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Federal Contractors Are $600 Screwdrivers
ideonexus writes "Last month an article appeared on Slashdot about how the government pays IT contractors twice what it pays its own workers. Missing from the article was how much the IT contractor pays its own workers. After working for a federal contractor for 10 years, a document accidentally leaked to employees by the contractor illustrated the incredible disparity between what the contractor was paying us and what they were charging the government. Like most contracts according to the GAO, the government provided our offices, utilities, computers, and training, leaving our salaries as the only overhead to the IT contractor, giving them an incredible incentive to keep them as low as possible to maximize profits. When the top 100 defense contractors cost taxpayers $306 billion, eliminating the federal contractor middle-man seems like an obvious place to start the austerity measures."
Every time a worker leaves the Federal Payroll to become a private-sector Federal Contractor, the President and Congress can claim to be reducing the size of government. They publicize the fact that âoe1990 total government employment⦠was 5.23 million,â which fell to âoe2.84 million in 2009.â
There you go, here's what happens when you voters keep asking for small government. That's why I've said time and time again, the problem is not quantity. It's quality. It's not the quantity of Government that matters so much as the quality.
You can have these jokers reducing the size of Government to near zero, but if everything is done by such contractors, it makes no difference or it's even worse.
Private Corporations don't even have to pretend to listen to the voters. The Government does, hence this "small government initiative".
In what world are outsourced IT workers in unions? Talk about putting the blinders on and diverting the issue. This was supposed to be that privatized haven the fiscal right is asking for, turns out the reality is just as crappy as what they complain about.
You're not supposed to reveal that "privatization" is a scam...that's "top secret".
Orwell: "In a Time of Universal Deceit, telling the Truth is a Revolutionary Act"
And yet, there has to be a middle ground. If you give the employer too much power, they take complete advantage of it. If you give the Unions too much power, you can't keep people accountable even for basic tasks and efficiency.
We have to stop saying that any limits on union power mean a return to sweatshops, because that's just as wrong as saying that returning to no unions will fix all of our economic problems.
Not true. I worked for the USG for a few years and in that time my boss fired 2 of the 15 people reporting to him (fired, not laid off).
The real issue is that people think that and then never check how the process works.
Dude here punched his boss in the face and they were unable to fire him
Something tells me there's more to this story...
Unless you're a rockstar, compensation is usually a "take it or leave it" proposition. Especially so in an economy where people are desperate for jobs and will take anything to put food on the table.
Where does the school board find them and why do they keep sending them to ME?
Not every kind of worker is the same. You're an educated person, but a miner, truck driver, or some other low-end worker usually can't negotiate any kind of benefits or anything. Either because no one will hear them, for fear of being fired (or flagged...), or simply because they're too... "uneducated" to know what their rights are.
A company is always bigger than a single person. And a company can afford a lawyer (or an army of them) to screw you, while you usually don't have resources to do that. That's why unions exist.
But unions need regulations, just like companies need regulations. What folks here don't seem to understand is that any "unregulated" area WILL get exploited, and the bigger guy always wins. That's the danger, not "government intrusion".
"You don't actually think they spend $20,000.00 on a hammer, $30,000.00 on a toilet seat do you?" - Independence Day, 1996
If the only way you can accept an assertion is by faith, then you are conceding that it can't be taken on its own merits
This whole concept of contracting is like outsourcing, looks good on paper as it saves costs. Then politicos can brag how they are reducing costs because there are less govt workers (though there are a zillion more contractors), i.e. NASA or number of troops overseas (much of those positions replaced by contractors). Only advantage of contractor is it is easier to fire someone than a civil servant. Don't think unions are all powerful and all members have juicy benefit plans and pensions (they don't). Now people like to say how much better contractors are at saving money (uhmm, J35 fighter has doubled cost in past five years and its contractors have a lot of political power like lobbyists and work less regulation than before so don't blame govt people. Oh, did you know the J-35 began as CALF, Common Affordable Lightweight Fighter?).
Others say contractors are good because it is private enterprise, you gotta work hard to make it successful unlike govt which don't have to make profits or deal with customers. However, pretty much all federal contractors have only one customer, the federal government so they are government. I see almost all these companies could never compete in the "real world." And those that do work in the real world are highly dependent on government contracts. Which I think is why federal spending has skyrocketed because it is the only big thing in town, as all other industries have collapsed.
There was a time when becoming a police officer or working some other govt position was considered low pay (especially NASA civil service in the 80s). Right now it looks really good because all other middle class jobs have collapsed. But even for them salaries and bennies are dubious.
mfwright@batnet.com
Been working Federal IT at various agencies for 20 years and the story is the same today as it was twenty years ago. You can't reach high quality/niche programmers on the Federal pay scale in the DC area. Scoff if you want, but we just had a top notch contractor successfully apply and get an offer for Federal work, only to turn down $137K plus bens. Great candidate, couldn't reach his rate. I've seen this time and time again.
That same contractor bills out near $300K per annum.
The system is skewed towards the contracting companies. Keeping Federal IT pay rates down below the industry average for our area guarantees big pay days for the contracting companies. These companies were supposed to be a panacea for the inefficient Federal worker. All that they have become is YAFE (yet another Federal entitlement).
And yes, some of the contractors have been in the same position for DECADES. Same lifetime entitlement.
I run a small business where we have contractors. I have been a government contractor in the past, but my company hasn't done any government work since we got started a year ago. Our employees know their billing rates vs what they're actually paid and haven't complained.
Our top rate is $120/hr, which would work out to be 240k/year if the person worked 40 hrs a week for 50 weeks (2 weeks pto) .. 2000 hrs.
But, we don't always have our contractors out full time. Sometimes they're on the bench (working on internal projects).. We have to cover that cost, or we have to lay them off. Essentially we're building up a bank account so that we can afford to keep employees that aren't working for the client at the moment. That plus the other overheads we have really eat into the company profit.
So.. even if we're paying $110k/year to the guy we're billing at $120/hr, it can be a close thing.
What benefits do unionized federal employees received that non-unionized do not? Most federal employees are not in unions. Federal employees can not be compelled to join a union. Federal unions can’t advocate striking or actually go on strike. According to the U.S. Federal Code, federal employees are not allowed to strike. It is deemed an unfair labor practice which can result in the employment termination and the revoking of the union’s status as a recognized labor organization. Recall how all the air traffic controllers were summarily fired and replaced thirty years ago.
And you're basing this on what evidence? I see no figures on this.
The fact is, people are pocketing a significant portion of government contract payments, and it's not the people doing the actual work. It's the guy in the suit who "manages" the teams, and says "You let ME worry about that" to everything while driving a fucking $200,000 Mercedes.
The unions and payroll have absolutely nothing to do with the inflated cost of government contracting, they're just an easy target recently vilified by the far right and other class-warfare commencing scumbag motherfuckers. So go join your party on the right, tea bagger.
For what it's worth, most union dues/benefits are paid for by the employee themselves through dues and fees. It is a rare occurrence that an employer takes care of all the costs.
Pensions are a stupid employment incentive all around, but it's not the unions' faults. Keep paying people's salary even after they retire? Yeah, that's a marvelous idea for the bottom line.
If the only way you can accept an assertion is by faith, then you are conceding that it can't be taken on its own merits
I'm sorry, but I just have to call BS on that claim. A guy gets punched in the face by a contractor, you call the police, not HR. You call management to get them banned from the building. If the contract says "you have to keep him paid until it is resolved" then fine. But just moving the offender to another department doesn't hold water even in fantasy land.
You'll have to cite references before I begin to believe that.
If you remember the stories about the $600 hammers, and you actually read the details, what you find out is that the hammer cost $10, and the contracting overhead cost about $500. That includes all the rules for government procurement, Federal Acquisition Regulation compliance, EEOE, small and woman/minority owned business requirements, limits on subcontracting, requirements for exhaustive financial/time accounting, etc, etc, etc.
Most of those overhead requirements are placed for good reasons, either for social policies (e.g. small business/minority business) or for fiscal or technical accountability (e.g. time accounting, facility security, etc.) But when you add them all up, you have a lot of overhead for doing government contracting that you don't have in business. It's part of the reason why government is inherently inefficient.
So the answer is outlawing unions and having all workers negotiate their own contract terms?
No, but there should be a middle ground.
Unions are good, but this whole "protect every employee at any cost" thing has to go. Outlawing the union is going way too far in the other direction, but there has to be a better solution.
Personally, I think that these claims that people are impossible to fire are largely made up. Maybe people are difficult to fire, but impossible? As for punching his boss in the face, I certainly don't have all the details (or any of them, really), but I'll bet there's more to that story. Certainly, if the guy punched his boss for no reason, he'd be arrested for assault and battery and I'm guessing he'd be easy to fire, union or not.
Labor unions have had policies put in place by which government employees are impossible to fire if you don't fire them within one year.
Uh, the civil service protections of federal workers have nothing to do with unions. They started with the Pendleton Civil Service Reform Act of 1883, which was motivated by various scandals around "the spoils system" and the shooting of President James Garfield by an office seeker.
When I worked for the DOD the only people I knew in unions were government contractors (many military bases and NASA installations had union staff and I don't believe that that has changed). I came to have a great respect for the Teamsters, who negotiated very hard and worked very hard.
I was a government IT worker in the U.S. Treasury for decades. Before I retired, contractors were being brought in to replace workers in my position. One guy comes to us fresh from a front-line support position at, believe it or not, Best Buy. After a long while, he turned out to be not so bad, trainable, and useful. It took about a year to get him up to speed.
At some point, he decided he trusted me enough to talk about pay. I was shocked. Why should he treat salaries as some sort of secret? As a public employee, my pay is known to anyone who wants to look it up. I showed him how to look up what anyone in the organization made, showed him my salary, and couldn't imagine why anyone would think of this stuff as proprietary information.
In his case, though, I can see why his employer had gone to great pains to create the impression that salaries were some kind of secret. He was doing the same work as a first-tier support employee but was being paid roughly one-fourth as much money. The contract to his employer was sufficient to support employees like me (the agency was paying roughly twice the annual salary of a senior computer specialist for each contractor who reported to a job site) yet the contractor simply took the contract, took a cut, and subcontracted the rest out. The subcontractor took a cut and subcontracted the rest out. The next level subcontractor took a cut and hired an out-of-work Best Buy leftover to report to the job for a pitifully small percentage of the original contract payment.
It was a multi-level sham. I was annoyed at the waste. The contract guy was annoyed that he wasn't making any more money. Overall, contracting for these positions was a completely stupid thing to do that only accomplished just one thing - slicing off shares of pure profit to a few middlemen. Ultimately, the workers on the ground and their customers got screwed and the U.S. government got a *very* poor return for the money spent.
Naturally, once the guy was fully trained and providing real value to the organization, budget cuts forced cancellation of the support contract and he was gone in a flash. All that training time, all that productivity diverted from helping customers to bringing him up to speed was, in an instant, flushed down the toilet.
I'm sure it's not always the case, but contracting for services like this by the government is, in every case where I've gotten a close look, a completely stupid thing to do.
Essentially, there seems to be a debate regarding government employees vs contractors (at 2x the rate).
But the truth of the matter is those contractors never see that double income. All the talk of how 2x let's you pay for your own benefits is hogwash.
Here is how the system works for the most part. Rather than having government employees hired for a task which is likely to be short-term (1-5 years). The government contracts it out. Instead of hiring a $50K-$75K employee they pay a major contractor (Northrup, Lockheed, L3, Accenture, etc, etc, etc) $100-$150K to fill that position.
These companies then hire from vendors adding an additional tier to the puzzle. (If the contractor is a foriegnor there may be a third party involved in sponsoring their visa.) So of that $100K-$150K paid by .gov for that contractor. The contractor might see $40K-$75K. All the rest is eaten up by middle-men.
But it doesn't stop there. The way the contract system works, it is not uncommon for one of these contracting firms to mass hire dozens of people toward the end of a fiscal year. They do this so they can use up (bill the government) for every dollar the contract allows for. Upon the end of the fiscal year many of those contractors will be let go. No severance. Nothing.
Essentially, the contract system allows for an at-will hire and fire. Which in an economy that has 9%-16% unemployment becomes a gross abuse. You literally watch people hired for two weeks only to be let go. Positions are advertised as part of a long-term contract. New hires are often misled into thinking there is an element of job security. Some even leave jobs for these positions only to reach a very rude awakening.
Seriously, Unions need to quit wasting their $$$ being campaign fundraisers and get on the ball with what unions were all about. Defense of the worker.
In the current market, a potential new hire has little to no ability to negotiate on contract. And if misled, lied to, etc - has even less recourse.
There needs to be a fraud law that mandates whether a position is long-term (min. 1 year) or merely short term. If fraudulently mis-portrayed, than the hiring firm would be obligated to pay the employee for one year of time.
This would help end the abuse of contractors that is rampant in government work.
And when they talk about how much Federal employees make vs Contractors they never factor in that a Contractor doesn't get any benefits, any life insurance, any health insurance, or anything.
Except that they did factor that in.
Because the contractor billing rates published by GSA include not only salaries but also other costs including benefits contractors provide their employees, POGO added OPM’s 36.25 percent benefit rate to federal employee salaries
http://www.pogo.org/pogo-files/reports/contract-oversight/bad-business/co-gp-20110913.html#Summary%20of%20Methodology
upon the advice of my lawyer, i have no sig at this time
Actually, not really. While there is plenty of bullshit, the government requires a certain portion of the work to go to small businesses. So there is a good chance that a small business will get the work.
However, the small businesses that do get the work, tend to be partnered with larger firms, who end up doing all the paperwork to help the small business win the contract. I know, I work for one of those monstrous companies and we partner with, and supply the paper framework all the time.
I came, I conquered, I coredumped
The way contracts work in the government is that usually they have a specific contractor they want to use anyway. So they'll word the contract in such a way that only that specific contractor can meet all the requirements. Same goes when they want to hire a specific person. Because of government regulations, they have to have an open competition for contracts and positions, but many times they already know who they want to work with. On one hand it's unfair to the others who want the contract or job. On the other hand, it's a lot less risky for them to pick somebody they know will get the job done (regardless of the cost) over someone they have never worked with before.
Anthropic principle: We see the universe the way it is because if it were different we would not be here to see it.
All I read in your post was this:
I come from a middle-class family, there was always food in my table and growing up was easy, then I started working and was always happy with my paycheck, and I even found ways to avoid overpaying taxes. I don't see why people say they can't find jobs... you just go somewhere and say "hi, here's my qualifications, i want a job" and you get it. It's not so difficult.
Which is fine, except that in real life there are other factors, like genetically stupid people, or people who didn't have proper nutrition as children, or whose mothers drank, smoked, or did drugs during pregnancy. Or teenage mothers, or many other factors that automatically get you out of the American Dream elegibility.
If you stop for a minute and think that, gee, not everyone is like you. Not everyone can negotiate, can afford to "meet people", or HEY! they don't even have the kind of job you are doing (I doubt a walmart cashier can benefit of "getting in touch with people", since she's probably there because she can't do anything else.)
(BTW, i'm from a middle-class family, I have a decent living, I got my "gigs" by meeting people, etc. But I also have empathy for other people and I can see why things are the way they are. It's either that, or we kill all idiots, "they're useless anyway")
You just reminded me of a guy I met on a plane a long time ago. He was a welder for a company that did nuke maintenance in Washington state on the nuclear subs as part of their periodic refit (the subs, as most military ships, have to be torn down quite a ways every so many years and have everything fixed and updated, including the nuclear power plants). He had to have some kind of high security clearance, and was a very high end welder so his pay rate was pretty high; then working on nuclear equipment involved a substantial pay differential. Safety rules and work rules meant that his work day was as follows: 1.5 hours going through several levels of decontamination and clothing changes; 1 hour of actual welding; 1.5 hours coming back out of the decon cycle, 1 hour lunch, 1.5 hours of decon to go back in, 1 hour of work, 1.5 hours of decon. The contractor was required to have the lunch break by state and federal law, and there is no way to eat lunch inside a nuclear hazmat suit. And federal work rules did not allow working more than eight hours. So he spent six hours per day changing clothes and two hours per day working, getting paid for eight, at (IIRC) triple time for nuke+hazard duty. I don't know that there's any other way to do this, but it's expensive. If they went to a 12 hour day then they could get four more hours of actual work, tripling actual work hours per day, but that was impossible. It was kind of frustrating all round for the contractor, the employee (the guy I talked to) and the military folks but nothing could be done. It's been a long time so I might have some details wrong but that's the gist.
As for your numbered points, some good, some interesting, ideas but never gonna happen.
It's easier to be a result of the past, but more fun to be a cause of the future! http://www.spacefinancegroup.com/
Well, if unions in the USA are as powerful as The Incredible Hulk, they must be doing a really sloppy job. After all, you're among the countries with the highest income inequality among developed nations. And it keeps rising.
I suspect this anti-union rhetoric that floods Slashdot all the time is more a product of decades of brainwashing from the part of the corporate media propaganda machine.
In my country (Portugal), unions are pretty weak. That's one of the reasons (but not the only, mind you) we have incredibly shitty pay compared to countries where unions are powerful like Germany and France. And it hasn't helped us at all to have weak unions. Our productivity is still very low, although we work more hours than the other Europeans. Our country is bankrupt. And our managing class is one of the most illiterate, lazy, loutish and well-paid in Europe.
"You don't actually think they spend $20,000.00 on a hammer, $30,000.00 on a toilet seat do you?" - Independence Day, 1996
See, this is the thing. Golden Fleeces were being handed out, fingers pointed, voices of indignation were hollering at every microphone and camera they could find - it was like a scene out of Bloom County - so preposterous and yet happening.
Forward a few years and instead of buying a special model of hammer or seat meeting a particular specification, we now have contracted out an enormous amount of work - and from what I've seen, a lot of the result is garbage - it's far worse now than $600 toilet seats. The contractors who flooded Iraq were taking home tons of money, while much of the work was done by sub-standard hires - and we saw some of the results in the news, but Cheney's old company made a sickening haul and nobody seemed to do more than bat an eye at this seeming corruption - Just how was it that Halliburton was awarded a giant no-bid contract, because they were the only company seen to be prepared to handle it? Talk of inside information .. there must have been a conversation including something like this from Cheney, "Get oil, security, contruction, everything ready now, because we're going to invade Iraq in a year and if you are ready, we give you a fat no-bid contract, OK?"
Old advice, too, from someone in my past - if you want to make money, get contracts for government - education, too. You can sell rubbish which you could never get away with in the private sector markets.
A feeling of having made the same mistake before: Deja Foobar
This biggest issue caused by the unions is an unwillingness to reduce benefits to match the current economic state.
Which economic state are you talking about? If the few rich are richer than ever before, why should the be workers who accept to reduce their benefits? Clearly there's enough money to satisfy their benefits, it's just poorly distributed.
The real problem is the way the produce billing. Say they need a toolkit for a specific plane. They get the specs for space and everything. Someone specs out and tests each component of the toolkit. The time and materials comes out to $6k, for a 10 piece tool kit, ok $6k divided by ten pieces, $600 per tool.
Cheap storage VM.
I have a friend that was doing help desk work for a large software company around the time that the whole Iraq thing started. He was a competent guy, but he didn't posses any special tech skills. I suspect that he was making about 35k a year with a few benefits. He caught wind of a job that was providing help desk support to the troops in Iraq that paid something like 90 or 100k per year, and jumped on it.
At the time, I was rather shocked at the rate of pay. He was making something like 2 to 3 times what you would realistically pay someone for the same thing stateside. Then I heard a few stories from him as time passed. They were sequestered in a military base 24/7 for the duration of their time in country, so they wouldn't get murdered. I asked him once about why he slept in a tent in their base, and his reply was that 'The buildings tend to draw mortar fire', so there were some dynamics that made life more interesting than most help desk gigs.
As an outsider who just sees the 100k a year job without understanding what it entails, it seems like a $600 hammer. The government isn't stupid (well, mostly not stupid), so there is usually a reason for things.
I could have taken the job, but getting possibly shelled, shot at, and trapped in a desert base surrounded by 18 year old marines with SAWs for 10 months, no benefits and no promise of a job past the current contract wasn't worth the money.
HA! I just wasted some of your bandwidth with a frivolous sig!
(1) Amazon did not exist in 1980 when this story emerged.
(2) There never actually was a $600 hammer. The actual (averaged) price to the program was $435.
(3) That $435 included $420 the design and testing of the toolkit, amortized over each thing in it. For example, if you paid the vendor a nickel for an allen key, you'd call that $420.05, even though you only paid a nickel. The actual marginal cost (i.e. what the government actually paid the vendor) for the hammer in question was $15.
(4) Using the same accounting methods that arrived at $435 for the hammer would yield $476.99 for your Ampco hammer, regardless of what you actually paid the vendor for it.
What does this show? That you should beware when somebody peddles this kind of story. They're more interested in how effectively the story sways your opinion than whether the story is true.
Many of the biggest money wasters in government are stupid attempts to save money, as in the case we are discussion here.
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