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US Gov't Pays IT Contractors Twice As Much As Its Own IT Workers
bdcny7927 writes "The U.S. federal government pays outside IT contractors nearly twice as much for computer engineering services as it pays its own computer engineers, and 1.5 times more for IT management work, according to a non-profit watchdog group. 'The study points out that IT specifically "is widely outsourced throughout the federal government because of the assumption that IT companies provide vastly superior skills and cost savings." The Project on Government Oversight says its salary comparisons prove that those cost savings are not being realized. However, the comparisons do not address any cost savings that might be achieved through the skills, processes or systems that private IT services companies might deliver. The POGO researchers say that the federal government itself does not know how much money overall it saves or wastes with its sourcing decisions and has no system for doing so.'"
Being able to point the finger of blame at an outside source has significant value.
Conveniently, we have plenty of shrill talking heads telling us that the private sector is always more efficient. That should be a viable substitute for so called "empirical evidence".
I know a foreign government that does the same, if it makes you Americans feel any better...
"When information is power, privacy is freedom" - Jah-Wren Ryel
People having life time jobs make less than people willing to work on a day-by-day basis, with twice the hours, triple the productivity, working in any location the job requires? Really?
I hope this is the first of a series of articles called 'real life eye openers'. To be distributed among public workers worldwide.
I was under the impression that you outsource to SAVE money. My perception is changed.
The dangers of knowledge trigger emotional distress in human beings.
Temporary workers always make more money per hour than those doing it full time, its the trade off for the convience of having an on demand workforce. It's also very misleading to go strictly off per hour wage when your not including the total compansation package into the mix. Full-time employees will get PTO, insurance, 401k/pensions, etc. That isn't a small chunk of change.
That actually isn't that bad, given that the cost of an employee is way more than what their salary is (sick time, vacation time, health insurance, retirement, other benefits, etc.) all add up.
I'd be more concerned if it was 5-6x as much. 2x is a relative steal.
At the same time, if the feds only need someone for a few months for a specific project, it's a lot cheaper to bring in a consultant for the time needed than hire someone and have them working for you way too long.
I am guessing that in about half these cases, at the individual level, the contractors are former government employees who weren't getting paid their fair market value by the public sector. Given that a good IT worker is worth about 5 times a medioce one and 20 times a bad one, they're probably a much better value, on average, than those "left behind". Consulting budgets and the like also let huge bureaucracies get necessary work done that is internally impossible because it is "not in the budget".
The other half these cases, I am also guessing, will prove to be unnecessary wastes of money even worse than typical government IT initiatives.
I don't make as much as a Highly Paid Consultant, either, but fuck off! This should be considered normal. Do you think the zillions of perks you get as an employee for the government (health insurance, unions, more holiday time, guaranteed pay raises) are free?
how is babby formed?
When did this happen?
...and I work for a state govt. I have to cover all my insurance costs, all the SS and other mandatory deductions, plus vacation and other paid time off. Some states are trying to mandate paid vacations and health insurance - even for baby sitters. This raises the costs considerably. PLUS - we are actually accountable: if we don't perform up to spec, we can lose money. A govt employee, esp. a federal employee has (in essence) a sinecure.
Chaos maximizes locally around me.
Cost to run in-house IT/etc.:
- Personel wage
- Facilities
- Administrative costs
- Training
- + others
Cost to pay contractors:
- Wage/Contract cost
Typically they're similar or the contract will come in lower. Wage is not the only variable in the entire equation
I know lots of people in federal IT contracting. NOBODY makes that kind of money. I call B.S. on this whole article.
And the gov't employees make more, work less, and walk away with a pension.
Godaddy is a scam and a ripoff.
You can't just compare a consultants rate to an employees salary. The government is paying for the employee's health care, pension, etc. As an independent consultant I have to pay for all that out of my rate. Additionally I have to carry Errors & Omissions Insurance, General Liability, Workman's Comp and several other things that are just the cost of doing business. A one-to-one comparison is very misleading.
"IT companies provide vastly superior skills"
Anyone who has ever seen a contract change within a government contractor knows that is not true. I used to work for a major contractor in IT at a NASA center. The contract went though a change to a new contractor. What happens is that the existing contractor and other contractors bidding for the job all put in a bid claiming the talent of the people who already do the job. Yes, the company bidding on the work assumes that most of the workers currently doing the job can be rehired to do the job. So even when a new contractor wins the contract, the existing employees get to apply for the jobs they already have. The new contractor comes in with an attitude of "We're doing you a favor by letting you apply for / keep your job". And ultimately, about 90% of the employees stay the same. The brightest employees tend to say "Screw this" and leave soon, but the dead weight still stays around through each contract turnover.
private corporations routinely pay IT contractors more than their own IT workers for the privilege of
being able to quickly hire and fire anyone they like without the cumbersome and frustrating effort of dealing with health, dental and life insurance as well as 401k and training/certification benefits. Thats right, the art of oursourcing is also a clever means of engineering around your inherent value as a human being. Much the same as "benefits" are a delightful means of ensuring corporations never pay their employees what theyre really worth. all glory to the invisible hand of the market.
Good people go to bed earlier.
Or that outside contracting companies are a nice source of kickbacks that could not be "handled" otherwise.
The POGO researchers say that the federal government itself does not know how much money overall it saves or wastes with its sourcing decisions and has no system for doing so.
Any private IT consultants willing to take this task on for a truckload of cash?
Have gnu, will travel.
Actually it was at least initially part of the smaller government initiative back in the 90's. All the IT folks had to be contractors. No government IT folks. Our first couple of contracts were so badly written that servers didn't get updated. If a server broke, the government paid to replace it. But if it got old, the contractor pays for a replacement. So as long as we could keep it going, it wouldn't cost the contractor anything.
[John]
Shit better not happen!
Exactly. This survey seems to compare the rate that the government pays a contractor versus the salary that an employee makes. Those are not the same because all the benefits you mentioned, plus overhead. It costs a lot more than salary to run a business -- office space, power, HR, management, legal fees, accountants, etc. I guarantee the actual consultant isn't getting nearly all of the money that the gov't is paying the contractor for his services. However, when the government pays an employee a salary, by definition he gets all of that money.
No, actually they aren't. If you had bothered to read their methodology on their study you would know this:
Because the contractor billing rates published by GSA include not only salaries but also other costs including benefits contractors provide their employees,[66] POGO added OPM’s 36.25 percent benefit rate to federal employee salaries[67] and BLS’s 33.5 percent loading to private sector employee salaries to reflect the full fringe benefit package paid to full-time employees in service-providing organizations that employ 500 or more workers.[68] All supporting data for this study are found in Table 1 and Appendices B through D.[69]
For the most part, often. According to the data Capers Jones has presented, contracted software work will be produced at about twice the rate of in-house work. It's not always true and it doesn't mean a company could run on only external workers. There is the domain knowledge aspect that pretty much requires in-house nurturing, otherwise the job could probably be handled by off the shelf software.
Even if the article is comparing total compensation to total compensation, which I doubt it is, there may be other cost involved. There have been times when I supplied my own equipment and I have charged beyond a normal hourly rate for the use of the equipment.
For contractors that are hired for short time, it is not uncommon in industry to pay them large amounts of money. For instance, I have seen many contractors come in for a few weeks a years being paid double what an equivalent worker would make. It is not cost effective to have such a person on payroll, but their specific skills are sometimes needed. Think of a plumber or electrician.
Which is not to say there is not waste. Just to say the article does not make a compelling case for waste, and certainly not a compelling case for 50% waste, which is what everyone wants to believe so that we have these historically low tax rates without negatively effecting economic growth.
"She's a scientist and a lesbian. She's not going to let it slide." Orphan Black
Let me try spinning this
GOVERNMENT IT WORKERS PAID LESS THAN SAME WORKERS IN PRIVATE SECTOR
Obama claims government tightening belt
PRIVATE SECTOR CONTRACTORS BILKING THE US
Senate hearings commence in two weeks
GOVERNMENT UNIONS KEEPING COSTS DOWN
Union leaders praised for austerity
GOVERNMENT UNION WORKERS FORCED TO WORK FOR LESS THAN PRIVATE SECTOR
Bill O'Reily attacks unions for not protecting worker's rights
Here's what I think the 'real' spin should be:
WORKERS AT DIFFERENT COMPANIES PAID DIFFERENTLY
Film at eleven.
Here will be an old abusing of God's patience and the king's English.
$268k is the combined invoice for the employee; $136k is the actual compensation of the GS14 or GS15 in question. Government contractor employees, unlike government employees, often work unpaid overtime for the government. That $268k may actually be 2500 hours instead of the 2080 hours normal to a 40 hour work week over a year.
There's a reason why they're paid more: contractors serve at the whim of the government and can be fired at anytime. While they may be paid more, they lack the job security and numerous benefits that Federal employees receive. They can jettisoned at any time at the government's pleasure. I would also add that Federal employees are near impossible to fire. The paperwork to get rid of an underperforming worker is so complex and onerous that many departments simply transfer them or "promote them out" to get rid of ineffective employees. In fact, I think it would be easier to simply dissolve an entire department than to fire an individual employee. As one friend joked, "You'd have to kill someone get fired, and even then, it would depend on the circumstances." So yes, you're paying a premium for disposable labor.
I'm surprised it's only a factor of 2.
This has been a racket perpetrated since at least the Reagan administration, if not the beginning of time. Politicians make a big noise about how they are cutting government spending and gaining the efficiencies of the private market, by replacing civil servants with contractors. The contractors are much more expensive, which makes the companies hiring them a lot of money, some of which they use to lobby the politicians for more outsourcing. Politicians get campaign contributions, beltway bandits get rich, but somehow the government doesn't get more efficient.
(Yes, there is a little bit of truth in the quick hiring and firing abilities of private contractors. It is true that it is hard to fire people from the government - but you can RIF them, if their program goes away. In practice, however, people rarely get fired or let go from either side of the divide, at least at the professional level. They get transferred around, but rarely laid off, and almost never fired. And, note well, civil servants are forbidden to directly lobby for their programs; contractors aren't. It can make a difference, and it makes it hard to perform mass layoffs of contractors.)
The amount of administrative red tape to hire a "permanent" employee is immense. In government, this is tantamount to a lifetime offer of employment, so it is not to be undertaken lightly. Management needs to be sure there is a lifetime of work for the position and the candidate has to be a good long-term investment risk.
With a lot less red tape, it is possible to scrape some budget money together THIS YEAR to hire a contractor. And it's not all that hard to get this year's money carried over to next year. And if by some chance the budget is cut, there is no collective bargaining crisis to determine who bumps who and which unfortunate soul loses a game of musical chairs.
Hiring contractors is the workaround to almost any administrative obstacle. Government has MANY hiring policies (affirmative action for example). Outsourcers can do a better job of ignoring (or pretending to comply with) just about any HR policy mandate. Hypothetically, you can verbally tell an outsourcer that you want an attractive blonde woman for a certain job, and they will present a list of candidates, all of whom happen to be cute blondes. The only people who will even know about the opportunity are those who meet the undocumented pre-screening requirements. I'm exaggerating with the specifics of my example, but this kind of thing happens all the time.
Kickbacks are part of the game as well. The outsourcing machine has a lot of moving parts, lubricated with an abundance of grease.
i suspect the same set of concerns applies to a lot of outsourced commercial IT.
But there's a lot of contracting overhead between the agency and the actual guy/gal doing the work. Add to that the substantial overhead costs for compliance to all the Federal Acquisition Regulations (FARs). Within the Government, there are major problems attracting -and retaining- talent; the Government trains them and if they're good, they go get much better paying/much better working conditions jobs in industry. The truly bad employees do get weeded out. So what you're left with in the Government IT ranks is generally a lot of mediocre people for whom the job security of a Civil Service job is their primary benefit. And the Government fails to invest in training, etc. So their primary job skill is supervising contractors. I don't envy Govt IT workers, but I'm not sure under the current system they would be able to execute without substantial contractor support.
I wonder if the salary comparisons were all in costs of the federal employee - which I doubt because then you're at at a GS11/12 step 5 or so position for the quoted numbers, assuming a 1.5x salary multiplier to account for benefits. A 14 step 9 in DC already makes 133K per the salary table - so an all in cost would be around 200K minimum.
What contractors bring is the ability to change the staffing levels quickly. Unlike federal employees, who after a year, are very hard to let go; a contractor can be terminated rather quickly for virtually any reason. So, the life cycle cost is probably much less than for an employee.
The contractor isn't getting all than money either - as much as 20 - 30% is going to the company he or she works for to cover costs and profit. I know a lot of contractors that would gladly convert to federal positions because of the security and benefits but can't - the positions just aren't there. Unless Congress approves and funds positions an agency can't hire someone - even if both sides would love to do that. So, hiring contractor is a way to get needed skills without having federal positions. It's not like government agencies have tons of funded vacant positions in IT that they can't fill.
My point is a simple salary comparison doesn't tell the whole story.
I'm a consultant - I convert gibberish into cash-flow.
Whoever wrote this article must not recall the major downsizing that occurred in many U.S. IT shops between 99-01. A large number of permanent employees were let go in that period. That resulted in a number of problems including decreased morale and the outflow of tons of knowledge - knowledge that had been built up in a single worker that management figured would never leave. Because of those problems, a number of changes were made. One of those changes was to keep, as permanent workers, a small set of skilled people that would necessary even in times when IT demand was limited. In times of increased demand, the shops would ramp up with temporary workers. While, this philosophy comes with its own set of problems, I largely agree with its intent and results.
The need for this is even greater in government shops. Remember, in many government sectors, when a person is permanent they really are permanent. There are contractural obligations that prevent the government from letting people under all but the most extremem circumstances. Downsizing permanent IT employees to cut $$ out of the budget just isn't possible. In today's world, where government needs to be able to scale up and down frequently, the best option is to do so with temporary employees.
Are temporary employees more expensive? Sure. You have to pay a premium to someone to have the luxury of letting them go at any time for any reason - especially when doing so isn't just a possiblity it's a guaranty. In addition, temporary employees often bring specific skills into the shop that you need for a limited time, but wouldn't want to maintain permanently. These skills cost $$.
The cost of IT outsourcing is likely the least of most government's problems...
That's what I get for not RTFA completely.
We don't have to pay for contractors' insurance and benefits (and probably neither do the contractors, who might farm out some work to their own contractors). At this rate, whether public or private, the retirement plans for *actual* workers look more and more like the Soylent Green screen play. Or maybe Mad Max.
In other news, that steak dinner that cost me 20 bucks at a restaurant could have been made at home for a Lincoln.
Confucius say, "Find worm in apple - bad. Find half a worm - worse."
Since, the 'Pay' is only about half of a federal employees cost. So it's a wash, now bring in the fact that they likely only need the contractor for a limited time, and now its a good deal.
(If at first you don't succeed, do it different next time!)
A story on this point:
A friend of mine consults for DC public schools. Yes he does make quite a bit but it isn't actually a story about him, he at least delivers for his money.
So they want him to write a bigass database processing script. It will get fed data from a bunch of sources, including a web interface for users, and have to process it and store it in a Quickbase (Intuit's online database service). No problem, this is what he does best. So they've laid out for him what they require, he lays out for them what he'll require in terms of time and materials. Only material is a server. He tells them he'll need a simple Linux server, doesn't have to be all that powerful nor does it need to be dedicated, just some place the script and web server to live. He figures this is an easy request.
Turns out not. They don't do their own IT, they outsource it all. So they say they have to go get approval for the funds. This surprises him since they are paying him like 5 figures for all the development work, so what should a server matter? Well turns out the company they outsource IT to charges them $3000/month for a basic Linux VM. I'm talking like 20GB disk space, 1 virtual CPU, 1GB RAM.
He was just floored.
AC... This was me, updated Firefox logged me out!
...in the study. I work in government IT, and figuring the cost of benefits is standard procedure when we're working up a budget, and trivially simple. Here's a link to the actual study
You're right about bringing in consultants for short-term projects, of course it makes more sense than hiring.
Never let a lack of data get in the way of a good rant.
Is that SALARY or TOTAL COST?
I bet they're comparing contractor total cost to government employee salary.
Oh, look, there it is:
Another non-functioning site was "uncertainty.microsoft.com."
The purpose of that site was not known.
Conveniently, we have plenty of shrill talking heads telling us that the private sector is always more efficient. That should be a viable substitute for so called "empirical evidence".
Not really. The article admits that skill levels are not factored into the comparison. The article mentions that the outside contractors may possess superior skill levels and be better trained and that there may be savings related to having more capable people running and implementing a project. I'm not claiming this is necessarily the case, I'm just saying the it is premature to make claims as to whether money is being well spent or wasted. I know some very highly skilled people who work in a government IT job, however I've also met some that were more comparable to DMV workers.
Perhaps I missed it but its also not clear if the comparison is strictly based on wages vs hourly billing rates or whether other employee benefits are also factored in, social security contributions, insurance , vacation, retirement contributions (if not a full pension), etc.
I am a soldier currently deployed to Iraq in support of the current drawdown. I manage a videoteleconferencing suite that was supposed to be run by civilian contractors, but out of the two that worked the shop, one did his time and left on time, and the other got a better job and left early. We were sent a replacement. I had to train this person up, but then they were moved to another base to cover down on the contracting companies other commitments. My soldier and I now run the shop in place of the civilians that were there before. My soldier has learned faster and performed better than the civilian I trained and makes about 1/5th of the pay that contractor made and only gets to go home for 15 days once during the deployment. The contractor gets paid leave every three months and left us somewhat... disappointed when it came to performance. Soldiers can do what contractors can, and if left to focus on that job specifically, we may even outperform as we have invested a bit more into the outcome. Some contractors we really do need, but some are getting heavily overpaid for something a soldier could easily learn how to do. I think the system needs an overhaul.
Government or Private Sector contracting, it is all the same. A contractor is brought in to complete a specifc task and are kicked out when they are no longer needed. If you instead hired an employee, you would have to find them a new position once the project that you hired them for is complete. You might have to cross train them for a new position. Also, it is not easy to fire an employee unless they royally screw up and sometimes not even then. But with a contractor, you can get them replaced or just cancel the contract.
Another benifit of having contractors has to do with PR. When have you ever heard about a company or government agency get bad publicity for getting rid of a bunch of contractors? But if you have to layoff employees, it makes the news. Canceling/ending a contract just does not have the same negitive stigma that layoff do eventhough in the end, depending on the contracting company, the same number of people could be unemployeed.
I have spent some time working on government contracts where I was one of many contractors sitting at the client location full time. Part of the reason that particular agency used contractors was because their HR process was very difficult to deal with. It was very hard to hire new full time employees and it was almost impossible to fire anyone. The director knew he was paying more for the contractors, but he also knew he could quickly alter his workforce if his budget changed.
As far as costs go, the full time employees were probably paid 10-15% or so less than the contractors (in terms of what the contractors took home), but they had much better benefits (not to mention job security). Most of the contractors worked for consulting companies, and they were the ones raking in the cash, not the actual contractors. In fact the agency I worked for forced everyone to go through a middle-man company if you wanted to do any work for them. The middle-man took from 10 to 20% off the top just for time entry and billing.
Don't forget that many government agencies have no real incentive to save money. If an agency improves their efficiency and slashes the budget by 10 million dollars, it just means they get less money the next year. It is why you sometimes hear about agencies going crazy at the end of the fiscal year and using up their remaining budget to buy whatever they can, regardless of need, so they can show they spent their allocated monies.
Me either. So much for accountability...
I've been working for the government pretty much since I joined the Marines in '91, and I can't name 1 government employee who was fired in that time. In fact, we had a male employee who physically assaulted one of the women in our office enough to put her in the hospital and him and jail, and when he returned they had to accommodate him with a work area because he had a restraining order!
No wonder the toilet seats costs so much, someone making double can't sit on a regular old toilet seat! They need something that will stimulate the mind/bunghole to keep them well paid and all internals functioning correctly!
Isn't this standard? You pay contractors more than you pay your internal workers. You need to, because you don't pay for any of the contractor's benefits. And you don't pay any of the overhead of that contractor's employers. The number I've seen thrown around is the total cost of employing someone is twice their actual pay rate.
I don't see why they deserve more than the contractor gets paid in PURE PROFIT with no costs of their own. If the tax payers knew, there would be a revolt. We can only assume that since these corporations have NSA contracts, that any whistle blower will be quickly "disappeared".
Who do you think writes the proposals to win the contracts? Who do you think does all the marketing? A lot of contract awards hinge on the reputation of the contracting companies. Of course they are going to take their cut even it they sub the work out, They are the ones that did the initial work to win the contract, they are the ones that have to maintain the contact and it is their reputation that is on the line not their subcontractors. If you are awarding a contract, who would you award it to, a company that you have never heard of before or a large firm that you have had good experience with? Even on goverment contracts that are considered "Small business Set Asides", the small business will prime the contract with one or more large contractors backing them as subcontractors.
Lots of important details are left out of TFA:
I'm a cost accountant in my day job and a good cost analysis is not a simple salary comparison.
>The POGO researchers say that the federal government itself does not know how much money overall it saves or wastes with its sourcing decisions and has no >system for doing so
We all knew this from the get go, there is absoluteley no way they will get /create the neccesary appplication or system to give them that data either, as it would be a little too detailed for the liking of that government. If you knew how much your government was wasting of your tax payer dollars when all they had to do was be a little smarter shopper, people would just stop paying their taxes.
Exactly. Paying contractors 1.5-2x the equivalent salaried staffer is probably breaking even or better for most organisations. The overheads of employing someone are far higher than most employees realise: providing a suitable place to work, all equipment and software required for the job, paid vacation and sick time, whatever pension/health cover/benefits go with the territory, training expenses, people to handle management and administrative overheads... A freelancer has to eat all of that before they even start making any useful money.
There are a lot of advantages to being a freelancer in IT, if you are willing and able to wear all the extra hats that go with it as well as getting the day job done. But when people have a dig at me because I get "tax breaks" here in the UK, I tend to laugh, and ask how they'd feel if they only got paid for 2/3 of their working hours, didn't get paid at all for any non-working hours, had to spend perhaps 20% of the income they do get on overheads of one kind or another, etc. Usually they've got bored and conceded defeat before I run out of things I have to do personally that their employer does for them. :-)
If you disagree, post your argument. (-1, Overrated) isn't your personal censorship tool for views you don't like.
IT contractors have a lot of over head and levels of companies that are some times very far from the job leading to people not knowing what is going on and makeing it hard to get stuff done at times or leading to people being on site with no work to do as other parts of the contract are at a different page.
Some contractors also rotate people in and out so you have lot's of people who don't know how the site they are on works and what needs they have.
They are better off going in house and maybe even having a Gov IT department that does IT work for all of GOV (other then small stuff that each department needs on there own).
Is there a web site, or publication that one could view? Let see for myself...
I believe typical professional service consultancies aim for billing rates that are 2.8 to 3.3 times the employees salary to run profit margins of roughly 15%. And I would bet any things that contractors are WAY more efficient than government employees, based on my experience.
Exactly. The contractor gets paid twice as much, not the employees. In fact, profit motivations of the contractor put pressure on them to pay their employees as little as possible, and since most contracts are written in such a way as to absolve the contractor of responsibility if projects fail, the easiest way to maximize profit is to hire unqualified staff.
This is my firsthand experience. I was government contractor for 10 years. They hired me because I wasn't very qualified to write software (this was on a mission-critical aviation logistics system), but, lucky them, I worked hard and became one of their star programmers. I was the second highest-paid person on staff with our contractor in an organization of over 100 people. I found out from a leaked document that my company was making $150k a year off me after paying my salary. Since most employees were making less than half my salary, the contractor was pulling in about $15 to $20 million a year on our contract since the only overhead they had was covering our health insurance and 401ks (offices, computers, furniture, and other supplies were all provided by the government). That's $15 to $20 million a year to serve as a Human Resource department for 100 employees.
When the contract came up for recompete, the contractor used extremely heavy-handed tactics to try and force me to sign an exclusivity agreement with them, which was pointless in a right to work state. I objected on the grounds that the company provided no added value to the contract and that the employees, most of whom were just warming chairs, would get picked up by whoever won the contract (saw this happen many times over the years). It was a principle thing and I didn't appreciate being bullied. When they continued to pressure me (a manager actually blocked the door to prevent me from leaving without signing the document), I produced the leaked document and told them I would quit without a 10% raise. They let me go without a second thought.
Since I left, the software project I had spent the previous three years working on has completely failed without there being anyone qualified to work on it, but the contractor doesn't care because they get paid no matter what and it's cheaper to hire people with zero programming experience and pay them diddlysquat to struggle through their job than it is to reduce your profits and hire people who are educated software development. I'm not bitter about being let go, but I am bitter about the project failure. I was really dedicated to my job and felt I was making a difference in the organization, but the contractor, who honestly didn't really know anything about my job or the project I was working on (Government employees managed me directly), could only see the dollar signs.
I assure you, this is not about placing "blame." This is all about giving government employees the ability to put checkmarks next to items on their todo list. The department where I worked hired a contractor to build a LIMS for them so they could claim progress on a project the higher-ups were demanding. The government manager who started the project took credit for making progress on it after he got promoted elsewhere, the contractor got $15 million for producing a single webpage with a a phone number field that auto-focused to the next input after you filled it in, and the new government manager killed the project and took credit for eliminating waste.
"You need to go get rid of 250,000 contractors in the Defense Department, where you can really pick up some small change." ~ Former Republican Senator Alan Simpson, February 16, 2011 on balancing the budget (source)
"The problem with Socialism is Socialism, the problem with Capitalism is Capitalists," as William F. Buckley once said. Government contracting combines the worst elements of socialism and capitalism.
i ~ Celebrating Science, Cyberspace, Speculation
Why hasn't anyone asked about benefits yet?
I have read every single comment on this board, and no one seems to be asking about if they factored in benefits or not.
I will take this to assume they have not, and merit my above average cleverness for the discovery. I hereby declare, by right of my ideology, that this article is fraudulent.
Most of them have no idea, and it's only something you learn when spending enough time in the region to truly see how sickening it is.
I interviewed with a few "contracting" companies here and there and demanded even half of what I get in full time positions of *private* companies (that may do government contracts), and they looked at me like I was crazy.
That said, the pay is usually pretty damn good.
Make the process of requirements & biding 100% open & accessible to public scrutiny for a defined time period.
Hold any party accountable (public or private) for not delivering agreed upon results.
End of story
Which is why the study looks at total compensation instead of just salaries:
I Browse at +4 Flamebait
Open Source Sysadmin
When i deployed to Iraq, the contractors there made 140K a year. Being military i make less than 40 to do the same work for the entire year. Something tells me we need to trim the fat starting with contractors that make retarded amounts of money....
First, it would be increasing the "size" of government, even if it lowered its "cost" and the R's still wouldn't let that happen. Second, they tend to be liberals...
That is all.
"As a fed contractor, I never put in more than 40 hours a week. That is what we had in the budget, and to do more than that would have resulted in issues."
There was also a strict 40-hour limit for me as a direct federal employee (summer internship; I was classified as GS).
Moreover, they were also strict about it being 8 hours a day, 5 days a week. This meant that I couldn't work longer when I was having a good day & work less when I was having a bad day, which would have gotten more out of the same 40 hours.
I listen to both RIAA and non-RIAA stuff if I like the music, tangential business/politics nonwithstanding.
Back in 1965-66 a consultant talked with some college students, including me, about consulting. One thing he mentioned was a rule of thumb for computing a consulting rate.
For a middle-to-long-term consult the rule of thumb was one percent of an annual salary per day. This comes out to the billing rate being 2.5x the salary-only cost (assuming a 40 hour work week).
The multiplier covers a lot of stuff. Notable items include: The work done by the consulting firm (including sales, billing, carrying receivables, government forms, and non-billable consultant time) and their profit margin. Benefits for the consultant - both ordinary benefits such as medical and the company's part of social security and replacement of retention benefits such as bonuses and stock options. Paying the consultant enough that he can absorb "dead spots" between contracts, risk of them being long, and other fallout from the company's lack of interest in retaining him past a project's end. And a premium for the actual work because he's expected to be more expert in the field than those who take salaried positions rather than risk and succeed in the consulting market.
Many of these costs have equivalents that actually are paid for salaried personnel, but don't show up in the salary itself. For instance: Recruiting costs correspond to the consulting firm sales costs PLUS possibly the firm's recruiting costs to get the consultant onboard in the first place, but because consultants are onboard for less time the sales costs occur more often.
Right now consulting prices are depressed, due to a flood of laid-off hi-tech workers taking consulting positions at low rates as a stop-loss. But it looks to me like the government is still getting a bargain.
Bantam Dominique roosters crow a four-note song. Once you've heard it as "Happy BIRTHday" you can't NOT hear it that way
Typically organizations will bring in a consultant when they have a short-term problem that they want to solve, or just need extra hands for a big project. Now even though they're paying their contractors "twice" what they pay their employees, they are only getting money. Working as a contractor means you don't get health insurance plans, retirement, etc. Additionally, you're only bringing these folks in for (hopefully) a limited period of time, after which time they move on. So really in the end, it's pretty close to being the same money-wise. Maybe this "watchdog" group should watch something meaningful. Everyone knows contractors make a bunch of money, but there's more to it than just the money.
that the government is being compared against.
It certainly isn't private enterprise.
I know that the uproar is all about this waste (and it is) being paid for by JQ's taxes...but JQ pays for the waste in industry through higher prices.
I know goods and services are voluntary, taxes are not, all that... but seriously, I am looking for the human enterprise that is efficient (or even equitable) and I am not coming up with much.
I am very small, utmostly microscopic.
Government IT contract workers make obscene money. I've seen horribly unqualified people taking network/system admin jobs in the middle east for $90k, $150k, $250k for a 9-12 month contract. The first $70k(ish?) is tax free. Its insane. Most of them sit in little NOCs and watch lights blink all day.
Once you pay contractor, there is no unknown deferred liabilities that would likely double or triple FTE cost if accounted for.
It is EXTREMELY expensive to do work for the Federal Government - first, most these high-paying jobs require a security clearance, which costs (depending on the level of clearance) ~$25,000 to get, and $15,000 per year to maintain. Then, when you are flying for a government project, you ALWAYS have to purchase fully refundable tickets, which means you pay 2x-4x the price you pay anywhere else - because the project you're working on will ALWAYS get rescheduled at the last moment.
Government is hopelessly dysfunctional, every project takes 2-10x longer than it should... yet if it weren't for the contractors, nothing would get done. At least a contractor can leave agency A, and go to agency B while A tries to figure out what the heck is going on.
Joel
Good security is based upon reality and common sense. Common sense is a function of having common knowledge.
I just retired from nearly 30 years at Treasury. I can't count the number of employees I've seen fired.
Perhaps a dozen were led out in handcuffs for violating disclosure or other laws.
I've seen behavior infractions (fisticuffs, actually) result in a "both of you go home and we'll sort it out later", with the conclusion that one voluntarily resigned and the other was fired.
My agency was the IRS and IRS employees get ZERO slack on filing their tax returns late; 100s of employees have been fired for that reason since the Revenue Reconciliation act of 1998.
I've seen student aides arrested and fired for stealing.
I've seen at least a half-dozen fired for fully-documented poor job performance, a process that takes time, to be sure, but can be done.
I've seen two fired for downloading porn. I saw one (a Special Agent, no less, who apparently thought his off-network investigative workstation was immune to audit) who was allowed to resign before he was arrested two weeks later for spending all day at work and leaving his computer running all night downloading kiddie porn.
Hell, I even saw a *Division Chief* fired and criminally prosecuted for falsifying less than $1000 in relocation expenses on a travel voucher!
Yes, tenured civilians in government service get fired. Maybe they don't put as much emphasis on personal accountability at whatever agencies you worked for, but I know that at the IRS, employees got fired.
As an aside, relative to a circumstance in the GP post - I've known 7 employees who got caught having sex at work. 2 got fired. 2 got a 3-day suspension with loss of pay. But 3 got kicked upstairs/promoted out of the place. (The number is odd because one of the caught employees was screwing a contract security guard. She got promoted; he got fired.) I never really understood the rules surrounding that particular infraction.
Contractors can be useful in some situations. For example if an agency is upgrading a database system, they need people to migrate the data, test the new system and train the db admins and users. For a six month project additional costs of using contract labour is justifier. If we limit contractors to one year with a given agency they will be used on these kinds of projects and not just be overpaid perma-temps.
Most businesses go out of business in the first two years. Eventually, most businesses go out of business period.
From a statistical point of view, comparing the costs in general of doing something that will eventually end (private industry) vs doing something that isn't supposed to end (government) seems like comparing Apples and Oracles.
2X the internal staff costs. Why not. As an outside vendor, I have to pay group insurance, pension benefits, and a whole slew of fees, in addition to the work of book-keeping and our admin salaries. If we make 10%-15%, per placement, we are doing well. We make some growth with volume, but then we have to pay for extra courses to keep our employees from jumping ship.
Leslie Satenstein Montreal Quebec Canada
So the first two points are out. The other three are still valid and there are probably more factors than that. Wages and benefits are still just paid directly to the employee. The company incurs other costs per employee.
2x the cost of an employee sounds about right.
Load factor on that employee is about 2 anyhow, more if you include ineffeciencies (idle time between projects).
It's a wash.
"Reality is that which, when you stop believing in it, doesn't go away." - Philip K. Dick
I find this surprising. While I never have worked for the US government, from my experience it is much much more than that.
All consultants/contractors see government as a feedbag and will rip them off as much as possible. Its a big payday. This is hardly limited to IT workers, though they probably make up a large percentage of the total.
BTW the female told me that Open VMS is not UNIX
OpenVMS isn't UNIX, though many UNIX commands have been ported to it. What is OpenVMS? Which is better, OpenVMS or UNIX?
OpenVMS was designed entirely within HP and specifically within the former Digital Equipment Corporation (DIGITAL). ...It was once certainly true that OpenVMS and UNIX were quite different. In more recent times, there are tools and C APIs on OpenVMS that directly provide or that easily support porting UNIX programs and commands
its just an application that runs on a Microsoft Server!
I assume they were running it in a VAX hardware emulator on a Microsoft Server. Although OpenVMS does natively support Intel Itanium-based servers, so it's possible that a Microsoft Server with the Itanium chipset could be repurposed to run OpenVMS.
I only know what I see. This is what I see: you were ill-informed and ended up looking like a moron.