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. This series offers a fresh look at ten of those occupations. Today’s occupation is language specialist. Let's check out the numbers!
Like many of the other services we analyzed in our report, language specialist services fall into the category of “commercial” services—i.e., the sort of services that you can find listed in a phone book. Language specialists also highlight the trend of outsourcing activities closely related to national security, as many of them have intelligence-related roles.
Our report found that federal employees who perform language specialist services pull in $110,014 in full compensation (which includes benefits) annually. The annual billing rate for a service contractor who does the same work, on the other hand, comes to $211,203. Translation: a language specialist who is a contractor costs taxpayers nearly twice as much as a fed who does the same work.
It’s worth noting that this billing rate is nearly 3.5 times the full annual compensation of a language specialist working in the private sector (our report also presents data showing the full annual compensation—including benefits—of private sector employees). Of all the services we examined, this service had one of the highest ratios of annual contractor billing rate to annual full private sector compensation. Only two other services—accounting and claims assistance and examining—saw larger contractor markups from the average annual private sector salary.
As for the for the overall contracting picture, the Pentagon spent $198.6 billion on service contracts in fiscal year 2011, and that the entire federal government spent $325.3 billion on service contracts during that period, according to USASpending.gov. Those are hefty sums to spend on something that on average costs twice as much as the alternative.
To be clear, our report isn’t the end-all-be-all in this issue. The most important message for policymakers is that they need to stop buying the myth that contracting out is cheaper and start conducting meaningful comparisons of the relative costs of contractors and federal employees.
You can find more information about this issue in our Bad Business report.
Bryan Rahija is a contributor to POGO's blog.