By BEN FREEMAN
Yesterday, the Aerospace Industries Association (AIA) launched another volley in its "Second to None" campaign to protect the more than $350 billion taxpayer-funded revenue stream flowing to contractors every year from the Pentagon.
AIA released a Deloitte study it commissioned titled "The Aerospace and Defense Industry in the U.S.: A financial and economic impact study," which, similar to a previous "study" from AIA, is light on unbiased facts and heavy on fear-mongering.
From page one it is clear that the results of this study should not be used to predict, well, anything. But, don’t take my word for it, take Deloitte’s—“These results are not intended to be predictions of events or future outcomes,” says a disclaimer on the cover of the study. So, while it’s usually necessary to remind AIA that the Pentagon gives defense contractors more money than all of our men and women in uniform, and thus don’t deserve subsidies or corporate welfare while our troops get their benefits cut, or that military spending is one of the least effective means the government has to create jobs, we can instead focus on a remarkable statistic provided by Deloitte.
According to the study, the average salary for the aerospace and defense industry was $80,175. By way of comparison, that is more than $36,000 higher than the U.S. national average cited by Deloitte and more than $10,000 higher than the average wage amongst the U.S. military’s civilian workforce, whom these defense contractors often replace. According to the Office of Personnel and Management, the average salary at the Department of Defense (DoD) is $69,218, and the average salary in every branch of the military is lower than the average salary of these defense contractors.
The average salary of defense contractors is also far greater than the pay of the vast majority of uniformed military personnel. For instance, a Sergeant First Class in the Army (E-7 pay grade) with 20 years of service and a family of 4 receives just over $50,000 annually in basic pay. Even when other military benefits, like housing and tax perks, are accounted for the Sergeant First Class’s compensation is still below that of the average defense contractor. The same is true for many officers. For instance, a First Lieutenant (O-2 pay grade) with 20 years of service takes home just over $53,000 annually.
Fortunately, the DoD is become increasingly more reluctant to pay its contractors more than its soldiers. Just this week, General Martin Dempsey, Chairman of the Joint Chiefs of Staff, noted that contracted operational support for the military has grown from a ratio of six troops per contractor during the Revolutionary War to fewer than one troop per contractor in Afghanistan. And Dempsey said, “It can’t keep going that way.”
Dempsey’s concern for the military’s overreliance on contractors should be echoed by Secretary of Defense Leon Panetta and other Pentagon leaders to remind AIA that troops, not contractors, are second to none.
Ben Freeman is a POGO investigator.
If you want to make a good case for how contracting out government jobs is killing our nations defense, why don't you look at all the warship design jobs that have been outsourced to defense contractors? Look at what a disaster that has been! We once had a 600 ship Navy of good, solid, seaworthy ships, now we can barely keep 280 ships with hulls like beer cans in the water. Back when the Navy designed its own ships the cost less and took far less time to design and build. Today with all our technology and computers our Navy is looking more an more like a contractor assisted suicide. POGO is taking a very short term view on this government contractor issue. Dig back in history a little and you'll make a much better case for why contracting out government jobs is setting this nation up for complete failure.
Posted by: Dfens | Mar 11, 2012 at 11:25 PM
Ray, Brian, and Flygad, thank you all for your comments. While this may come as a surprise, I agree with a lot of what you said.
This post is not, nor was it intended to be, a comparison of the full cost to government of contractors vs. uniformed military or DoD civilians. Nor does this post make any comparison of the effectiveness of the groups. Currently, no such full-scale study exists, and putting one together would be an immensely challenging undertaking. Until such a study is created we must make comparisons based upon the best available data, which in this case were average salary figures for DoD Civilians and uniformed military personnel, and the other part of the force structure that is often used in their stead – defense contractors. I incorporated some elements of the military compensation packages unavailable to contractors (e.g. housing), but as Flygad scathingly pointed out, I did not monetize other portions of compensation packages, like government and contractor pensions (which can also be rather lavish).
Had this been a lengthy report I certainly would have attempted to do this and much more - including addressing the reasons the military relies on contractors – but this is a blog post, that reports one facet of this extremely complicated issue. Fear not though, this is a core issue for POGO and we will be providing significantly more information in the future.
Again, I thank you all for your comments.
Posted by: Ben Freeman | Mar 09, 2012 at 12:33 PM
Ben, I believe your argument would be more convincing if you quantified the dolar value of benefits that civil servants and the military receive, vs. the dollar value of typical contractor benefits.
Also, I don't believe the example of a First lieutenant with 20 years service is a very good one, because that's a very odd combination of grade and years of service to see. Typically, a First Lt. is promoted to Captain after 4-6 years service.
Also, a slight correction to your article: a Sergeant First Class in the Army is the E-7 pay grade; an E-8 is a Master Sergeant.
Posted by: Brian Wilkerson | Mar 09, 2012 at 11:19 AM
Ben
Your article does not include the reasons why the military relies on contractors. A few reasons are that in the long run its cheaper, that the
customer gets unique experts and when the contract is over-its over. General Demsey is not opposed to contractors, he like all senior leaders just wants excellent implementation. That is very feasible and smart use of money.
Posted by: Ray Draeger | Mar 08, 2012 at 08:39 PM
Amateurish comments on a semi-pro study. Whoops, someone forgot to monetize the generous government pensions and job security and demands, or lack of it, for productivity.
And it looks like POGO, in a more inept way than Deloitte seems to think it is OK to compare a career NCO or officer with a military mission to a defense contractor, who more likely has an industrial mission. You are taking a colorful fruit salad, putting it in the old Cuisinart, and making a mono-chromatic puree---that no one can use sensibly.
No doubt there is profligate waste in defense contracting, often caused by movies. There is often an equal and opposite wastrel vibe in government, both the military services and GS employees. They tend to think they have have blank check and that their mission is sacred, say, compared to fixing education or rebuilding infrastructure here (as opposed to Afghanistan). POGO just loves to bash contractors, and some deserve that, but when comparing govies to contractors, you gotta do it smartly, and, you typically don't. From long observation of this fracas, I'd say no one really has. Certainly not Congress, OMB, the rapacious unions, or the likes of AIA, NDIA or PSC, and any of the so-called good-govt orgs. All the while, the citizen taxpayers suffer and the fighters of our many unnecessary, incompetently managed wars are the ones who suffer.
Posted by: Flygad | Mar 08, 2012 at 04:40 PM