NYTimes: Privatization saves money - NOT!

[Scuba]

http://www.nytimes.com/2011/09/13/us/13contractor.html?_r=1



..snip..

WASHINGTON — Despite a widespread belief that contracting out services to the private sector saves the federal government money, a new study suggests just the opposite — that the government actually pays more when it farms out work. The study found that in 33 of 35 occupations, the government actually paid billions of dollars more to hire contractors than it would have cost government employees to perform comparable services. On average, the study found that contractors charged the federal government more than twice the amount it pays federal workers.

The Heritage Foundation, a conservative research group in Washington, released a report last year that found that federal employees earn 22 percent more in hourly wages than the private sector. The Heritage study also found that if federal employee compensation were adjusted to match that of their private sector counterparts, federal spending would be reduced by $47 billion in 2011 alone.

But POGO said its study did not just compare the salaries of the two sectors; instead it focused on what the government actually pays contractors to perform services versus how much it would cost to have that work done by in-house staff members.

“That’s a big difference,” said Scott Amey, POGO’s general counsel. “We compared the full compensation paid to federal government and private sector employees to the billable rates in federal service contracts. Across the board you see that it cost government more to pay for contractors.”


..end..



Gee, I wonder where all the extra money goes?

[DJ13]

1. Who could guess that adding a layer of profit might make costs increase?

I swear, our political system (both sides) is a total sham in recent years.

[peace13]

2. Did they actually have to research that it takes more money to pay a middle man?

The irony of the the government is that they pay someone who takes a profit and sells the opportunity to someone else who takes a profit and sells the opportunity and makes a profit. The last guy in line gets a nickle to supply the goods! Consequently we get crappy service/ supplies at top dollar. This is no mystery to most people!

[RC]

3. The Heritage Foundation came up with this? WTH?

They are some of the people that want to drown our government in a bath tub

[karynnj]

4. No - the Heritage Foundation did a simplistic study that this refutes

Their study compared salaries of people doing similar work in the private sector to those in the government - ignoring all the overhead costs of the entrepreneurs. This study looks at the real total cost of each alternative.

[malaise]

15. Because their friends get the contracts

Heritage is all about looting government.

[Luminous Animal]

5. Please read the article. The the POGO study refutes the Heritage Foundations study...

"“That’s a big difference,” said Scott Amey, POGO’s general counsel. “We compared the full compensation paid to federal government and private sector employees to the billable rates in federal service contracts. Across the board you see that it cost government more to pay for contractors.”

For example, the study found that, on average, the federal government paid contractors $268,653 per year for computer engineering services, while government workers in the same occupation made $136,456.

For human resources management, the federal government paid contractors an annual rate of $228,488, more than twice the $111,711 to have the same services done in-house."

[SharonAnn]

6. And the private sector hires less experienced, less qualified people and has high turnover.

[salin]

8. and pays less... (than federal employees), but charge far more

and pocket the profits.

[RaleighNCDUer]

7. Well, DUH.

When I was in the service my unit had a squad bay full of guys who worked in the motor pool. They kept all the unit's vehicles running. They lived app. 120' away from the motor pool. They got paid (as E1) @1.10/hr (for an 8 hour day, though they were literally, like the rest of us, 24/7 employees).

Today that motor pool would be run by a contractor whose employees take home salaries at least 5x those of their military counterparts (is there even an MOS for truck mechanic anymore?), and we think that somehow this is supposed to save us money?

[elocs]

9. My godson was in Afghanistan a few years ago as a communications specialist and could not do his job

because they had private contractors doing it instead. The Army trained him and then had private contractors doing his work instead.

[librechik]

10. duh HOYYYY

why is this the first time anyone is pointing this out? Will it6 grow legs? After all, this fact used to be COMMON KNOWLEDGE before the 1980 coup.

[kenny blankenship]

11. Can't have Piratization and Pirate Enterprise without the Profits

Gotta have that sweet, sweet cake and plenty of it to make college grads want to run public services. So to build in some profit makes it cost more, but it's worth it for bragging rights among your suburban Republican golfing buddies. OUR trash is hauled away by Princeton & Amherst alums wearing horn rim glasses. Liberal arts majors end up needing something practical to do. It's more costly perhaps, but we pay for the expertise and at least the money isn't wasted on, you know, city employees.

[arbusto_baboso]

12. And yet we still have idiots insisting that privatization saves money.

Hell, we have idiots here on DU who insist that.

[hifiguy]

13. Blinding grasp of the obvious there.

Increase the number of middlemen, factor in a (gigantic) profit for the fatcats and wonder why you wind up paying more for shittier goods and services. Just how damned dumb does someone have to be not to be able to see that this is not only a likely, but the only POSSIBLE result.

[hifiguy]

14. Kick for the evening crowd!

:kick: