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"Do Not Overpay" by Timothy Valentine on flickr
In an article in the New York Times, Government Pays More in Contracts, Study Finds, the conclusions are that:
Despite a widespread belief that contracting out services to the private sector saves the federal government money, a new study suggests just the opposite — that the government actually pays more when it farms out work.
The study found that in 33 of 35 occupations, the government actually paid billions of dollars more to hire contractors than it would have cost government employees to perform comparable services. On average, the study found that contractors charged the federal government more than twice the amount it pays federal workers.
When I worked for an agency in the DoJ, as a Telecommunications Program Manager, one of the duties included radio systems for federal law enforcement. I watched DoJ and Treasury force contractors on to a big money project, a nation-wide radio system for all federal law enforcement in the 1990s-2000s.
Starting in 1993, Department and Agency radio / telecom managers (think “techs”) in DoJ and Treasury (pre DHS) got together and we started designing a nation-wide, interoperable, radio system for all federal law enforcement agencies, with sharing to State and Local agencies. This was driven by the mandate of upgrading every radio system in the Federal Government, for frequency reasons, by 2005.
As our research and design progressed, first the radio equipment manufacturers took notice, then Congress. The projected “line-item” for the Radio Project in the federal budget reached $1+ Billion in the late 1990s, for the whole system. Then, the “contractors” were in-charge of the project, “managing the design and process” for the Departments of Justice, Treasury, and Homeland Security. Some years minimal hardware was bought, contractors got the most of the budget.
Today – 2011 – the nation-wide radio system is still not installed. In 2005 (when I retired) part of it was installed in Seattle, and some along the southwest border in San Diego/Arizona (per a senator). I believe it could have been finished and working by now, using the centuries of technical experience available in the agencies of the federal employees (and with some Contractor assistance). This system was designed pre-9/11 and workable.
Tell me about how “contractors” are cheaper. Federal law enforcement still has no interoperable radio systems, as recommended by the 9/11 Commission.
36 Comments
quel surpriz
Oh the republicans especially love government contracts. That was one of the main reasons for the cold war. To make sure those lucrative WWII contracts did not come to an end. But the fall of the USSR nearly put a monkey wrench into that.
Thank god for crazy Arabs..right ? ;-)
no shit.
No question that it costs more. Isn’t that the point?
For example, it used to be that soldiers had “KP” duty. Now it is all contracted out. Of course it costs more to have a “corporation” peel the potatoes!
Largesse for those connected to our mafia government.
The charge was 10.00 for Halliburton to wash one shirt for a soldier in Iraq.
Thanks, Bev, for posting this.
I’m sure somewhere Condi Rice is muttering “who could have anticipated . . .”
It’s OK if it costs more — they get to break unions, which for corporatist profiteers is Job #1.
(Nice doggie!)
Even when the DoD or someone makes a point of putting out some ‘support’ contracts with ‘strict’ hourly wage rates, there will be a few hourly rates set in so that favored contractors can make extras.
This just hapened in FL with the jails. So they did something about it. Privatized more jails.
Why didn’t the government finish the job on time with the help of the contractors?
The design kept changing, needed more funding, some inter-agency politics on features. It was mostly a very slow process, meetings every week or so for all those years.
Ever hear of Blackwater??????
After 9/11 and Dept of Homeland Security came in, the process changed, a new Department (was Treasury) wanted different features and there was a struggle for the lead Department on the Project.
corporations and private contractors have a profit model, government service has a performance and results model
there is some waste and corruption in government programs however that cost figure is dwarfed by the profit model of the private sector
brigeds, roads, water, parks, police, fire dept, mail service, ALL cost far less when the government provides the service as compared to say bottiled water, private security guratds, private fire dept, fed ex, beach clubs, country clubs etc
in addition to costing the tax payer less, government service pays living wage with benefits so the workers have more to spend which of course benfits the economy, the middle class, the lower class AND THE UPPER CLASS
EVERYONE benfits from public provided service, accept of course the single corporation that might have made money for the ceo, at the cost of lower wages, higher taxes, etc
Are you aware that the USPS is one of the few government agencies that has to actually pay for itself through it’s own reviews. And that it is $15Billion dollars in debt.
There is another, very significant, reason that governments at all levels choose private contractors over public agencies – kickbacks. The standard rate for contractor contributions to the politicians that fund them is 10%. Even for a small town mayor, that adds up to a lot of campaign (and other) cash. For a governor, or a federal official, the numbers are staggering. And, as a guy who once was briefly assigned to “manage” a $2,000,000 engineering contract secured through a $200,000 contribution to the governor’s campaign (after the election, no less), I am an authority of sorts on how unproductive these contractors are. Public employees, by contrast, don’t make those sorts of contributions and they generally are far less supportive of Republicans. It’s not hard to understand why politicians, particularly Republican politicians, favor privatization.
Well, duh! The whole idea of contracting out government services is to enrich corporations that provide such services. The Republic claim that it makes government “smaller” is nonsense compared to how much more it costs the taxpayer. Cost should be the one concern. How much is it costing?
Well, there are contractors and then there are Contractors. The problem with the version which couples itself to government is the source of influence to that government as to what and how to run the contract. It is self-referential.
Contractors to the private sector are 180° out from that model. We are expected to perform out of the chute, at the level of performance expected from the employees with whom we are supplementing, and the startup time to full performance can be brutally short. Then, the pay tends to be less than the comparable job within the company, no perks (but no politics either!)and after that period is over, a year to 18 months, you are job searching again.
So it isn’t the contractors per se, it is the corrupt model by which government shapes the contract itself…to favor the contract agency, not itself.
You are right, there is a difference in private vs government contractors. I do expect a private contractor to perform to the agreed contract at the amount agreed on. The study was on government contractors.
alan, do a little research before you repeat the propaganda from fake news stations, the only reason it’s “in debt” is because they were turning a profit so the “politicians” force them to fund pensions on people who aren’t even there and well into the future
if you use the same “accounting” then just about all companies arwe in debt
do some research, the usps is not only cheaper, pays higher wages, makes delivery everywhere on mandated days but still winds up being a profit organization, until of coures you use accounting that takes those profits and makes believe they are spent somewher
I heard a postal worker describe how USPS contracted out its IT operations to Accenture – perhaps that’s where some of that $15B went.
Maybe USPS should be considered a public service and not have to pay for itself. Maybe more of those Wall St. freeloaders should be taxed to subsidize mail service to poor rural areas. Maybe I would love it if postal clerks weren’t forced to offer me a laundry list of unwanted services every time I go in to mail a package.
Thanks for the post. All utterly unsurprising, except of course to most citizens (of various political persuasions) who simply don’t pay attention, except to propoganda in the media, which misleads (to be polite) and lies (to be more accurate) about all of this.
There’s a certain amount of articles written about govt contracts highlighting how much they actually cost, whether at the federal or state level (less goes on at the local level).
But what you’ll hear endlessly is most voters whining incessantly about the so-called “waste,” fraud and mis-management wrought by hapless govt workers, who also, like teachers & PD, are the “cause” of the 2008 crash. As someone said, above, sure there is fraud & waste at the govt level, but it’s frankly *NOTHING* – very very very small potatoes – in comparison to the rip-off by govt contracting, esp that at the fed level and most esp that involved with War, Inc.
But I duly note that at the last most recent TeaPublican “debate” Newt Gingrich was riffing on govt fraud and waste, per usual. These folks have that “line” down pat, and their credulous followers lap it up like mother’s milk.
The State of Arizona has proven that private prisons cost the taxpayer more: http://www.privateci.org/private_pics/AZAuditNov2011.pdf This has come to light even when the people running the private prisons (CCA) have the Governor and other elected officials in their pockets. (Google on Arizona, CCA, and Gov. Brewer.)
“Kickbacks” has such a negatove connotation. Perhaps we should call them ………uh………lemme see……..no, not that………. on second thought, “kickbacks” works for me.
You’re right there. “Government” contractors are a whole different story.
Well put.
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Newt Gingrich just breaks me up!!!
Actually so does Bachmann and what’s-his-name.
I am so glad to see we are getting an “international audience” here at FDL.
Bienvenue.
Was that a dress shirt????? Folded or hangar. It makes a difference.
The people behind a few corporations have taken over the infrastructure of the Federal and most of the state and county governments in order to steal the taxpayer money flowing into them. Those people intentionally mismanaging these infrastructures for power and profit. They have a vested interest in not telling you the truth about their activities. See Senator Carper’s statement (video link on the click-thru) that the overpayment by USPS into the Civil Service Retirement System is 50 to 74 billion USD. 50 to 74 billion USD well outweighs the 15 billion USD, doesn’t it?
Same goes in CA. It’s ridiculous. And in the last CA Gov election, the crapulous spoogebucket insider trader E-Meg Whitman, promised to cut taxes & cut gov’t, but was crowing about how she’d increase prisons… of course, E-Meg got GIANT donations from the prison-industrial complex.
Yeah: that’s the ticket, E-Meg. Let’s INCREASE prison funding to the private sector, while cutting teachers, police, fire dept, social workers, health care, etc. Typical TeaPublican insanity.
Thanks for the post, great info. I went to the POGO study (through the NYTimes link above) and am perusing it.
I had some personal experience as a COTR (Contracting Officer’s Technical Representative) when I was still gainfully employed. I recall one contract where we (the gov’t) paid a contractor $71/hr for the time of one of their employees, who was running a small stockroom – would have been maybe GS-7 (or WG-7, depending on whether it would have graded out white or blue collar). Told the employee how much we were paying for him and he was flabbergasted. I’m sure he was paid less than a fourth of that.
I was a COTR also, saw a lot of that too.
“politicians force them to fund pensions”
Dang regulations.
Another memorable entry in the annals of “Who could have anticipated . . . ‘
that’s typical from a republican alan, you took my statement ENTIRELY out of context, I SAID they force them to fund pensions for people who aren’t hired yet, and into the future BEYOND what any other company funds
DANG regulations trying to make people like you THINK and then claim the post office is operating less efficently then the private sector when it’s out performing the private sector by leaps and bounds
let’s see how far you can take another statement out of context…I am pretty surprised you tried that, it’s WAY below your usual pretty decent representation of some right wing reasoning
T shirts.
Kickbacks, you know, sharing. It’s a good thing, I am so sure.