Contractors, Contractors and More Contractors

Don't look now, but the Defense Department is filled with contractors. They look the same, act the same and do much of the same work as their government counterparts. Only they're more expensive. That's the conclusion of a new report by the folks at the Government Accountability Office.

Many of you in the know already knew that. But it bears repeating, if only because even advocates of outsourcing are becoming concerned about the implications of all of this mega-outsourcing stuff. The GAO said that spending on service contracts rose 76 percent over the last decade to more than $158 billion last year.

The auditors examined the Army Contracting Agency's Contracting Center of Excellence, which buys things and services for 125 divisions. Guess what they found? Almost half of the procurement specialists are contractors. Most of them work for CACI International, which by the way is one of the DoD and government's 50 largest contractors.

Wait a second! Could those contractors who work in the DoD contracting office somehow be biased in favor of their real employer, CACI?

"We found the line separating government from contractor personnel to be blurry," the GAO said in its report, according to a story today by my colleage Dana Hedgpeth.

"There is no physical separation; the two work side by side in identical office space, and contractor employees are not identified as such on their cubicles. The only apparent distinction is their different badge color."

The GAO report said relying so much on contractors, creates "the risk of loss of government control over and accountability."

By Robert O'Harrow |  March 26, 2008; 5:24 PM ET
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Many contractors other than CACI also provide "contract specialists for hire" across the entire federal government. With the well publicized shortages in headcount and skills within the federal acquisition workforce, the feds are stuck between a rock and a hard place in figuring out how to accomplish their missions with understaffed offices and under trained personnel - hence the dependence on contractors working in contracting offices. As you can read in GAO's report - these contractors do not have to adhere to the same ethical guidelines and standards of conduct as federal employees. Federal reliance on a "blended workforce" is a sizable issue that is now starting to get the attention and visibility it needs.

Posted by: PGT | March 27, 2008 1:45 PM

they should all be contractors, then you can fire them when they don't perform instead of promoting them for 50 years

Posted by: Anonymous | March 27, 2008 5:13 PM

Did the author think that he had uncovered some deeply hidden secret? This is the other side of the "peace dividend" that everyone was so happy about in the 90's and early 2000. Remember when making the military smaller was a good idea? Now that we have a few wars going on the military needs more people. You can not train people overnight so you have to hire contractors (ex-military personnel usually) to get the job done.

Posted by: Jeff Smith | March 27, 2008 8:27 PM

Did the author think that he had uncovered some deeply hidden secret? This is the other side of the "peace dividend" that everyone was so happy about in the 90's and early 2000. Remember when making the military smaller was a good idea? Now that we have a few wars going on the military needs more people. You can not train people overnight so you have to hire contractors (ex-military personnel usually) to get the job done.

Posted by: Jeff Smith | March 27, 2008 8:28 PM

It's no sin for the government to hire contractors personnel to fill contracting office roles. Usually, though, contractor companies that provide staff augmentation services to government contracting and program management offices are highly specialized and operate exclusively in that line of business. It is unusual, though, when that same contractor bids on contracts that are being evaluated by the contracting office that employs its own personnel. If this isn't conflict of interest in fact, there's the potential for it. Contracting companies do provide a broad spectrum of valuable services to the government. But that government/industry relationship works best when the government has good management and oversight capabilities necessary to ensure that the contractor companies provide value to the government. In this age of government outsourcing, the government seems to have outsourced oversight along with the jobs.

Posted by: ____ | March 27, 2008 10:40 PM

I think the govt recognizes the benefits of outsourcing to qualified industry professionals. The premium they pay for the assistance is significantly less the cost of doing it themselves while providing an equal or better product, in less time. I'm sure CACI, like other DoD professional services companies, employs strict disciplined conflict of interest mitigation plans that the govt accepts as part of the effort before any acquisition support begins. Clearly the advantages far outweigh the percieved disadvantages and that's why the govt will continue to outsource. More outsourcing for inheritantly govt roles and responsibilities should be applauded not ridiculed and politicians backing the opposition are in it just for the headlines that most people, unfortunately, will only remember. Media plays a significant role in the presentation of material like this and has an obligation to their audience to report the positive aspects of the story not just the negatives. If we change the way we demand our information in this country vs just reading the headlines, our next generation of leaders could be cultivated from our very best instead of picking and choosing from wannabe's. The Washington Post's challenge is to report the other side of the story. Let's see if they're up to it...........

Posted by: lmlstudio | March 27, 2008 11:32 PM

The problem is even more complicated overseas: Many government civilian contracting positions are remaining unfilled indefinitely because the government is either not willing or not able to pay relocation costs for most positions. And there are not enough qualified personnel in the government civilian ranks already overseas to fill the positions internally. However, there are numerous American citizens living overseas, most of them military veterans, who are fully qualified for the positions but the local Status of Forces Agreements (SOFA) in each country will not allow the government to hire them if the individual has a work permit for the country they live in. So, government contractors hire these people and place them in jobs similar to the ones referred to in the GAO report. Imagine being an American miltary veteran living in a foreign country and wanting to serve your government again but because of the SOFA your government won't hire you even if you are the best choice for the job. The veteran's only hope is to get hired by a contractor and now the government wants to reduce those chances too. It is a lose-lose situation for all concerned and ultimately America herself will suffer the most.

Posted by: ___ | March 28, 2008 10:15 AM

Your post says, "Wait a second! Could those contractors who work in the DoD contracting office somehow be biased in favor of their real employer, CACI?" But then after wafting this stinker, you don't follow it up with anything. Note that Assad did not voice concern about fraud or organizational conflict of interest. Commenters seem mainly comfortable with the appropriate use of contractors. Two wrongs don't make a right and poor perforance, fraud, waste, and abuse, should be rooted out vigorously everywhere. One could read just the general business press and see as much or more of those problems emanating from government employees and whole programs and agencies, than from rotten contractors. Again, what is your point--or better yet--what are the cases you may have in mind about self dealing? There probably are some somewhere, but my guess is you won't find them in the instant case of CACI in this contract.

Posted by: Michael Lent | March 28, 2008 10:36 AM

Who monitor contractors in the first place maybe if there were you could stop a lot of fraud . I worked for the airforce for thirtyfour years things change evry day .

Posted by: mike | March 28, 2008 3:44 PM

Who monitor contractors in the first place maybe if there were you could stop a lot of fraud . I worked for the airforce for thirtyfour years things change evry day .

Posted by: mike | March 28, 2008 3:44 PM

Some real numbers would have been nice in this article. Instead we see generalities. Matbey the real problem is not that contractors are filling civil servant jobs, but that these jobs even exist in the first place.

Posted by: Nukeman | March 28, 2008 3:47 PM

Some real numbers would have been nice in this article. Exactly how many conractors are there filling these jobs. Instead we see generalities. Maybe the real problem is not that contractors are filling civil servant jobs, but that these jobs even exist in the first place.

Posted by: Nukeman | March 28, 2008 3:49 PM

I am a government employee and we have contractors in our office that out numbee us 3 to one. I agree there is not enough government oversight as to what a contractor can or cannot do. I blame this on our great government leaders who thought it would be cheaper to hire contractors instead of getting good government workers or retraining the ones they already have. I have been in the government for almost 30 years. I remember when the contractors first came in to the government to help. They were only suppose to be a temporary thing until the agency could get qualified government employees. Some where brought in to train the work force and they were suppose to leave after their work was done but a lot of times it never happened. The cost for doing business with contractors in 2008 is very high. We need to rethink our contractor situation and take back government control.

Posted by: Anonymous | March 28, 2008 4:56 PM

I don't understand why a janitor can't end up becoming the boss. It's a basic human right to be promoted beyond competency.

Posted by: civil servant | March 28, 2008 5:21 PM

I'd rather have contractors than festering bureaucrats running things. At least the contractors can be fired.

Posted by: Anonymous | March 28, 2008 5:24 PM

To read the remarks on not being able to train personnel in a few weeks is quite discouraging. The war is 6 years old why not train people as you proceed? How was the military supported from 1941-1945? I don't think they needed contractors then. The power of contractors may one day exceed their employer, what then?

Posted by: June Bos | March 28, 2008 5:29 PM

When gov't organizations and their employees are responsible for waste and/or fraud, the outcry is tremendous. But when those responsible are contractors--or privatization in general-- the defenders and the rationalizations come out of the woodwork.

Bashing the men and women who work in public service is a self-fulfilling prophecy. If you want good people to work for government, and to keep working for the government, suggesting that only lazy and incompetent people hold such jobs isn't much of a recruiting tool.

Defending poor contracting practices is a self-fulfilling prophesy, as well; if you defend the rotten ones, more and more rotten ones will be attracted.

I believe contracting out is a good idea for certain public goods and services--but expert contract management functions should be developed, funded and implemented to keep the "foxes out of the hen house." But I also believe there are some things that should always remain in the public sector, and that we should inspire the best and the brightest to come manage them--as many of them do now.

Posted by: Paul | March 28, 2008 8:52 PM

I have the unique vantage point of employee both within this govt-contractor world and the private sector small and medium large businesses. There are many fine and honest people working in the govt-contractor realm but the thing as a whole is really only good at sucking money into itself. The "war industry" was never really intended to be a real free and competitive marketplace--once upon a time this was an acceptable evil. But today it has survived far beyond any actual usefulness to the country and badly needs to be dismantled.

Posted by: Henry Browne | March 30, 2008 1:19 PM

The core issue here is how come the government is not capable of performing its various missions with the workforce that they have. The obvious answer is that all the drawdowns, cutbacks, realigning etc have failed to provide a workforce adequate for the jobs at hand. This is something that needs to be reevaluated on a continuing basis and obviously the government has not been doing so. This is an area where the government can learn a lot from the corporate world. Right on the heels of this issue is the question of what has or maybe even why hasn't anything been done to properly correct the problem? The contractors provide a sort of "thumb in the dike" solution but it doesn't seem to be a solution that anybody is truly satisfied with. Current government workforce levels were planned with the world situation of the 90s in mind. The world situation today couldn't be more different. It's the same story everywhere in the government: Too little, too expensive or too old. The government needs more qualified personnel to properly fulfill its various mission needs. The decision needs to be made whether those personnel are to be government employees or contractors. If they are to be contractors then a lot of thought needs to be invested in whether or not current acquisition regulations properly address the current situation and what will be done about it if the answer turns out to be no (most realistic outcome). And if the personnel are to be government employees then how does the government plan to recruit and retain new qualified (and motivated) employees? Whatever else might come in the middle, the closing piece of this process will be what happens to the excess personnel if peace breaks out? Contractors are easily gotten rid of, government employees are not.

Posted by: MaBa | March 31, 2008 7:19 AM

Wake up people, When the U.S. President, Senators, and other elected officials accept huge campaign contributions from corporations that profit when civil servant positions are outsourced, do you really think that your "leaders" are interested in saving the taxpayers money? It may be difficult to identify a Quid Pro Quo relationship between the campaign contribution and the contract, but one cannot deny the obvious any longer... there is no way that a U.S. Corporation can make a direct profit from a civil servant's wages and it would be difficul to prove that outsourcing jobs has saved taxpayers one dime - however, it appears to have cost us billions.

Posted by: Bob | March 31, 2008 10:05 AM

Bob, I couldn't disagree more, and take issue with the premise that contractors are more expensive than Government personnel. Based on my read of the GAO report, it isn't an apples to apple comparison when discussing costs. Comparing contractor labor rates to Government personnel salaries does not count several other costs the government incurs with employees, such as space, health care, and retirement. This GAO report also did not adequately discuss flexibility the Government enjoys with contractor personnel, which can be added and removed much more easily then their Government counterparts. As such, I feel it is GAO who has an 'agenda' to push.

Posted by: DOC | March 31, 2008 7:36 PM

Well, DOC I couldn't disagree with you more.

Remember back in the good old days before the Pendleton Act when every federal job was a reward for political supporters? When the Whitehouse changed hands, the entire federal service was cleaned out and the newly elected Commander in Chief appointed his cronies to all the federal positions, not just the top tiers. Now, thru the magic of "reinventing the Government" to "become more efficient" like big business of the 90s, we are outsourcing more and more of the federal service each year.

Now either way you go has costs and benefits. If you outsource federal jobs to contractors and "Personal Service Contractors" or temp workers, you get to cut employee wages and benefits such as retirement and health care, demand more free overtime and hire and fire at will. The cost of doing this is a workforce that has conflicts of interest (one contractor/ potential competitor overseeing another's work), the short term profit motive of the company taking priority rather than putting the taxpayer's interest first, and a workforce with no long term loyalty to the agency or the government (after all, the contractor being overseen by the contracted employee today may have your next promotion as your next employer tomorrow).

If you have a stable civil service workforce, you will have some bureaucratese and some retired-on-the-job, but companies have this as well only they don't have to release their information under FOIA. You also have a stable consumer base of decently paid jobholders that will be adding to the macro economy, unlike the gyrations of the business sector of layoffs and offshoring. I also personally believe that doing away with the civil service retirement under Reagan and implementing FERS was a big mistake and greatly added to the turnover in federal service. Since a significant portion of what the federal government buys is services and it takes quite a while to learn how to advertise for, select and monitor company performance, turnover as that experienced in the off-the-shelf commercial environment has a definite cost and long term impact.

Like Bob has said, politicians have to reward those who have gotten them into office if they want to be supported in the next contest. So now that we have maintained roughly 1.9 million fed civil servants over the last decade while the contracted workforce has ballooned into 7.6 million, can anyone say "Congressional Earmark?"

Posted by: Jim | April 1, 2008 4:28 PM

I've read through all these comments and not one mention of contracting for mercenaries like Blackwater. We should all be less concerned about whether these contractors are more or less expensive than regular government workers and consider the very real implications of outsourcing our military positions to mercenaries. We should also be concerned about the legality of sending civilians armed with military weaponry (mercenaries) into foreign and sovereign nations. Where's the law that provides for sending armed civilians into foreign countries? We have laws against a band of armed civilians roving around our own country, what makes it acceptable in foreign countries?
There's more at stake here than just a misadventure with public funds, although that alone, is serious enough; we need to wake up to the fact that a whole new industry has formed around this phony "security" business and we'll soon have these mercenaries coming out of our ears--and its inevitable that they will eventually be employed against the people--our people!

Posted by: Incredible!! | April 2, 2008 5:51 PM

The author hit the nail squarely on the head. Contractor personnel serve two masters, but the masters are not equal. When it all comes down to the bottom line, a contractor's parent organization, not the Government, is where the true loyalty is shown. Procurement is an inherently government function which should NEVER be farmed out to contractors who suckle at the government teat. Of course, contractors will disagree. But, piglets usually do...

Posted by: Captain Bob | April 3, 2008 1:22 PM

Don't blame the current administration for this...
The FAIR Act, was signed by Pres Clinton in 1998. This required all gov't entities to "submit each year an inventory of all their activities that are performed by Federal employees but are not inherently Governmental (i.e., are commercial). OMB is to review each agency's Commercial Activities Inventory and consult with the agency regarding its content. Upon the completion of this review and consultation, the agency must transmit a copy of the inventory to Congress and make it available to the public. The FAIR Act establishes an administrative appeals process under which an interested party may challenge the omission or the inclusion of a particular activity on the inventory. Finally, the FAIR Act requires agencies to review the activities on the inventory. Each time that the head of an executive agency considers contracting with a private sector source for the performance of such an activity, the head of the executive agency shall use a competitive process. When conducting cost comparisons, agencies must ensure that all costs are considered." ( http://www.whitehouse.gov/omb/circulars/a076/a076tm20.html).

Posted by: catherine | April 4, 2008 6:47 AM

Off the point or unfinished business. Why is it we no longer hear about Blackwater? Have they gone out of biz, laid off folks, or outsourced, I think not. If my understanding is correct, Blackwater just was granted another contract, I wonder what services were taken from the 'last' contract?
Excuse me for the muck, but my concern has always been a private army in the U. of S., no matter whose 'private' army that may be.. KKK with government contract....
This ain't good, in my view, no matter how many contracts are let to this or similar contractors....
Please open up the dilogue with this urgent situation.

Jim McClure
Gig Harbor, WA

Posted by: Jim McClure | April 10, 2008 11:51 AM


I was a Govt. employee for 30 yrs. During thos years, I watched the coffee cup holders, who do minimum work, just marking time, until they reached the magic numbers for retirement. As a supervisor, I could not hire and fire, or manage to budget. Firing someone was next to impossible, with miles of paperwork required, counseling, 90 day chance to clean up their act and then after that cycle, revert back to their old ways, which would begin the cycle all over again. Now, a contractor hired, can be let go on short notice, if he's not producing and replaced. The Govt. does not care about their retirement and health benifits for life, etc, etc. Yes, a contractor costs more up front, but he doesn't have any garantee that the Govt. will keep him beyond the 6 month contract review.

Posted by: Mike R | April 10, 2008 12:27 PM

Just yesterday I was sitting in a meeting at the Defense Intelligence Agency, and listened to a middle-level civil service manager say to a mixed government/contractor audience that the Director of DIA has decided that the President is wrong - contractors are not cheaper than Civil Servants and the Agency is taking a hard look at its long term contractor requirements.

As a taxpayer and someone who has been a contractor for 22 years, it frustrates me each time I hear a comment along that vein whose root is usually in a comparison that is not apples to apples. Normally, as was the case in this forum, the root of the flawed logic is an operating budget comparison of say a GS-13 whose salary is $100k a year to a comparably skilled contractor workyear cost of $180k a year. Not included in the GS-13 cost comparison are many employment related costs to include health & welfare benefits, the cost of infrastructure support for the employee, or the cost of retirements benefits.

The bottomline is that when you include these employee costs for a Government employee for an apples to apples comparison, a contractor is less expensive to the taxpayers. The Government should educate its middle level decision makers as the shepards of our tax dollars, ensure that they understand this dynamic, and make them evaluate the total cost of a Government verses a Contracted workyear when they are making budgetary decisions.

Futhermore, every potential Goverment retiree added to the roles increases the long term obligation of the country to pay retirement benefits, the largest and continually growing portion of the Federal budget. Conversely, that obligation is not incurred for a contracted support employee.

As a taxpayer I want to see the Government operate efficiently. The best way to do that is to allow industry to compete for and to perform all of those functions that are not inherently governmental. We need more contractors, not less.

Posted by: A Hard Working Contractor | May 1, 2008 6:07 AM

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