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FCW Insider: Are feds more cost-effective than contractors?

The debate often comes down to this: “Feds are perpetual loafers who know they won’t be fired” vs. “Contractors only look out for themselves, not the taxpayer.”

We heard both assertions from readers reacting to the news that Obama proposed to save money by reducing the number of contractors at the Defense Department and replacing them with federal employees.

But we also heard more nuanced arguments, some questioning the assumptions of Obama’s plan, others focused on the role of contractors in the larger scheme of government operations.

Numerous readers were skeptical of the financial basis of Obama’s plan. According to budget documents, the administration hoped to save $900 million in fiscal 2010 by bringing more jobs in house (please note that all comments have been edited for length and clarity).

* What a misleading headline designed to make the administration look good. Read the story carefully -- they are making the claim that the number of defense contractors will be cut. In reality, they are dropping the percentage of defense contractors by turning contractors into government workers. A more realistic headline would have been - “Obama to increase DOD federal workforce.” Any idea how much this is going to cost in terms of total cost of employment - including benefits and retirement? What a sham!
-- Mark

* Did the president in any way explain how in-house federal employees are somehow less expensive than contract employees whom the government (read: "taxpayer") can terminate at any time without recourse? Federal employees are, by nature, permanent employees accruing long-term obligations for salary and benefits. If Obama is saying the work itself isn't needed, that's one thing. If he thinks that over the lifecycle, federal employees are cheaper, he needs a new economics lesson.
-- R. Sutton Virginia

Several other readers suggested that an either/or approach to staffing would never work. However much the cost, contracting staff has a place in agencies, they wrote.

* I work the numbers to calculate the cost differences between federal employees and contractors. For short term projects requiring highly specialized skill, it's best to pay contractors to come for a few years, then leave when projects are deployed. For long-term programs and operations, it makes more sense and costs less to have federal workers, mostly because of the institutional knowledge.
-- Anonymous

* Contractors have a niche to fill when expertise is needed for a fixed-work contract that has an end state but not to perform work for an indefinite period of time. In an organization that provides ongoing support to the DOD, most of the workforce should be stable to provide for continuity of operations. I know at least one agency that is almost all contractors except for a couple of green suits. If they lost all those contractors, their operations would cease completely.
-- Paul

Pay is also a hot button, especially for federal employees who work alongside contractors and know what they make.

* Some contractors [in my organization] said they could not take a government position, since it would mean too much of a pay cut. The contractors also have company benefits to pay for undergraduate and graduate degrees.
-- HC

* I have contractors in my branch who have been in position for 15 and 20 years. As the government manager, I am one of the lowest paid staff in the office.
-- SW DC

However, sooner or later the debate always comes back to employee performance. Specifically, readers always zero in on two issues: What motivates employees (money vs. loyalty)? And how do managers deal with under-performers?

* Where does the federal government think it will get the expertise? If they make federal employees of ex-defense contractors, are we to believe the pay will be substantially less?
-- Anonymous

* I don't think Obama gets what contractors do for the government. In an idealistic world, the government workers would produce as much or more than contractors. Anyone who has worked in the government knows that idealism doesn't exist in the reality of the government. Yes, some contractors really don't help much, but most of the time, they are the ones doing the work ...
-- GC DC

* If we increase government employees, we definitely need way to fire those who do not perform, not just move them around. That may be difficult with the power of labor unions going up with the support of the current administration.
-- Jim

* As a federal employee I do things because of loyalty that goes way beyond the position description. Contractors won't move an inch unless it specifically states in the contract to go an inch. If going 1.5 inches makes things better, well a whole lot of negotiations have to occur first. Where are the savings there?
-- Joseph Rindone, Kirtland Air Force Base, New Mexico

* The whole attitude that all federal employees are a bunch of ineffective, lazy incompetents has basically turned the executive branch into a Swiss cheese-like mishmash of federal and private workers. The only reason this has wheezed along as long as it has is that we ineffective, incompetent, wasteful, fraudulent and abusive federal workers still retain corporate knowledge so we can train the revolving door of contractors. The trouble is, most of us are retiring and that knowledge transfer will dry up.
-- The Curmudgeon

* I like the idea of cutting the contract workers and filling the positions with federal employees. However, we must remember that we want quality workers, and to provide our veterans an opportunity to work and still serve their country. If I was selected to work as a civil service employee, I would give my current employer two weeks notice, so I can get back where I belong with my military family.
-- (ret.) Staff Sgt. Arquelio Gillespie Sr.

Posted by John Stein Monroe on May 12, 2009 at 12:14 PM

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Reader comments

Thu, May 14, 2009 Pattie DC

Turning contractors into Feds or Feds into contractors saves no money. To save money, you must work more effectively. I'd love someone to show me an organization where every single person is fully occupied every minute of each day with work that enables the organization to fulfill its mission. Can't be my organization or else I woulddn't be reading (and responding to) a story on FCW.com

Wed, May 13, 2009 Janice Frutiger

NSPS was adopted by some federal agencies as an avenue to weed poor performers out of the system. If we can take a leap that far why not consider hiring federal workers on a 4 or 5 year contract. If their performance warrents retention then the contract is renewed if not they are released. Being a federal employee should not be a free ride to a steady pay check.

Wed, May 13, 2009 Jim MI & DC

I retired after 33 years in civil service and saw first hand the sub standard labour by contractors. If they messed up, there would be a loop hole they could hide behind and the government would have to pay. A greenback is a green back, but the biggest issue I saw was the pot of $$ it came out of. But, in the end, it came out of the taxpayers pocket. WRONG!!

Wed, May 13, 2009 Bill T. Washington D.C.

I've been with the Federal Government for 20 years. During that time I've seen the workforce shift from few contractors to mostly contractors. You have both sides of the argument. Contractors have no loyalty to the government/taxpayers and milk us for everything they can. And government employees are lazy and incompetant. I think both of those statements are false. There is a happy medium. Contractors are NOT easier to fire than Federal employees. If you have a bad employee and have documented it and been a good manager, you can fire that person. Same goes for Contractors. The problem is in both cases many managers are not just managers. They are running their own projects as well as supervising. Therefore they are not equiped to be good managers. The whole Federal structure needs to be revamped. Too many managers don't have the time or ability to be managers. Too many Program Managers don't have management support to fire a contractor. People are afraid to make waves and be effective in their jobs. This issue is much broader than what it appears on paper and if you're going to get to the bottom of it...you have to look at the underlying problems for your solution.

Wed, May 13, 2009 Ray

Contractors are like government workers, they came in all shapes and sizes. As far as who is best let us consider some items (NOTE: this is my experience as an ex-contractor, a government employee, a co-worker with contractors, and a victim of contractors). 1. Cost, look at the billing cost of a contractor and not his pay check. You are paying his company, the investors, and profits. Plus, government costs and often overhead like computer, buildings, and other staff supports like the people he works with. Now this varies depending on the contract and the work environment, some, all, or none of what I said may be true. For the contractors I work with and when I was one, it was true. In another group, they have to go to their people to get office supplies. 2. Work ethic. I have worked late with our contractors when it was needed, I have also had some outsiders that when it hit 15:00, they were on the way back to home to put in the time card and get out at 15:30, just like the union. Again, it depends on the contract and the group. 3. Firing. We have one group of contractors that we are not allowed to write a bad review on, just like certain 'good ol boys' on the government side. On the other hand, one of our groups uses contractors for special tasks, and if they do not meet up with the requirements, they are let go and the company is told to furnish someone who can work. Government workers are harder to fire because of the union and various laws, but it can be done with perseverance. 4. Treatment. I was never treated badly as a contractor, our contractors do not have to stay but they like the environment and they have more issues with the parent company. But I have seen organizations where I would not want to work as a fed or a contractor. So like all places to work, it just depends. 5. Getting the job done. I had cables built using a government shop, what a pain! The items needed were almost impossible to get due to the way the system works. If it were not for the tech I worked with who helped with redesign and other issues, I would still be waiting for parts. On the other hand, another project is using a contractor and an outside cable shop associated with his company. Fast build with the parts bought through non-federal sources, but it is costing extra because no one would point out some of the issues and redesign had to be done the hard way and officially. And I have seen the reverse in both cases on other projects. In closing, companies in the real world use contractors, some stay on for years, others are hired for a task and leave when it is done. Obama's writers are making good rhetoric, but in reality, contractors are a very important part of any company. I see some contractors I think are overdue for dumping and I see some Feds that are due for dumping. But it is turning into a political football.

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