I was in Afghanistan in fy 2003 and had access to the KBR Cost Data as a Senior Procurement Officer and had actual cost data from KBR which demonstrated that they were over-charging the Government(AMC) millions of dollars. However, AMC,DCAA and DCMA ignored this issue.

You've lofted a big question, a really good one. There's little data, just as there is next to no data or cost-benefit measures of the value of the salaries/benefits/costs of civil servants and even military members.
We only know, as in our everyday lives, by comparison--but that's not necessarily going to lead us to conclusions on fair value. Economists say, simply, that something is worth what people pay for it; but that doesn't make it necessarily a fair and reasonable market price.
We all know how controversial the annual salary surveys are that say federal employees are underpaid compared with the private sector. Ditto, civilian government vs. military pay parity. There are lots of seeming intangibles, like job security, flexibility, ability to start soon, supervision/or not.
In parsing your issue, you also need to distinguish between "staff augmentation" (putting "butts in federal seats" for "supervision" by government managers) vs. the discrete consulting engagement where the contractor manages, does a job, and leaves. This work usually is higher value-added and plugs a gap in government expertise.
I've raised a lot of questions--only to suggest that the contractor pricing issue is hardly simple. No one's got a good answer, although more competition would do wonders, in my view. BTW, good luck on your interesting blog.

I think there's hardly a comparison between a contractor and soldier. Most enlisted and young officers are too young to have the job experience that a contractor will bring, and most GI's will leave for better-paying private sector jobs by time they DO get those skills.

On the other hand:
Remember that contracting was originally created as a way to _save_ the government money and put some cash back out into the private sector at the same time. I think now as the DCIA has suggested, maybe it is time to reign-in the contractor and hire more Feds. More competitive salaries, making it easier to hire/fire feds and accentuating those 'intangibles' would go pretty far toward this goal.

Our agencies staff directory does not distinguish between employees and contractors. our contracting offce asked that a distinction be made and we were told that the agency did not want the contractors to feel inferior. Unbelieveable.

The biggest beneficiaries of this Pay to Play politics required contractors to donate to identified campaigns in exchange for Congressmen to introduce earmarks that required agencies to hire certain contractors for certain jobs. The Post quotes Angela Styles as saying it was like watching billions in taxpayer money "go out the window." Many of those politicians, their lobbyist friends, and their co-conspirators in GSA are in jail now - Tom DeLay, Duke Cunningham, Bob Ney, Jack Abramoff, David Safarian - except one prominent one: Tom Davis (R-VA11). As head of the NRCC, he arranged an office for Abramoff, and worked with lobbyist Dan Mattoon on the scheme. He leveraged his power to get the Chair of the Oversight Committee, where he not only prevented investigations into overcharging but Mr. O'Harrow showed here how Davis had contributors donate to his wife's campaign and hire her as a consultant. Here is a track of the millions they collected from these I-T contractors, the ones Robert O'Harrow mentions in this post. I hope Virginians strike a blow for honesty in politics and kick him to the curb in 2008. His wife is also running a campaign these guys funded, for an office in 2007.

Seems to me that the original purpose of contracting out - or at least one of the stated purposes was, of course, to save money, and another stated purpose was smaller government. I'm not clear on how employing outside contractors makes for smaller government, and I am darned sure that they are, in measurable and immeasurable ways, a great deal less accountable than even the worst "civil" servant.

Ok - so now we're saying that the use of Contractor services is yet an other example of "Contractors Gone Wild". The fundamental problem with services in the Federal procurement world is and always has been the fact that the Government made T&M and Labor Hour contracts the norm for services. This was not a problem in the days when the Government bought Engineers and other hourly type services. However, when IT services became a hot item in the Federal Market place no one gave thought to the fact that most commercial IT companies do not sell services on an hourly basis. Instead, commercially services were sold on a fixed price basis with different pricing factors applicable to different regions. Rather than taking this into consideration in implementing FASA, FARA and SARA - the Federal Procurement world left it up to the contracting officers and the contractors to negotiate pricing. So when it came time to add services on to vehicles such as GSA schedules commercial contract adminsters quickly rushed to create "rate cards" and develop hourly rates based on informal labor categories. Again, the Government CO's either ignored the lack of formality in the process and accepted these rate cards with little scrutiny and auditors - well they added little value to the process. So what do we have? A decade later we're wondering what went wrong?

I suggest you review OMB Circular A-76 to see what the Government should be doing in making the "make or buy" decision regarding services.

Ironically, the Dod agencies that have traditionally been held accountable for fair and reasonable pricing have been subjected to a 50% staff reduction in the past two decades as component program staff assumed these functions. The first to go were the pricing analysts. The next decade looks as grim with the projected loss of 50% of all acquisition-related, general series professionals.