The federal government overspends on service contracts by following two myths: that contract employees don’t contribute to the overall size of the federal workforce, and that the private sector is categorically more flexible, efficient and cheaper, a government watchdog argued before a Senate panel recently.
The Project on Government Oversight’s general counsel, Scott Armey, asked the Senate contracting oversight panel to change the way service contracting costs – $320 billion in fiscal 2011 by his count – are tracked, and cited a POGO report from last year finding that more often than not contractor billing rates are nearly double what the government pays federal workers to do the same job.
OPM chief operating officer Charles Grimes noted however that a straight one-to-one cost comparison doesn’t tell the whole tale.
He said a cost comparison to consider performance in-house as an alternative to continued contract performance “might be beneficial if requirements tend to be managed best through an employer-employee relationship, the agency has experience performing the work in-house, the ability to recruit for the skill is high, and the government has historically had challenges with contractor performance.”
On the other hand, he added, a cost comparison may be less beneficial if the agency needs to meet a short term or immediate need where long-term hiring does not make sense, if an agency lacks an in-house capability, or an agency has had considerable success in getting good performance at a reasonable cost from its contractors.
