Outsourcing Assumptions Proven Wrong by Report: Billions Wasted Hiring Contractors

The nonprofit group, Project on Government Oversight (POGO), has released a breakthrough analysis and report that blows away [the assumptions that outsourcing government work to the private sector is cost-effective]. The report shows that the federal government actually pays these service contractor employees much more than the federal government pays its own employees, and is substantially more than what employees in the private sector make…

The report trumps the assumption that service contractors can do federal work cheaper than federal employees:

… 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…

My sources in the federal government have been telling me for years that there has been more and more cutting of federal contract managers and oversight personnel even though the federal budgets, especially the DoD, have been growing. This allows federal contractors to lead the government around by the nose and cost us billions of dollars. If both political parties are looking for areas in which to save money, this is a prime place to start. The demonization of all federal employees and the artificial praise of service contractor savings has led the public to believe much of the federal employees’ work is wasteful. This hurts legitimate federal endeavors and needs to be exposed.

— Excerpted from a story by Dina Rasor, on Truthout, Wednesday 14 September 2011