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Study: Contractors costing 2x govt workforce
Posted by: Les ()
Date: September 14, 2011 06:10PM

Hundreds of billions wasted on hiring contractors
By DANA LIEBELSON
The U.S. government's increasing reliance on contractors to do work traditionally done by federal employees is fueled by the belief that private industry can deliver services at a lower cost than in-house staff.

But a first-of-its-kind study released today by the Project On Government Oversight (POGO) busts that myth by showing that using contractors to perform services actually increases costs to taxpayers.

POGO’s new report is the first to compare the rate that contractors bill the federal government to the salaries and benefits of comparable federal employees. The study found that while federal government salaries are higher than private sector salaries, contractor billing rates average 83 percent more than what it would cost to do the work in-house.

The study comes at a crucial time, considering that Congress’ special “Super Committee” is looking for ways to cut $1.5 trillion from the federal deficit.

http://pogoblog.typepad.com/pogo/2011/09/by-dana-liebelson-the-us-governments-increasing-reliance-on-contractors-to-do-work-traditionally-done-by-federal-empl.html

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Re: Study: Contractors costing 2x govt workforce
Posted by: justsayin ()
Date: September 14, 2011 06:21PM

This isn't news... "reducing government" is measured in workforce of federal employees. The federal employees are the managers and contracted people are the doers in many government programs.

You tea partiers wanted "limited" and "smaller" government, well that's what happens when the same shit has to get done but the federal workforce is slashed. You just squeezed the balloon and made private CEOs rich. But maybe that is what you wanted all along.

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Re: Study: Contractors costing 2x govt workforce
Posted by: Firrat ()
Date: September 14, 2011 06:22PM


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Re: Study: Contractors costing 2x govt workforce
Posted by: Les ()
Date: September 14, 2011 06:34PM

The real government workforce is closer to 10 percent of the labor force once you include all the contractors. It's just a way of hiding headcourt. They used to hire 3 consultants for every technical employee at MCI. They'd lay them all off once or twice a year and recall just the ones that were well-liked and/or productive. It avoided the wrongful cause for dismissal or contract terminations.

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Re: Study: Contractors costing 2x govt workforce
Posted by: Reality ()
Date: September 15, 2011 12:28AM

Government employees are unwilling or unable to perform the many tasks the government needs done. Without contractors, the government would fall apart.

Also, while contractors may get paid more, they also provide more productivity than the average government employee. Contractors have to worry about getting fired for bad performance. I know a lot of government employees who are just doing the bare minimum be ase they know they can't be fired.

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Re: Study: Contractors costing 2x govt workforce
Posted by: Hatemotor ()
Date: September 15, 2011 12:33AM

I know plenty of contractors who work for the fedral gov't that think they're riding a gravy train too,,,

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Re: Study: Contractors costing 2x govt workforce
Posted by: eesh ()
Date: September 15, 2011 12:50AM

Reality Wrote:
-------------------------------------------------------
> Contractors have to worry
> about getting fired for bad performance.




There is plenty of dead weight in the contracting world too, especially in middle management. As long as you are able to justify what you put on your timecard every week, and never charge to overhead, you can ride out contracting with no worries.

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Re: Study: Contractors costing 2x govt workforce
Posted by: Reality ()
Date: September 15, 2011 01:49AM

eesh Wrote:
-------------------------------------------------------
> There is plenty of dead weight in the contracting
> world too, especially in middle management. As
> long as you are able to justify what you put on
> your timecard every week, and never charge to
> overhead, you can ride out contracting with no
> worries.

Oh, no doubt. There are shitbags everywhere. However, if you have a bad contractor, they can at least be fired. If you have a bad fed, it's virtually impossible to fire them. In fact, shitty feds are often promoted to move them somewhere else where director so and so doesn't have to deal with them.

Example: Today, I told the fed about several things we needed to accomplish in the next couple weeks to maintain operations. He just threw his hands up and said he was overworked and that the job stress was killing him. He then spent the next four hours doing absolutely nothing related to his job, and actual work discussion didn't come up again for the rest of the day. For your taxpayer dollars, you are getting much more out of me than you are out of people like him.

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Re: Study: Contractors costing 2x govt workforce
Posted by: Hay Zeus ()
Date: September 15, 2011 06:48AM

I used to intern at a Fed Agency. Typical day of a fed manager went like this.

9:30-10:00 Mosey into work, turn on computer, drink coffee, read news paper, complain

10:00-10:15 Respond to some emails

10:15-11:00 "All hands" Meeting

11:00-1200 Figure out where going to for lunch

1200-130 Lunch!

1:30-2:00 Disappear

2:00-3:00 Meeting to talk about what needs to be done

3:00 - 3:15 Coffee break

3:15-4:00 Meeting to talk about progress of whats being be done

4:00-4:15 Respond to Emails

4:15-4:45 Meeting to discuss what did not get done

4:45-4:59.99 Respond to emails

5:00 GO HOME Exhausted

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Re: Study: Contractors costing 2x govt workforce
Posted by: sumguy ()
Date: September 15, 2011 08:10AM

I think their might be a problem with this study did they factor in the benefits that a government employees have (medical and retirement).

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Re: Study: Contractors costing 2x govt workforce
Posted by: Atom ()
Date: September 15, 2011 08:41AM

Both the lazy federal employees, and layers upon layers of contractors for everything quadrupling+ the price of every project, are symptoms of the same issue.

Use it or loose it budgets.

If republicans were serious about fiscal responsibility they'd start there. But politicians are in the hands of industry and even the Tea Party cries are a profit mechanism for multiple interests.

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Re: Study: Contractors costing 2x govt workforce
Posted by: TheMeeper ()
Date: September 15, 2011 09:05AM

Atom Wrote:
------------------------------------------------------
>
> Use it or loose it budgets.

Another dumb trend I've noticed over the past few years is the increased use of firm fixed price contracts for govt. procurements. In theory, yeah it sounds good because the contractor assumes most of the risk and the govt. knows the exact cost up-front. That works great when they're ordering standard stuff, like supplies or well-defined services. But it's silly (and wasteful IMO) when they start buying stuff like consulting services on a fixed price basis. Example, the govt. needs some experts to come in, analyze some kind of problem and implement a solution, for a fixed price. From the contractors side, this is something that might take 500 hours, or 2,500 hours if the unknown problem is complicated. Then everybody jacks up their offer price, cuz no one knows the full scope of the work and no one's gonna risk getting burned. The work ends up not as complex, the govt. pays an arm and a leg for it, and the contractor does everything to make sure most of that money ends up as profit instead of labor.

I'm all for outsourcing as much work as possible to private industry, they just need to be smarter and more flexible about doing it.

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Re: Study: Contractors costing 2x govt workforce
Posted by: badtimeahead ()
Date: September 15, 2011 09:14AM

Atom Wrote:
-------------------------------------------------------
> Both the lazy federal employees, and layers upon
> layers of contractors for everything quadrupling+
> the price of every project, are symptoms of the
> same issue.
>
> Use it or loose it budgets.
>
> If republicans were serious about fiscal
> responsibility they'd start there. But
> politicians are in the hands of industry and even
> the Tea Party cries are a profit mechanism for
> multiple interests.


From what I hear from my budget friends. The streets are going to run red with the blood of unemployed contractors all over DC. Things are going to get ugly, very very ugly. Support Service contracts are going to dry up fast. We are not talking about small decreases; we are talking major cuts, well above 20% to 30% of program budgets, that’s just for FY13.

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Re: Study: Contractors costing 2x govt workforce
Posted by: PrivyMan ()
Date: September 15, 2011 09:19AM

The private sector rips off the government so bad it's not even funny. Private contracts inflate prices and create phantom employees.

No way would I say the private sector does government contracts better then government employees. Look at a couple of years ago where the pentagon was paying $500 for a regular hammer and toilet seats.

Military contractors are the worst. We might as well give them a blank check.

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Re: Study: Contractors costing 2x govt workforce
Posted by: UseOrLoose ()
Date: September 15, 2011 09:25AM

Meeper is correct. Use or loose is completely BS. I've also worked for agencies where the practice was to completely spend all the budgeted money and then ask for more even if not needed.

The idea was that by using all of the budget money and requesting more the agency looked like it was really important and doing lots of work.

It still floors me that Bush created another agency "The Homeland Security" agency instead of making the FBI, CIA, Pentagon and Justice Department work together! Why the hell weren't they sharing information in the first place!

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Re: Study: Contractors costing 2x govt workforce
Posted by: Urbanmyth ()
Date: September 15, 2011 09:31AM

PrivyMan Wrote:
-------------------------------------------------------
Look at a couple of years ago where
> the pentagon was paying $500 for a regular hammer
> and toilet seats.


Everyone knows that the $500 hammer and toilet are complete urban myths. The hammer was for a set of sepcialized tools that were labled hammer becuase of an input error. The tolet was for the Space Shuttle.

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Re: Study: Contractors costing 2x govt workforce
Posted by: Shadow ()
Date: September 15, 2011 11:11AM

UseOrLoose Wrote:
-------------------------------------------------------
> Meeper is correct. Use or loose is completely BS.
> I've also worked for agencies where the practice
> was to completely spend all the budgeted money and
> then ask for more even if not needed.
>
> The idea was that by using all of the budget money
> and requesting more the agency looked like it was
> really important and doing lots of work.
>
> It still floors me that Bush created another
> agency "The Homeland Security" agency instead of
> making the FBI, CIA, Pentagon and Justice
> Department work together! Why the hell weren't
> they sharing information in the first place!

+1000

Huge waste of taxpayer money.

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Re: Study: Contractors costing 2x govt workforce
Posted by: Les ()
Date: September 15, 2011 11:17AM

Notice that there've recently been a lot of high-profile sting operations by the DHS and FBI to try to justifify their budgets with the pending budget battle and the series in the Washington Post on the huge counterterrorism complex. Recall that the total headcount figure was over 900 thousand employees and contractors to 'look' for 'terrorists'.

COINTELPRO II: Hunting Terrorists by Making Them
Posted by Julian Sanchez

A new study from the RAND Corporation looks at the threat of homegrown terrorism and concludes that our so-called “lone wolves” look a lot more like “stray dogs”—and stray dogs with more bark than bite, at that:

The 82 cases [i.e., investigations culminating in prosecution for some form of support for jihadist terrorism] since 9/11 involved 32 plots. Few of these 32 got much beyond the discussion stage. Only 10 developed anything resembling an operational plan that identified a specific target, developed the means of attack, and offered a sequence of steps to carry out the planned action. Of these, six were Federal Bureau of Investigation (FBI) stings. Only two individuals actually attempted to build devices on their own. One was arrested while doing so, and the other’s device failed. The rest of the would-be terrorists only talked about bombs. In only two cases did jihadist terrorists actually succeed in killing someone, and both of these cases, which occurred in 2009, involved lone gunmen. [Emphasis added.]

That assessment dovetails with the portrait painted by an important package of feature stories in the latest issue of Mother Jones examining the FBI’s pursuit of the War on Terror, and in particular the way the Bureau has established a vast network of informants. In many recent high profile cases, the FBI or its “assets” appear to have gone beyond trying to detect terror plots to playing a substantial role in manufacturing them. In line with the findings of the the RAND report, Mother Jones’ survey of domestic War on Terror success stories shows that many of the highest-profile ones, including all but one of the supposed subway bomb plots “foiled” by the FBI, had first been orchestrated by FBI assets. While the targets of those operations were clearly boiling over with anger at the United States, it’s not clear how many of them would have translated their rage into violent action absent the government’s prodding.

The author of the Mother Jones article compares the contemporary hunt for “lone wolves” and domestic terror cells to another notorious FBI initiative: COINTELPRO, a series of covert projects, stretching over three decades during the Cold War, that targeted domestic “subversive” groups for infiltration. But the aggressive use of informants and infiltrators is not the only interesting parallel here. COINTELPRO projects like Operation Chaos targeted activist groups, especially anti-war groups, suspected of being controlled by foreign governments, consistently failing to turn up proof of foreign control. But Lyndon Johnson was convinced that the link had to be there—and the failure to uncover it only underscored how insidious and dangerous the adversary must be. Thus, over time, the bar for what counted as foreign “ties” was lowered, the program’s scope expanded to include civil rights and women’s liberation groups, and its methods grew more aggressive. Because the foreign communist control had to be there, failure to detect it was regarded as failure, period.

The attempt to detect “lone wolf” terrorists presents a similar—and perhaps in some ways a still more daunting—problem. The last decade has seen a drastic expansion of government surveillance powers in the name of “connecting the dots” to identify the affiliates of foreign terror groups. This has inevitably involved the monitoring of many innocent people, but that project is, in one way, finite: Investigators begin with a set of known starting points—people, phone numbers, Internet addresses, bank accounts, etc., that are believed to be tied to a group like Al Qaeda, and then begin tracing the links in search of unknown allies. As investigators learn more about the target group through capture, infiltration, or surveillance, they can begin to develop estimates of how many operatives might reasonably remain at large—and in particular, how many of those might have made it into the United States.

But a true lone wolf won’t be located that way since, by definition, he’ll lack the necessary links to known terror groups. And there’s no reliable way to know in advance how many solitary angry individuals might be plotting violence. The effort to preempt lone wolves, then, leads to much broader attempts to detect “suspicious behavior,” leading to the compilation of dossiers on many innocent people. But it’s hard to justify the hundreds of billions, if not trillions, of additional spending on a vast national security state since 9/11 without a few scalps. Pressure naturally mounts on informants to come up with the lone wolves the government just knows must be out there—even if some of them need a little push, a little help getting a plan together or a working bomb produced. Call it supply and demand: When billions are available to fight a terrorist enemy, you can be confident we’ll come up with enough scary terrorist enemies to keep the money flowing. Even if we have to make them.

http://www.cato-at-liberty.org/cointelpro-ii-hunting-terrorists-by-making-them/

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Re: Study: Contractors costing 2x govt workforce
Posted by: Olde Farte ()
Date: September 15, 2011 12:29PM

There are rules in place about cost of contractor versus cost of employee. I forget the actual factors but let's assume it was 2 - if a contractor costs more than twice an employee then an employee must be used (I believe it's actually stated the other way around - "If an employee costs less than twice the contracted rate then a contractor must be used").

When I was a government contractor (more than 20 years ago) we had an in-house factor to apply to billing rates - if we worked on-site at the government location we billed twice the contractor's salary, if we worked off-site at our own location we billed three times the contractor's salary. The difference, of course, to make up for overhead costs.

But, in any case, I believe I (strongly) remember that there were mandated outsourcing rules similar to what I said up above in the first paragraph.

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Re: Study: Contractors costing 2x govt workforce
Posted by: sumguy ()
Date: September 15, 2011 12:45PM

I have done plenty of work with government agencies. Ever job has to be bid upon it usually goes to the lowest bidder. The only way this could happen is if the system of bidding is corrupt. We sell supplies to government contracts the pricing is cutthroat you barely make any profit the volume makes up for the lost. I also deal with local agencies they have a use or lose mentallity also. I have been told on may occasions that if the funds were not spent they would receive less the next year.

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Re: Study: Contractors costing 2x govt workforce
Posted by: Les ()
Date: September 15, 2011 12:46PM

I've seen on-site contractors bill out at much higher overhead rates since the bill rate for the position is fixed by the contract and the contractor goes out and hires juniors for that position. They may sometimes lose money on a lead technical person if the client wants him bad enough. They make it up on the rest of the team, although I've seen some projects where I swear evryone had to be right out of school or had 1 to 3 years experience at most (a couple of Anderson projects come to mind).

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Re: Study: Contractors costing 2x govt workforce
Posted by: TheMeeper ()
Date: September 15, 2011 01:03PM

Olde Farte Wrote:
-------------------------------------------------------
>
> When I was a government contractor (more than 20
> years ago) we had an in-house factor to apply to
> billing rates - if we worked on-site at the
> government location we billed twice the
> contractor's salary, if we worked off-site at our
> own location we billed three times the
> contractor's salary. The difference, of course, to
> make up for overhead costs.

Things are still priced the same way, and your multipliers for on/off site are still in the ballpark for fringe/overhead/G&A.

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Re: Study: Contractors costing 2x govt workforce
Posted by: Pricing ()
Date: September 15, 2011 01:17PM

So the same job -

Government worker cost = $75

Contractor cost = $150

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Re: Study: Contractors costing 2x govt workforce
Posted by: Les ()
Date: September 15, 2011 01:25PM

There was a DoD study that showed they could save about 44K per position they brought back in-house. The savings would probably be much less than the 50% of the contractors bill rate in the lead article.

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Re: Study: Contractors costing 2x govt workforce
Posted by: FurfaxTownie ()
Date: September 15, 2011 01:55PM

I thought contractors were used when hard deadlines had to be met. The Fed gov't is incapable of doing anything ontime. At least contractors have accountability and heads can roll.

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Re: Study: Contractors costing 2x govt workforce
Posted by: detroit ()
Date: September 15, 2011 01:59PM

Les Wrote:
-------------------------------------------------------
> There was a DoD study that showed they could save
> about 44K per position they brought back in-house.
> The savings would probably be much less than the
> 50% of the contractors bill rate in the lead
> article.


did a private contractor do the study for the dod?lol

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Re: Study: Contractors costing 2x govt workforce
Posted by: Olde Farte ()
Date: September 15, 2011 02:00PM

Pricing Wrote:
-------------------------------------------------------
> So the same job -
>
> Government worker cost = $75
>
> Contractor cost = $150

Yes, somethinglike that - but it's important to remember that this "billing difference" was mandated by Congress. The idea, from what I vaguely remember, was to reduce the Government payroll (since, in theory, longterm employment is more expensive than multiple shortterm employments!).

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Re: Study: Contractors costing 2x govt workforce
Posted by: TheMeeper ()
Date: September 15, 2011 02:11PM

Pricing Wrote:
-------------------------------------------------------
> So the same job -
>
> Government worker cost = $75
>
> Contractor cost = $150


Not really. Olde was talking about the cost of private contractors. If Company A hires someone and pays them $10 an hour, they would charge the govt. 2-3 times that amount to cover overhead/fringe, plus fee (aka "profit"). The "2-3 times" depends on the company. Company A might have an OH multiplier of 2.8 because they have a high amount of OH (expensive office space, etc.), while Company B has an OH mult of only 1.8 because most of their people work from home and their benefits suck.

You can't make a blanket comparison between gov and private, but I think the point is that when the government contracts work, they are also paying a big chunk of that company's overhead. You can't just compare the salary and benefits of contractors vs. Feds. A contractor who earns less money and has less benefits can still cost more than the federal employee. Not to mention, they might not be as stable because they don't work directly for the agency.

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Re: Study: Contractors costing 2x govt workforce
Posted by: indirect rates ()
Date: September 15, 2011 02:11PM

Pricing Wrote:
-------------------------------------------------------
> So the same job -
>
> Government worker cost = $75
>
> Contractor cost = $150


True and fair if the Gov rate is the base rate and the Contractor rate is burden. If the Gov worker rate is $75 and is base rate, then when you add in the Overhead, GA, Fringe then the rate would be around $150 ish range.

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Re: Study: Contractors costing 2x govt workforce
Posted by: Registered Voter ()
Date: September 15, 2011 02:18PM

TheMeeper Wrote:
-------------------------------------------------------
> You can't make a blanket comparison between gov
> and private, but I think the point is that when
> the government contracts work, they are also
> paying a big chunk of that company's overhead.
> You can't just compare the salary and benefits of
> contractors vs. Feds. A contractor who earns less
> money and has less benefits can still cost more
> than the federal employee. Not to mention, they
> might not be as stable because they don't work
> directly for the agency.

The long term costs of a Federal FTE far outweighs any difference the short term contract cost might eat up. Federal pensions and retirement, medical benefits (which are MUCH better than anything the private sector typically generates), other support services, paid leave per year, etc, etc, etc. The typical problem facing any form of contracted service is the loss of long-term knowledge of the systems and how they work. The government puts endless reams of required documentation on the contractors to try and mitigate this issue - but I have yet to see that work in any meaningful way other than some of the interface documentation. And typically things are changed in the final implementation that never make it into document revisions.

For all the contract work I did, it would be nice if I had been able to rack up any form of decent retirement plan other than what I was able to put into various 401K plans that had to be rolled over/cashed out when I left the company.

If you can’t model the past, where you know the answer pretty well, how can you model the future? - William Happer Cyrus Fogg Brackett Professor of Physics Princeton University

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Re: Study: Contractors costing 2x govt workforce
Posted by: TheMeeper ()
Date: September 15, 2011 02:26PM

Registered Voter Wrote:
-------------------------------------------------------
>
> The typical problem facing any form of contracted
> service is the loss of long-term knowledge of the systems and how they work.

Loss of institutional knowledge can be a major cost that is often overlooked.

> The government puts endless reams of required documentation on the
> contractors to try and mitigate this issue - but I
> have yet to see that work in any meaningful way

Because it's an easy way to save money and ensure some kind of maintenance contract.

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