Service Contractors Feeling the Heat

By SCOTT AMEY

I'm often asked what government issue most concerns me today. ObamaCare? Nope, that was so June! Political wrangling that hinders progress ranks up there. Contracts that are over budget and behind schedule are a possibility, but, as is often the case, the government and contractors share the blame and sometimes that is the price we pay for innovative programs and cutting edge technology. Spare parts overpricing is on the list too, but who hasn’t seen a cartoon about that.

My vote for the largest problem facing our government is the excessive costs taxpayers are paying for service contracts. POGO’s Bad Business report exposed the issue last September, and added to the debate that wrongly focuses on public vs. private sector pay. Congress is also interested in the cost of service contracts. And now, the White House is answering questions about the delay in getting out policy guidance related to striking the right balance between public and contractor employees, which will include cost factors “to help agencies consider where rebalancing of work can save money.”

We have taken a lot of heat (sorry for the heat analogy while the East Coast weather is hitting triple digits) for our comparison of federal compensation and contractor billing rates. The Bad Business report, however, included many official findings of cost savings when using government employees rather than contractors. Hearing testimony by senior Army and Department of Homeland Security officials confirms that savings can be realized by hiring or retaining government employees. For example, the Army cited savings from FY 2008 to FY 2010 of up to $51 billion (see p. 4). DHS found that its 2009-2010 insourcing efforts “indicate approximately $28 million in cost savings” (see p. 2).

In June, another example of cost savings came to light. In the civil case of Elmendorf Support Services v. U.S., the contractor sought an injunction to prevent the Air Force’s insourcing of a long-term base supply services contract. An Air Force cost comparison found that “performance by government civilian employees would be more cost-effective, saving the Air Force $5.4 million or 18 percent over a five-year period.” Additionally, the Air Force determined that using “military personnel would not exceed the cost of the contract.” The Court ruled against the contractor, and the case will likely drag on for years. Nevertheless, it provides another example of the potential cost savings of government employees.

That said, POGO would still like to see a complete breakdown of all cost models to ensure that they are fully loaded and include accurate figures that truly reflect the life–cycle costs of hiring government or contractor employees. Additionally, we need to lift government hiring caps that have hindered personnel efforts for years.

Scott Amey is POGO’s General Counsel

Follow @sameyjd

Comments

[Dfens]

I've said it before, but it bears repeating. Back when the Navy designed its own ships we had a fleet of 600 solid, seaworthy craft. Now that contractors have taken over their design we can't keep 300 little tin cans floating. When NASA designed their own rockets we sent men to the moon so often it because routine. Ever since they contracted the design of their rockets out to defense contractors we have not been able to go any further than low earth orbit, and their last go at designing a new rocket was such a fiasco that currently the only way NASA can launch a man to "our" space station is to buy a ride from the Russians. Government contractors are largely to blame for the fact that we pay more in taxes to get less from our government than ever before in history. They have run up our deficit so that a few could get rich on the backs of working class Americans whose money they take, not by providing a better product at a lower price, but literally at the point of a gun.