Contracting Out Costs the Government Lots Extra

POGO Study: Contractors Costing Government Twice as Much as In-House Workforce. This looks like an important study. The results are sadly not incredible: if you look not at the wages employees receive in the contracted-out businesses, but rather the prices their employers charge the government for their services, contracting-out looks (sometimes very) expensive compared to using government workers.

The U.S. government’s increasing reliance on contractors to do work traditionally done by federal employees is fueled by the belief that private industry can deliver services at a lower cost than in-house staff.

But a first-of-its-kind study released today by the Project On Government Oversight (POGO) busts that myth by showing that using contractors to perform services actually increases costs to taxpayers.

POGO’s new report is the first to compare the rate that contractors bill the federal government to the salaries and benefits of comparable federal employees. The study found that while federal government salaries are higher than private sector salaries, contractor billing rates average 83 percent more than what it would cost to do the work in-house.

The study comes with some caveats, but at first glance it looks like a serious attempt to measure things that — oddly — are not routinely measured by the government that pays for all this stuff.

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