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

A recent remark by Obama triggered a lengthy debate among readers about the relative value of in-house and contract staffers.

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.

NEXT STORY: Get a Life: To blog or not?

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