Back in March, Obama ordered the Office of Management and Budget to take a close look at the government’s contracting procedures, especially the use of outside contractors. Cost-plus contracts came under particular scrutiny, as did sole-source contracts.
One of the first agencies to make changes to their use of major outside contractors was the IRS. In April, they declined to renew a contract to outsource debt collections. Why? Partly because it overstepped the line of using private contractors for inherently governmental functions, but mostly because government debt collectors were a better investment when it came to getting more back for your buck:
The decision followed an extensive IRS review of the program, which showed that private collection agencies recouped less money per case than federal employees, closed fewer cases and were more expensive than in-house collectors.
The study, conducted by the IRS and reviewed by MITRE Corp., found that the cost of the IRS’ in-house program averaged $0.07 per dollar collected, while that of private debt-collection agencies was $0.24 per dollar recovered. The IRS program recouped 11 percent of debts assigned for collection and moved 28 percent of taxpayers into payment status, compared to 4 percent and 11 percent for private collection agencies.
Claire McCaskill is pushing DHS to get their contracts under control, and now the DOD is also stepping up. While everyone else in DC was watching the health insurance reform bill get passed by the Senate on Christmas Eve, Walter Pincus was poring over the the fine print of the DOD appropriations bill:
The Defense Department estimates it will save an average of $44,000 a year for every contractor it replaces with full-time federal personnel to perform critical defense jobs, according to the House-Senate conference report on the fiscal 2010 defense appropriation bill.
A week ago, OMB reported that it has found $19B in savings on acquisition contracts as a result of the studies they ordered in March. For eight years, the Bush administration used the war in Iraq and the mantra that privatization is best to justify expanding the use of contractors in all aspects of the government. Now we’re seeing the fruits of that folly, with excess spending for private profits and a poor return to the government for their investment.
I’m sure all the deficit hawks in the GOP who were screaming about the cost of the health care proposals will be jumping for joy at this about face in government contracting.




24 Comments





Support this site!
Subscribe to the newsletter
Advertise on Firedoglake
Send
us your tips
Make us your homepage
About Firedoglake
That’s very encouraging! I hope the change is pervasive.
I’ll believe it when I see it. Too much of what Obama does is talk—action speaks!
McCaskill has been doing some good work along these lines. I think going after private, for-profit contracting is one of the best weak links to target the corporate state.
If a private contractor can do the job better and cheaper, by all means, use ‘em. But make the process transparent so it is clear when government civil servants are more efficient, which is frequently the case.
And of course, some agencies can’t even seem to pass a basic audit, let alone a more detailed analysis of government work compared to outsourcing to the private sector. That should be a huge issues for places like the Pentagon.
Let’s quickly implement changes in the way the Pentagon operates.
The government has already hired outside contractors to run Congress and the White House.
You know, the government on Wall Street. Of course, they call them “inside contractors” in New York.
This is a signature issue for McCaskill. She’s shown quite an anxious obsession to find the middle in Missouri politics, and rooting out contracting waste and chicanery has broad appeal there.
About as much jumping off the Eiffel Tower with a bungie chord tied around their nuts…
And if you believe that I got this bridge in Alaska to nowhere for sale!!
I have never supported privatizing Government work period, seems to me it is cheaper to have a Federal employee doing Government Work. Keep Corporations out of our Government services!! It only transfers more wealth into the hands of the rich and that has to stop if we are to survive as a Country!!
Jim Webb of Virginia was instrumental in bringing this amendment forward. The Webb-McCaskill Wartime Contracting Amendment to the 2008 Defense Authorization Act will serve to ensure appropriate use and improve accountability of military contractor usage.
How federal agencies have changed. Somewhere in the 1990′s federal agencies learned that using contractors could increase headcount without having folks talk about the growth in government. Of course, contractors are for-profit and cost more for their hide-the-headcount services than it costs to have direct hires. So we are well on our way to privatized government, of which DoD contractors are only the privatized military version.
And now with individual mandates in HCR the IRS will be turnin over everyones income infoemation to the insurance industry so they can extract their whatever percentage. Arrgh! Maybe someone will notice that before it’s writ in stone.
Jeez. I am so unlucky. All that time the IRS came after me…. I coulda got a private outfit and paid less? Just my luck.
Like GM, the government will make it up in volume. At least it’s plethora of private contractors will. Expect terminating outsourcing contracts to be just as much horsetrading and clutching of pearls as closing a military base.
Republic deficit hawks certainly are well rested since they took the all of the Decider’s years in office off.
As a constituent of McCaskill’s, I am delighted at her focus on waste and mis-management, but she at times gets in the way of necessary spending with proper oversight and controls. She opposed some of the health care proposals, where government spending on the one hand would would have reined in health care spending overall (federal, state, and personal spending).
Go after the waste, by all means, Claire — but not all government spending is wasteful.
Hasn’t McCaskill also announced that she wants to set her sights on “entitlement reform?” Which people like me fear is code for gutting SS and Medicare.
You know there probably never has been any kind of government which did not engage in some level of outsourcing ie. contracting. After all governments have usually had to outsource their production to private industry, probably since day one for the US. But when federal agencies are contracting out the function which the agency itself was created to perform, things have gone off the deep end.
This is of course nothing new to all the FDL’ers here, but I just returned to the states after 15 years of being an ex-pat, and the America I knew from my childhood, growing up here, has become something quite unfathomable. This outsourcing stuff was just getting in vogue when I left in the early 90′s, coming back to the states now, it seems as if half of the actual function of the government has been outsourced. What really scares me is the question as to whether or not America even has a government anymore, having been replaced by agencies which just dish out contracts.
Back in the early 90′s people like Ross Perot argued that the President should be like a CEO. Well apparently this mentality won out. The outsourcing of governmental functions(mercenaries instead of soldiers, private debt collection agencies vs. the IRS, for-profit prison industries etc.) is doing more to delegitamize the very raison d’etre of governance, and the principle of democratic participation, than anything else I can even imagine.
Everyone always knew that there was a lot of corruption between industry and the government(people rallied against this kind of thing all the way back to the founding of the US), but with such a large percentage of the government itself being outsource(I don’t actually know how much is being outsourced, just everyday I keep discovering all the shit which happened in the past 15 years here in America and I cannot begin to fathom it), words like corruption and collusion seem no longer apt to describe what’s going on. Ironic how films like Robocop more accurately depicted where things were headed in America than most people even dreamed possible. I wonder how many Americans have been living in what they thought was just a bad dream- I don’t want to wake up, this isn’t really happening.
I lived in Germany for the past 15 years and it baffled my mind to no end that Germany kept adopting the shit policies from America- there is no end to the good things that other countries could adopt and emulate from America, yet invariably only American excrement gets adopted abroad. I loved the exuberance here where people get so worked up about critically important social and political issues, yet I wonder to what extent there is anything even resembling actual governance anymore, the government having become a mere shell of it’s former self, with private corporations carrying out federal policies.
I am at once galvanized by seeing the aggressive stance that Jane Hamsher and so many others take here, and disheartened beyond belief by the extent to which governance and the government itself has been rendered incapable and irrelevant by the private corporations which are practically now our defacto government. I guess the fires burn brightest in the darkest hour of the night…..
As much as everybody here hated the Bush years we will still be dealing with the ramifications of what Clinton(via the likes of Rahm Emanuel) ushered into America for generations. The enemy of the Democrats is not the Republicans, but the so-called Democrats themselves, who sold America out hook, line and sinker. The laissez-faire liberals simply paved the way for the neocons, sure why not outsource everything….The only thing that the Left and Liberals have in common is the dreaded L, but liberals must learn to fear the Left, for they have unwittingly been sharing the bed with the Right, where the neocons where first conceived. Keep up the good work Jane, and although many refer to you as a liberal, I know better.
Outsourcing government functions to contractors is just another example of the lame GOP tenant that private industry can do things cheaper and more efficiently than government can.
Just like the “Gay Agenda” or “Family Values” this one is proving to be a bag of horse shit too.
But one thing that the GOP has gone out of their way to prove through their period of inept govenance is that “Government is not the solution to the problem, government is the problem”.
Looks like we can give them a “win” on that one…
I wonder when these asshats will ever learn that privatizing government functions always increases the cost. There is this whole thing call “profit”, that governments do not need and contractors maximize, as well as additional layers of management on both sides of the contract. there is also a significant loss of accountability when you outsource. Of course, I think all of these points are generally considered assets not bugs to the program.
It was not the laizze-faire liberals, it was the crony capitalist liberals.
The irony here being that it was the laizze-faire Republicans [and Libertarians} who were most opposed to the economic bailout. Why? Because they are equally aware of how corporstism rules in Washington.
Folks need to understand that using contractors never was about saving money it was about getting political contributions. In the same way Rahm sold the Democrats to the Banks and Corporate interests the Republicans sold the Gov. to the Contracting Companies (body shops) – Rahm and the New /Corporate Democrats just never figured out how to get into that food chain. Give them time they’re working on it -
This is another one of those “bi-partisan” issues.
Al Gore’s “Reinventing Government” project privatized a number of formerly government functions.
A notable one was the Office of Personnel Management agency that conducted background checks of government employees. It was turned into an ESOP named U.S. Investigative Services. Initially, Carlyle Group owned 25% or more.
Seems like a function that by its very nature should be conducted only by government employees. A decade or so ago, Al Gore actually gave speeches boasting about this great “success story”.
Any money in this?
http://www.govexec.com/reinvent/rrc/esop.htm
“The creation of USIS, Inc. was the first government privatization of its kind. A private consulting firm estimated that its creation should save the taxpayers $25 million over five years. ”
http://blog.executivebiz.com/tag/us-investigation-services
“Billion dollar government contracting powerhouse US Investigation Services, Inc (USIS) got a little more powerful this week . . . “
Why not have most federal civil service jobs be on 2-4 year contract basis? This would make sure that even if headcount jumps short term, it does not mean giant public liabilities associated with civil servants like cadillac pensions and the like.
I live in social democratic europe, and here temps and contract employees are all the rage in public and private fields, due to the difficulty in lowering headcount later.
I believe this is a reasonable rule to apply with two exceptions:
1. Whenever a government agency’s responsibility is outsourced or delegated to a private contractor, that agency incurs an oversight responsibility to assure that the private contractor renders satisfactory performance. The cost incurred by such oversight must be included in any cost-benefit evaluation of outsourcing jobs to the private sector.
2. No-bid cost-plus contracts must be prohibited without exception.
There are other important issues to consider, of course, such as establishing a list of qualified individuals and businesses by education, training, and experience as well as prohibitions against various forms of discrimination. Nepotism, political affiliation, and financial contributions to political parties and candidates also should be prohibited. The twin goals should be to promote efficiency and prevent corruption.
This is one of many bipartisan issues upon which honest men and women working in good faith can agree, regardless of their position in the vast political spectrum.