Occupational Education #6: The Cost of Contractor Computer Engineering Services

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June 25, 2012

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. This series offers a fresh look at ten of those occupations. Today’s occupation is computer engineering. Let's check out the numbers!

As we wrote in our report, “Information technology work is widely outsourced throughout the federal government because of the assumption that IT companies provide vastly superior skills and cost savings.” Computer engineering represents a subset of this work, and unfortunately for taxpayers, the anticipated cost savings for those services aren’t exactly coming to fruition.

POGO found that the annual contractor billing rate for computer engineering services comes in at $268,653. The annual full compensation—which includes benefits—for a federal employee who performs those services is $136,456. To put it another way, taxpayers could hire twice as many federal employees to perform computer engineering services as they could contractors.

Relative to the 34 other occupations we examined in our report—which ranged from accounting to cemetery administration—the cost of computer engineering contractors was about par for the course. Taxpayers fared even worse when the government outsourced other services, such as claims assistance and examining, which contractors billed at nearly five times the full annual compensation of a federal employee performing those services.

The scope of the outsourcing of government services is massive. As we’ve noted in our report, the service contractor workforce outnumbers feds almost four to one. According to USAspending.gov, the Pentagon alone spent $198.6 billion on contract services in fiscal year 2011. The federal government spent $325.3 billion in total on service contracts that year.

The bottom line is that the government needs to conduct meaningful comparisons of the relative costs of the service contractor and federal employee workforces. With hundreds of billions spent each year on service contractors, there’s simply too much money at stake to blindly follow the conventional wisdom that contractors are more cost effective.

Check out our Bad Business report for more details on this issue and recommendations for how we can begin to address it.

Topics: Contract Oversight

Related Content: Occupational Education

Authors: Bryan Rahija

Project On Government Oversight (POGO)

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Founded in 1981, the Project On Government Oversight is a nonpartisan independent watchdog that champions good government reforms. POGO’s investigations into corruption, misconduct, and conflicts of interest achieve a more effective, accountable, open, and ethical federal government.