Senator knocks government spending on contractors

The federal government’s use of contractor support services is costing taxpayers dearly as agencies have lost sight of spending and contracting has “gone wild,” according to Sen. Claire McCaskill (D-Mo.), who led a March 29 hearing to investigate the issue.

At the Homeland Security and Governmental Affairs contracting and oversight subcommittee meeting, McCaskill, subcommittee chairwoman, and ranking member Rob Portman (R-Ohio), quizzed officials from the Homeland Security Department, the Office for Personnel Management and the Army on plans for insourcing, use of and spending on contractor services and metrics for measuring savings. The panel members also discussed future budgeting concerns related to the growing costs of contractor services.

McCaskill in particular singled out the Defense Department, which last year released an insourcing report to Congress stating that the department was unable to provide requested data and was unable to “completely or accurately assess the specific impact insourcing has had on private sector firms or their employees” due to a lack of data, according to a letter McCaskill sent to Army Secretary John McHugh.

“As someone who’s had a 50-yard-line seat watching contracting…I know that anyone who says we can’t find savings at the Defense Department doesn’t understand,” she said at the hearing. “If they say we can’t save a dime and that we need to continue to grow the budget, they don’t understand that contracting has gone wild.”

Jay Aronowitz, Army deputy assistant secretary for force management, manpower and resources, acknowledged that the Army has failed to properly plan for spending on contract services.

“We don’t have service contract spending very well integrated into our budget,” Aronowitz said, admitting that costs have increased in recent years after a previous downward trend.

Still, there has been some progress -- last year at DHS, some 3,500 contractor positions were insourced for savings to the tune of $28 million, according to Debra Tomchek, DHS executive director of the Balanced Workforce Program Management Office.

Nonetheless, according to the Project on Government Oversight, which submitted a report to the Senate panel based on its own study, contractors are paid an average of 1.83 times more than federal employees in total compensation, and more than twice the full compensation paid in the private sector for comparable services.

“Our findings were shocking – POGO estimates the government pays billions more annually in taxpayer dollars to hire contractors than it would to hire federal employees to perform comparable services,” the report noted. “Given that one-quarter of all discretionary spending now goes to service contractors, a reassessment of the total federal work force, with a focus on contractor billing rates, could save taxpayers billions of dollars annually.”

But Professional Services Council President and CEO Stan Soloway cautioned that the government must carefully determine what work should be insourced – and what is still better left to be performed by the private sector.

“While we recognize that there are clear limits to the scope of work that is appropriate for the private sector to perform for the government, it is also true that the innovation, skills, agility, and competitive spirit of the private sector are the engine that drives our economy,” Soloway said in a released statement. “Any decision to perform work inside the government that is appropriate for the private sector to do must be accompanied by real analytical rigor. To do otherwise is contrary to both the government's and taxpayers' interests and the broader health of our economy.”

About the Author

Amber Corrin is a former staff writer for FCW and Defense Systems.

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Reader comments

Tue, Apr 10, 2012 gladys New York

The growth in gov't contracting seems to correlate with budgetary cuts. Congress cuts the money but the workload remains the same. Congress seems to think that removing the money means the work will be removed. A lot of work gets outsourced simply because they can pay for it on that line. If they tried to hire people and pay them competitive wages Congress wouldn't have it. This is a problem of Congresses making. They made it decades ago and no one including Senator McCaskill thought it was a problem 8 yrs ago when contract outsourcing reached it's zenith. It's gotten too big and too integrated to manage and with the help of the previous administration is running parallel to the gov't, without gov't oversight and control. So, how do you contract that kind of money out and not have any say on what the contractors should and should not be doing. Our Congress is disfunctional and has been for decades. As long as Congress continues to play politics with the agencies we will continue to have this problem and since they can't help themselves, there's no end in sight. She probably wouldn't have a problem if a Republican was in the WH. So all of this discussion is for election show and means absolutely nothing. If the election goes as planned, everything will go back to normal, Congress will continue to do as they did with the previous administration. Strip the gov't, outsource the work and pretend they are being fiscally responsible. Yea they've been playing that banjo for the last 50 yrs but when something works why change it. Contractors are so integrated into the gov't, in some cases they are the gov't which is the way some people want it. Sit tight nothing going to change. Campaign reform would fix a lot of problems, but that's not going to happen since the Supreme Court, the last independent branch, fell to special interest and politics and made a ruling that will take our current system of gov't and Democracy down in another 20 yrs or so. It has given the wealthy want they had in the 20's and 30's before the crash, their own gov't run by and for them.

Thu, Apr 5, 2012 Leaving

I am an electrical engineer and contracting is necessary to get the work done. If we could not contract out the work, then we would need more FTE's. This would not solve a thing because EE wages are too low to get qualified EE's in every position. As it is, I am expected to work 60 hrs a week and be paid straight time over time, if at all. Also, management thinks IDP's and evaluations are a waste of time (told this directly). Not to mention they don't believe in performance awards. I won't be here long. It is easy to see why the government is in the shape it is in.

Thu, Apr 5, 2012 COL

Having just retired from the Army and having a former career in employee compensation management in the private sector it was apparent to me that even with pension benefits a federal employee was the wiser choice over most contractor postion. But having said that in certain cases contractor's are needed because of unique expertise/experience, surge capabilities and special projects. Unfortunately, shrinking Government employment just doesn't sell well politically when we say we'll cut contractors and reinvest some of those savings on cost effective Govt employees.

Mon, Apr 2, 2012

Congress will never get their act together as long as we the people never watch what is going on behind the doors. They seem to know our every move but we know nothing of theirs. Unless we do our part things will never change they will only get worriest. We can't beleive any of them because the don't know the truth any more.

Mon, Apr 2, 2012 FedUP Fed!

This matches my experience with contractor Vs. FTE budgets, it is particulasrly bad when the contractor PM's are asking you, "why are you still working for the Government as an FTE instead of joining us as a contractor and taking home $128-148k instead of $86k!! This is not just DOD or DHS, this is everywhere in Washington. The GOP just has a grudge and is willfully blind to this reality because their contracting buddies are funding their campaigns!! Shrink the Federal FTE workforce, contractors will get more work because the work still has to be done, GOP gets bigger campaign contributions.. repeat process.. To stop this we need campaign reform, every candidate based on the office run for will recieve a flat amount for their campaign and public television ONLY advertizing spots. Fair for all candidates, no PAC giving a candidate so much money nobody else can be heard. The pool of money divided EVENLY amongst all candidates regardless of party afiliation can be based on tax deductable donations so tax payers are not paying for this process. Donars select their party preference, any left over funds (One party was given more than the other)after all candidates recieve their equal shares are donated to public television for public service uses.

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