Skip to Main Content

DoD Contractors Cost Nearly 3 Times More than DoD Civilians

Our Tabke Box

See the infographic below for all the data

Last month, the Project On Government Oversight sent a letter to government officials poking holes in the Department of Defense’s (DoD) claims that it utilizes a cost-effective workforce, and that congressional prohibitions have prevented it from implementing greater cost efficiencies. DoD’s own documents prove otherwise and support POGO’s 2011 finding that, on average, the federal government is wasting money by hiring service contractors.

POGO’s review of DoD service contracting budget and spending data found that contractor employees cost 2.94 times more than an average DoD civilian employee performing the same job. In fact, although the number of employees in both workforces is relatively balanced, spending on the workforces is not: DoD service contracts cost $253.8 billion and DoD’s civilian workforce cost $72 billion (base) or $108 (base plus overhead) in FY 2010.

Comparison of contractors to military personnel results in similar ratios, although this comparison is complicated by such cost considerations as pay, housing, subsistence, change-of-station expenses, education assistance, veteran’s benefits, tax advantages, and non-monetary benefits to military members

This new data, however, highlights the fact that the federal government is contracting out services regardless of the extra costs. Except for great work by the Army in tracking contractor labor and overhead and profits rates, there is very little interest in the government in monitoring service contract spending and assessing its relationship to overall federal hiring and spending.

Instead, policymakers are promoting federal employee hiring ceilings, pay freezes, and increased contractor compensation benchmarks. Many of those policies are based on the unfounded premise (p. 16) that contractors are cheaper. Some policymakers are more focused on the public vs. private pay gap debate, which, depending on whose studies you believe (Heritage Foundation or the Federal Salary Council), favors either side by approximately 30 percent. Meanwhile, hundreds of billions of dollars are spent each year on long-term service contracts that are wasting unknown amounts of taxpayer dollars.

The higher cost of contractors isn’t the only problem. Despite the claim that outsourcing allows the government to be flexible and cut its contractor workforce when needs change, the sequestration debate is proving that contractor jobs might be just as permanent as federal jobs. For years, the contracting industry has warned senior officials to “consider the impact on maintaining the industrial base in all sourcing decisions.”

The acceptance of outsourcing myths leaves taxpayers on the hook for a bloated contractor workforce that has largely been ignored by the government. Recently released DoD FY 2011 data shows that DoD contractor employees and service contract obligations increased from FY 2010. Preliminary 2012 data (see p. 5) shows some decline in DoD spending on contract services, as well as on civilian and military personnel, but more has to be done to ensure that the entire DoD and government workforce is sustainable. If the government is serious about reining in spending, service contract modeling and inventories desperately need improvement.

I’m not saying that we need DoD civilians for every job. Certainly, there are short-term needs and non-cost factors that should be considered when making workforce decisions. However, long-term jobs should be subject to rigorous cost comparisons prior to a contracting decision.

But don’t take my word for it—here’s DoD’s own conclusion regarding its FY 2010 service contract spending (see p. 10 or slide 6 from this DoD PowerPoint): “The savings are here. This is Total Force Manpower, but its growth has been unchallenged and often we don’t even know what is in the base.”

Pentagon Workforce Spending Inforgraphic
By: Scott H. Amey, J.D.
General Counsel, POGO

scott amey Scott Amey is General Counsel for the Project On Government Oversight. Some of Scott's investigations center on contract oversight, human trafficking, the revolving door, and ethics issues.

Topics: Contract Oversight

Related Content: Infographics, Wasteful Defense Spending

Authors: Scott H. Amey, J.D.

Submitted by John Doe at: September 15, 2013
I work for a civilian federal government agency and have reviewed price proposals for security systems from vendors whose primary customers are DOD entities. Their prices are at least double what a federal civilian or commercial entity would propose. These are for security systems that are equivalent in every way.
Submitted by bow n ara at: May 20, 2013
this has been the situation since the end of WWII when defense contractor's realized they could make billions in profit by war-mongering and encouraging USG to hire contractors and ditch federal employees! Someone really should bring this to the face of Govt and STOP THE MADNESS...!!! The American public is being hoodwinked... (again)!!!

Leave A Comment

Nickname
Comment
Enter this word: Change

Related Posts

Browse POGOBlog by Topic

POGO on Facebook

Latest Podcast

Podcast; Social Media, Internet Provides Opportunities, Challenges for Lawmakers

The Congressional Management Foundation offers the Gold Mouse Awards annually to members of Congress who make the most of the opportunity the digital world offers them. POGO spoke with members of Rep. Mike Honda's communications team about their award.