Government Pays More in Contracts, Study Finds

Discussion in 'Politics, Religion, Social Issues' started by rdowns, Sep 14, 2011.

  1. rdowns macrumors Penryn

    rdowns

    Joined:
    Jul 11, 2003
    #1
    I'm shocked I tell you. :rolleyes:

    Link



     
  2. iJohnHenry macrumors P6

    iJohnHenry

    Joined:
    Mar 22, 2008
    Location:
    On tenterhooks
    #2
    ;)

     
  3. mcrain macrumors 68000

    mcrain

    Joined:
    Feb 8, 2002
    Location:
    Illinois
    #3
    Those on the left have been saying that government provided health care is more efficient and cost effective than privately funded healthcare. This story is just yet another example of how private business that operates with a view for a profit will always have some amount of money that just lines somebody's pockets. It's called profit, and every penny that is "profit" is not being used to do whatever is being paid for. Can government be inefficient, yes. Can private industry be more efficient, certainly. Is the difference greater or less than the profits being siphoned away from what the taxpayers have paid for?

    Experience keeps showing us that the correct answer is that government, even with its (insert GOP talking point) employees (like the men and women who teach your children, put out your fires, build your bridges and responded to 9/11) is more cost effective than the "free market."

    (I'm sure there may be some examples where the reverse may be true, but my guess is that there is an inverse relationship between dollars spent and efficiency. [Just look at Haliburon and Iraq] A small independent roofing contractor may be more efficient than the government creating an agency to repair the roofs (rooves?) of government buildings; but, if the issue is huge, like healthcare, the government is going to be more efficient than the layer upon layer of profits and administrative expenses found in the "free market system" of private insurers, doctors, hospitals and other medical providers.
     
  4. Huntn macrumors G5

    Huntn

    Joined:
    May 5, 2008
    Location:
    The Misty Mountains
    #4
    The problem is that the business centric Republican Party likes business (or their personal friends) to make money even if it is at taxpayer expense. BTW, I love it when I hear the standard Libertarian mantra that it has to be cheaper if you take a job from the Federal government and give it to ANYONE else.
     
  5. Zombie Acorn macrumors 65816

    Zombie Acorn

    Joined:
    Feb 2, 2009
    Location:
    Toronto, Ontario
    #5
    I don't buy it. There are way too many variables that go into this, one added is when you contract the work out you aren't covering the overhead pertaining to the work. Are they adding the cost of equipment the government would have to buy/maintain added to the fact that they would have to keep staff employed long term and not just till the project was complete?

    Seems a bit too neat and tidy of a comparison to me.
     
  6. mrkramer macrumors 603

    mrkramer

    Joined:
    Jul 11, 2006
    Location:
    Somewhere
    #6
    Well the contractors have to get money to pay off the politicians from somewhere. I'm not surprised.
     
  7. djjclark macrumors regular

    Joined:
    Feb 17, 2008
    #7
    They definitely have something wrong here. It looks like they are comparing salaries to fully loaded FTE rates. A $100k salary will easily cost $300k once loaded with overhead which is similar to contractor yearly rates.
     
  8. avro707 macrumors 6502a

    Joined:
    Dec 13, 2010
    #8
    Unfortunately, it's sometimes right though. It's probably better to have someone full time and cut out the markup to the recruitment agencies if the job is for a long period of time (or what might be considered a permanent role). Of course, for short term projects, then contractors are better.
     
  9. CalBoy macrumors 604

    CalBoy

    Joined:
    May 21, 2007
    #9
    Indeed, something seems off here.

    A federal employee making $136k would cost the government an additional $7500 or so in FICA contributions, about $8-12k for health insurance, and at least another $7500 in FERS contributions (the federal pension program). A 20-year employee making $136k would receive about $30k for life upon retirement, plus Social Security. The government also makes contributions to employee retirement savings account in the same manner as a typical 401(k) account.

    Assuming they took all benefits into account to arrive at the salary figures, it still ignores support costs and personnel. No body works alone. An employee who could hypothetically do the work for $136k would also place demand on existing resource infrastructure and labor elsewhere in the department they're in.
     
  10. Desertrat macrumors newbie

    Joined:
    Jul 4, 2003
    Location:
    Terlingua, Texas
    #10
    Far more red tape and paperwork in federal contracts than in private-sector contracts. That means more people and more money to deal with the requirements.

    An allowance must also be built into contracts for miscellaneous punishments, among other things. For instance, on a road-paving job in Big Bend National Park, there was a $1,500 fine if any construction equipment ever went outside the right-of-way line. That slows down the rate of progress, and not just by a small amount.
     
  11. jnpy!$4g3cwk macrumors 65816

    jnpy!$4g3cwk

    Joined:
    Feb 11, 2010
    #11
    Anyone who has ever worked as a government contractor knows that this is true. It doesn't make any difference, because, big contracting companies are a political constituency, and, everyone knows that outsourcing saves money -- to China, to contractors, etc. Outsourcing really isn't about saving money long-term, it is about short-term political gain, whether we are talking about government or private industry. Unfortunately, there isn't any way to quantitatively measure the effectiveness of management except short-term profits.
     
  12. Desertrat macrumors newbie

    Joined:
    Jul 4, 2003
    Location:
    Terlingua, Texas
    #12
    Dunno what outsourcing has to do with government contracts. Outsourcing is what you as a corporation do when your foreign competition is whipping your butt in the marketplace.
     
  13. hulugu macrumors 68000

    hulugu

    Joined:
    Aug 13, 2003
    Location:
    the faraway towns
    #13
    Regardless, this study and others indicate that the move towards 'privatization' of government services is actually more expensive than just doing it in house with government employees.

    I'm not surprised, the Iraq War is a great case study for the failure of the contractor world.
     
  14. Desertrat macrumors newbie

    Joined:
    Jul 4, 2003
    Location:
    Terlingua, Texas
    #14
    Back in the '60s and '70s, part of my job was to review plans and specifications for dam/reservoir projects in Texas. I also kept track of bids and unit prices of the various construction items.

    Some jobs were federal for the USCE and the US BuRec. Some were local or state funding.

    Invariably, the federal jobs cost more, with higher unit prices throughout the bids. Conversations with contractors showed that hassle-factor was priced in. My own field inspections during construction showed no quality difference in the projects.
     
  15. mcrain macrumors 68000

    mcrain

    Joined:
    Feb 8, 2002
    Location:
    Illinois
    #15
    As a guy who did a bid or two... hassle factor is nothing more than "extra profit." We can soak them for more, so yippie, let's do it.
     

Share This Page