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Occupational Education #10: The Cost of Contractor Nurse Services

Looking for billions of dollars' worth of savings for taxpayers? Look no further than government service contracting. Last September, POGO released a report that found service contractors cost taxpayers nearly twice as much as federal employees who do the same work. With the final discussion of the mammoth defense budget bill looming in Congress and with the nation’s deficit crisis largely unresolved, we figured there’s no better time to take another look at data from the report.

Our report examined 35 different occupations. Over last few days, we’ve offered a fresh look at ten of those occupations. Today marks our last installment of this series. Our last occupation is nurse. Let's check out the numbers!

Graph of Nurses employees vs. contractor

Our report found that the average contractor annual billing rate for nursing services was $174,803, around $70,000 more than the average full annual compensation ($105,714 which includes benefits) of a federal employee doing the same work. There’s an even larger discrepancy between this billing rate and the full annual compensation of a nurse working in the private sector—a figure our report puts at $91,042.

If it seems like taxpayers are getting a raw deal by outsourcing government nursing services to contractors, consider that they’re getting an even worse deal on other services. Our report found that, on average, service contractors cost taxpayers 1.83 times (or 83 percent MORE) than federal employees doing the same work.

Again, the scope of federal service contracting is vast. According to USASpending.gov, taxpayers doled out $325.3 billion to service contractors in fiscal year 2011—more than the budgets that year of the Departments of Commerce, Education, Homeland Security, Interior, Justice, Labor, State, and Transportation combined. It’s time for the government to take a closer look at the relative costs of federal employees and service contractors. The conventional wisdom that outsourcing services to the private sector is cheaper simply doesn’t hold water. 

Find out more about this issue in our Bad Business report.

By: Bryan Rahija
Blog Editor, POGO

bryan rahija At the time of publication, Bryan Rahija was the blog editor for the Project On Government Oversight. In addition to those duties he also focused on open government issues.

Topics: Contract Oversight

Related Content: Occupational Education

Authors: Bryan Rahija

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