Why is it that the government always thinks that they can do whatever they want whenever they want to whomever they want?! The government is insourcing jobs from private sector contractors (made up of mostly minority owned and small businesses). I was wondering if anyone knew how to estimate how many minority owned and small businesses will go out of business as a result of the government’s insourcing directive that is in place? A better question might be, who has even heard of this insourcing directive?
I have. Seems like a pretty good idea to me. I think the government has gone a long way to reducing the number of government employees on the books by simply outsourcing duties that have traditionally been government responsibilities (cough-coughmilitarysecuritycontractorscough-cough) and those jobs should be performed by people accountable to… well, the people.
I have also seen lots of good government employees lured into retirement to go work for a private company as a contractor to the same institution from which they retired, only for more pay. Let’s be clear, it is taxpayer money that is providing that individual with the additional salary he is receiving. That’s a grade-A ripoff for the taxpayer.
The point about small and minority-owned businesses is an interesting thought, but they will continue to receive preference for whatever contracts they may bid on. But I would like you to explain this: why should the government pay more to a small business to do a particular service, if government employees can perform it just as effectively and for less cost?
Can you provide some actual numbers? One thing to keep in mind, is that a contractor can be terminated simply and cleanly. A government employee? Not so much. Or, even if the particular employee is gotten rid of, the job may still remain. So, it’s important to look at the total cost, not the annual rate.
I think we’re all familiar with the salaries paid to private security firms in Iraq, but I was thinking of something closer to home-- say inside the US.
Because periodically they get a bug up their collective asses and decide that they can do everything on their own. Usually when someone is looking at the funding to contractors and lamenting how much it costs to pay all those contractors all that money, and they think ‘Hey! WE could do that stuff and save a bundle!’. Sort of like a guy who knows nothing about plumbing deciding that they can save money by doing it themselves. It generally doesn’t work out all that great, and in many cases they end up spending more, since after they really fuck it up they have to bring in a professional anyway.
I doubt anyone really knows, but this won’t be the first time we’ve been through this cycle. It’s happening where I work right now. We’re being told that we won’t be bringing on contractors to assist in any of the projects we have this year. It’s supposed to be a cost saving measure. And it will last until the higher ups figure out that none of those projects are getting done because we don’t have the resources to do them in-house.
As a generic example, say we have a project that is going to require 2 network engineers, 4 IT technicians, and 6 layer 1 techs to accomplish (interestingly enough, we actually have such a project right now). What do we do? Well, we could contact that out and put one of our network engineers on the project as a project manager. Or, we could hire 4 IT techs that we don’t currently have, task 2 of our 3 network engineers to work on the project (which means they won’t be working on other things) and hire 6 layer 1 techs (plus purchase all the capital equipment for testing we don’t have). Which will cost more? And after the project is done, what do we do with the folks we hired? The next project has different requirements, and needs different vertical specialty skills and equipment we also don’t have.
I’ve worked both sides of the house in my time. I started out as a contractor programmer/analyst, then I moved to the government side and was a GS11 senior analyst, them moved back onto the contractor side, and now I’m back to being a government worker again (for the state this time). I’ve seen these kinds of directives come and go, and, as I said, we are currently being told the same thing here, even though it’s not at a Federal level. I don’t expect it to last long (these things never do), but it will be interesting to see how it plays out. That whole unintended consequences thingy should be quite interesting…
-XT
Whether they’re contractors or government employees, it’s likely to be the same actual people doing the same jobs. If the government finds that it often needs to perform a particular task, and is continually contracting out the job to the same people, and most of the work those people do is on one of these government contracts, what’s the harm in making it official and just hiring those folks outright?
If the government could have provided the service just as effectively and for less cost, they would not have outsourced the job in the first place. If they couldn’t do it then, what gives the idea/ apperance that they can do it now?!
It’s not, though, at least not in my experience on the technical side of things. As an example, if we are doing a project requiring a CCIE, it’s highly unlikely that the engineer doing that would be working for us, since there is simply no way in hell we could afford to pay the salary of that engineer.
In my experience, a lot of contractors have ex-government/ex-military types working for them who schmooze with the contracting officer types, or maybe act as project/program managers for the contractor if the contract is big enough, but in general the folks actually doing the work aren’t ex-government/ex-military types would would ever be working for the government as a government employee.
Well, the ‘harm’ would be a distortion in the pay rates. Take a CCIE for example. Even here in the wilds of BF New Mexico, a CCIE commands well over $100k…probably more like $120k in fact. The county manage of the county I work for makes, oh, say…$120k. See the problem?
Government salaries are generally much lower than those in the private sector. The compensation (or one of them) is the stability (though that’s not been the case for a lot of the state agencies lately), and the benefits (the 9% match for retirement is a nice benefit…as is the government vehicle and gas). However, those compensations aren’t adequate to bring in the better and more skilled employees.
-XT
Cite that the only reason they outsourced jobs was because it was cheaper/more effective?
Sometimes it was cheaper. Sometimes it was only theoretically cheaper. Sometimes there just weren’t enough bodies to do the job.
As an example, during the housing boom the City Projects Inspectors got pulled away to act as Development Inspectors, leaving the City Projects to contract out Inspection services. Sometimes it worked really well and sometimes it added another layer of cost, because it took more of the Project Managers’ time to supervise outside Inspectors.
Now there’s a housing bust and there are City Inspectors available for City Projects again. So we’re hiring out Inspection less often, usually for big projects as part of a package with Construction Management, because that’s where it reliably saved money. If we had hired more Inspectors during the boom, we’d be laying them off now.
It doesn’t seem like a bad idea to use contractors to fill positions that are probably only going to be needed temporarily.
Pffft … capitalists. Always looking for a government handout.
Because the law requires it to be so.
OK, then, that means that if they can insource jobs, then they’ll be saving money, since instead of paying the high salary of a private sector contractor, they’re paying the low salary of a public employee.
Now, obviously, there will be cases where they can’t find anyone willing to take the lower public pay, but those cases aren’t relevant anyway, because if they can’t find anyone willing to take the insourced job, then they don’t insource the job.
Well, leaving aside the problem that they will be paying this full time for possibly years or a couple of decades instead of paying a contractor for the duration of the contract, there is the little problem that if you pay less for someone you probably won’t be getting a person who is as qualified as you’d get for a person you, well, pay market price for. So, while you’d be saving money (leaving aside the first part of the above, which, btw, means you won’t be really saving anything over the long run), you won’t be getting value for your money.
It would be like paying a guy who builds model rockets half of what a real rocket scientist makes and then going ‘well, we saved a lot of money!’. Yeah, you did, but that will be cold comfort when the rocket explodes on the launch pad, ehe?
And it gets worse, because while you may need 4 rocket scientists, you only have positions for 2 half pay rocket scientists to handle your project. In my real world example we need 2 engineers (and we have 3 right now), and 4 IT techs (we have zero atm) and 6 layer 1 techs (again, zero right now)…and we don’t have open positions for any of them. Now, we COULD hire all those people (leaving aside the engineers, since I suppose 2 of our 3 could be fully devoted to the project, leaving us 1 for all the other stuff we have to do). That would be 10 new positions. Let’s say we could get them at bargain basement prices…say, $20k each on average. That’s $200k a year (unloaded).
Sadly, the contract price for the above project is only $80k…and when the project is over we don’t have to continue to pay those 10 people we just hired for 20 more years (or however long they stay…at those prices we’d get some real losers, and once they are in it would be difficult to get rid of all of them…hell, most of them). Do you see the problem here? And that doesn’t include the capital costs of the equipments we also don’t have that the vendor does (testing equipment) or the other resources.
Even if the project cost us half a million it would STILL be more cost effective to hire the vendor than to hire staff to do this one small project.
That’s true. So, of the hundred odd projects we have for this year, something like 90% of them would entail additional resources over and above what our staff currently can handle (mostly, our job is to manage the projects and ensure that the vendors actually do what we need them to do). So, after we determine that, to do all those projects we’d need to increase our staff by a few dozen or so, and after we post those jobs at the dollar figures consummate with the pay scales of the rest of the county, and after we get a large number of unqualified applications, slog through them, interview and reject them all (or maybe find a few young or has been low level techs that have the quals and are willing to work for chump change), we can then go back to the county managers and elected officials and say we can’t do the projects requested (which won’t go over too well) or we can hire contractors to do what we would have done anyway? Why not simply cut to the chase and hire the contractors?
Of course, what will REALLY happen in most cases is that the government functionaries won’t be this forthright, and they will tell you that CERTAINLY they can do all this work, and they will hire a bunch of folks who are unqualified (here in New Mexico it will be the Friends and Family plan…YMMV as to how the corruption will work in your own state or Federal agency of choice), they will hire said unqualified folks, and then the projects will go into cost over runs, epic fail, or in other ways not be successful…and then you’ll end up hiring contractors to clean up the mess anyway. Or, smarter COTR’s will simply find loop holes and work arounds in the system and get the contractors in anyway, but it will be more effort and cost more to do it.
-XT
Outsourcing jobs once held by (federal) government employees to the private sector is not cost-effective. Overall costs go up and not down and taxpayers pay through the nose as a result.
Not asking for a cite here, just want to try and follow your logic. You say costs go up when the government ‘outsources’ work that was previously done by government employees to contractors. I don’t know if that’s true or not (I’d say that, based on my own experience you could juggle the numbers in several different ways to make them say whatever you wanted them to say), but let’s assume it is. So, the tax payers pay more for services rendered. The thing is, were the services actually BEING rendered using the government workers, and were they being rendered in a timely manner? I’d say that the answer would be…it depends on what the project was. Overall, however, I’d say that the tax payers were paying less, and getting less, results wise…back to the guy trying to do his own plumbing without knowing what he’s doing. It cost him less, and he got less as a result. Did he really save anything?
My experience with the Federal Government employees goes from ‘good’ to ‘worse than useless’, and, again, in my own experience, GS types are generally better at managing projects (when they are in the ‘good’ category) than they are at doing the actual work. When they actually have to DO the work, in my own experience of course, they generally do a poor job, because they generally don’t have the vertical expertise to do it right, since, as a rule, they can’t attract the folks who can do that work at the level needed using the compensation available (there are exceptions to this…myself, of course :p).
This is all depending on what the work being done actually is, of course. I’ve worked with many government services types in facilities management, for instance, who did a hell of a job…as good or better than if they had contracted it out. In general, I haven’t seen great in house IT services from the government without any contractor support, though I’m sure there are exceptions. In general, and IMHO, the government works best when they use their own staff as project managers and coordinators, give clear and concise requirements with good metrics, and then over see the projects they don’t have the staff for.
YMMV, of course, but I’ve been doing this from both sides for 30+ years, from DC to California and even overseas, and that’s been my own experience overall.
-XT
Outsourcing leads to contracts being handed out to businesses with political connections, followed by substandard work. Insourcing leads to jobs being handed out to people with political connections, followed by substandard work. This is not a rule for all work. It just happens either way the pendulum swings. Bidding and civil service rules improve the situation, but won’t eliminate corruption entirely.
How well work is performed insourced or out is what makes the most difference. That relies on proper oversight of the work, and that is the vulnerability of either method.
Insourcing jobs does not save money…at least that is what Defense Secretary Gates said Aug. 9, 2010 in his announcement of his new initatives that he is putting into action.
I call bullshit on the whole minority owned crap. Less than 10 percent of government contractors are ostensibly minority owned.
For the longest time congress has cooked the books by outsourcing intrinsically government functions to the private sector. Everything from fighting our wars to collecting our taxes. By and large it has been a failed experiment. Private companies generally don’t provide more for less, they either privide less for less money (privitization of the federal security services); more for more money (Medicare part C) or in some cases provide less for more money (privitization fo tax collection, where the private companty gets a third of what they collect). I can’t think of very many privitized government functions where the private sector has provided more for less (perhaps mercenaries but I don’t really knwo enough to have an opinion on that).
Minority owned is only one of the government set aside programs. There is also small business, veteran owned, woman owned and a couple others that I can’t recall off the top of my head. They constitute more than 10% of government contracts. Even if they were ‘only’ 10% of government contracts, however, it would be a major blow to all the businesses in those categories, since we are talking about billions of dollars and thousands of jobs.
Do you have a cite for this?
And what metrics are you using to base your assertion here on?
-XT
Well, it depends on what you mean by a long time, but national security was considered an intrinsic function of government once.