By BRYAN RAHIJA
Looking for billions of dollars' worth of savings for taxpayers? Look no further than government service contracting. Last September, POGO released a report that found service contractors cost taxpayers nearly twice as much as federal employees who do the same work. With the final discussion of the mammoth defense budget bill looming in Congress and with the nation’s deficit crisis largely unresolved, we figured there’s no better time to take another look at data from the report.
Our report examined 35 different occupations. Over the next few days, we’ll offer a fresh look at ten of those occupations. Today’s occupation is mechanical engineering. Let's check out the numbers!
Our report found that the annual contractor billing rate for mechanical engineering services is $189,197. How much would it cost to have a federal employee perform that work in house? According to our report, a federal employee’s annual compensation (including benefits!) for that kind of work is $126,177. That means a federal employee costs taxpayers just two-thirds the price of a contractor for comparable mechanical engineering services.
Mechanical engineering, of course, is just one service of many that the government outsources. In fiscal year 2011, the federal government spent $325.3 billion on all kinds of service contracts, according to USAspending.gov, of which the Pentagon doled out $198.6 billion.
Again, the key takeaway here is that it's time for the government to start conducting meaningful comparisons of the costs of performing work in house and contracting out to the private sector. The conventional wisdom that the private sector is always more cost effective simply doesn't hold water.
Check out our Bad Business report for more details on this issue and recommendations for how to address it.
Bryan Rahija is a contributor to POGO's blog.