The Wrongologist

What’s
Wrong Today:

We became aware of
the breadth of the National Security Agency’s surveillance efforts with Edward
Snowden’s whistle-blowing. But the real story is that our government has increasingly
privatized national security.

Outside contractors
perform much of the work. The news that companies like Booz Allen Hamilton hire
high school dropouts who have secret clearances was stunning to most Americans.

Mother
Jones reports that over the past decade, firms like Booz Allen Hamilton, have
increasingly become major players in outsourced national security work. They
now account for nearly 60% of every dollar the government spends on intelligence.
A majority of top-secret security clearances now go to private contractors who
provide services to the government at stepped up rates.

Here is a look at the
mushrooming intelligence contracting sector:

The New
York Times reported that at
a Senate hearing on intelligence contractors in
September 2011, a witness from the Project on Government Oversight, (POGO) a watchdog group, cited
research from 2008 showing that the government paid private contractors 1.6
times what it would have cost to have had government employees perform the
work. Here is MoJo’s chart on salaries:  

A Government Accountability
Office (GAO) report
documents the potential for hundreds of millions of dollars in savings if the
contractor compensation cap is reduced from its current level of $763,029.

Since the
1990s, federal law has placed a limitation, or cap, on the amount of employee
compensation that contractors can charge to federal contracts. The cap has increased
by 63% in real terms since it was first used in 1998. The cap was set at
$693,951 in 2010 and $763,029 for 2011 and 2012. If the cap were reduced to
either the President’s salary cap ($400,000) or the Vice President’s salary cap,
($230,700), there would have been a
savings of more than $180 million per year from compensation costs that would
exceed a cap set at the President’s salary, and at least $440 million per year
if set at the Vice President’s salary. This means that the outsourcers are
charging more for their skilled staff than for their top management.

A by the numbers look at our private intelligence
industry:

12,000: Number
of Booz Allen Hamilton employees with top-secret clearances

483,263: Number of contractors with
top-secret clearances

1.4
million: Number
of public and private employees, total, with top-secret security clearances, as
of FY 2012

7th: Where employees with top-secret
clearances would rank, by population, if they were a single American city

1: Number
of occupations, out of 35 analyzed by POGO, in which privatization yielded
statistically significant savings: Groundskeepers

4.4
million: Number of
private contractors serving the federal government in 1999

7.6
million: Number
of private contractors serving the federal government 2005

1.8
million: Number
of federal civil servants in 1999

1.8
million: Number of
federal civil servants in 2005

70: Percentage of classified
intelligence budget that goes to private contracts (as of 2007)

90: Percentage of intelligence
contracts that are classified

1,931:
Number of private firms working on counterterrorism, intelligence, or homeland
security, according to the Washington Post

$1.3 billion: Booz Allen
Hamilton’s revenue from intelligence work during its most recent fiscal year,
according to the New York Times

23: Percentage of the firm’s overall
revenue

98: Percentage of the firm’s work that
focuses on government contracts

The Wrongologist managed
outsourced federal contracts prior to leaving the F500. In his experience,
outsourcing a contract is almost always a losing proposition for the
government, involving increased costs (despite claims that contracting saves
the government money) and often, poorer service quality.

Outsourcing any
function brings the potential to obtain inferior work for dollars expended, unless managed very carefully by the government.

Outsourcing can work well
in the private sector, particularly for companies where work ebbs and flows in
response to client requirements. There is limited use for it in government
services, particularly in gathering and analyzing sensitive information!

It would be interesting
to learn how many of these security contracts are sole-sourced, meaning that they are
awarded without competitive bidding.

After years
of Republicans demonizing government service, we see that outsourcing
government services (as opposed to goods manufacturing) generally costs taxpayers more,
offers less accountability and in some cases, limited success.

Most
privatization directly awards contracts to businesses in a politician’s district.
The winning firm contributes to said politician’s election campaigns. The irony
is that politicians, who make a living off of the government stay in their jobs
by demeaning government services and government employees, while simultaneously
directing jobs and money to private business. The outsourcers then give the
government and the tax payers lower value on the way to contributing to the politician’s
campaign. Clearly, this is not a virtuous cycle!

What
incentive do contractors really have to properly serve their government employers?
The contractors aren’t working for us; they are serving their managers and
seeking advancement in their firms, not within the government.

And who do
we have to thank for this self-created mess? 
Congress, so intent on downsizing government that it’s downsized the
quality of the work performed as well.

The basic
justification for outsourcing government work is to get a job done better and
cheaper. But it is highly doubtful that American taxpayers are getting their
money’s worth.