainly easier to fire them if the work in test diminishes. However, I have a hard time getting around that 70K / 180K differential. I'm sure the benefits for GS workers cost a lot. But even if the benefits = salary, we'd be looking at 140 vs 180. That seems a steep price to pay for flexibility.

Of course, you pointed out a lot depends on how the contract is written. It could be ours are written poorly.

In the long run, contractors can be a more cost-effective solution provided that the contract is written correctly and performance monitored.

In some cases, the only solution. Look at all the government agencies who rely totally on contractor services to manage and operate their computer networks.

Actually, the feds love contracts. They help justify many positions and can even support higher grade levels for the ones who 'manage' the contractors. Also, the feds don't have to actually do the work and can conveniently blame the contractor for anything that goes wrong.

Your observation about writing the contract correctly and managing performance is absolutely right on.