It's one of those well-watered and cultivated myths: Private industry can provide services at lower price than highly-paid government workers. While a lot of folks in the heartland have swallowed the outsourcing mantra hook-line-and-sinker, it's just not true.
And now, a new study by my organization, the Project On Government Oversight, shows that using contractors to perform services actually increases, rather than decreases the cost to taxpayers.
The study looked at 35 federal job classifications and found that on average, contractors billed at a rate 85 percent higher than what it costs a comparable federal worker to do the same work.
“We’re wasting tens of billions of dollars on a belief that it’s cheaper to have contractors doing the work, without any hard evidence. The government should operate on evidence, not belief” said Paul Chassy, a POGO Investigator.
As the SuperCongress starts whittling away at the federal deficit, it would do well to look at our analysis before accepting carte blanche the idea that a "bloated" federal workforce is the reason we're in dire straits.
The [POGO] study comes after months of criticism, mostly by Republicans, about what they see as the high cost of salaries and benefits for federal workers. The House earlier this year passed a Republican budget plan that would freeze pay grade levels and eliminate raises for five years, and cut the government’s work force by 10 percent. Last year, President Obama announced a two-year salary freeze for federal workers, which Republicans said did not go far enough.
But our study found that in all but two of the 35 federal job classifications we reviewed, it was cheaper to do the work in-house. The two jobs that were cheaper to contract out? Groundskeeper and medical records tech, and the latter only nominally.
In the case of claims examiners, the government was paying contractors FIVE times what it would cost to do the work with a federal employee.
You can read the full report here.