Government Spending: Costly contractors

Πηγή: The Economist

Sep 15th 2011


HOW could it possibly cost more for a government agency to hire a private consulting company with its own headquarters, executives, support staff, shareholders and so forth to prepare a bid for a project, compete for the contract, execute the project, compile reams of data proving what a great job it did on the project, and then spend the next six months lobbying the government to do a follow-on project and hire it again, than it would for the government agency to just do the dang job itself?

I really can't imagine. But the folks at the Project on Government Oversight can. They even did a study. (H/t Brad Plumer.)

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.

Read their report. Draw the appropriate conclusions. Whatever those might possibly be.