Monday, June 3, 2013

Contractor Employees Under DoD Contracts

Did you ever wonder the number of contractor employees working for DoD? Well, no one has a very accurate count. And that's somewhat understandable. Its a moving target. Contracts are awarded, they are completed, wars come and go, the Government goes back and forth on what work should be done with their own civilian workforce or contracted out. Budget shortages and priorities cause some projects to lose funding.

The DoD has been trying since at least 2009 to come up with an accurate count. The GAO (Government Accountability Office) recently looked at DoD's counting efforts and found that while the accuracy is improving, the number is probably understated. The GAO concluded that more work needs to be done to come up with a reasonable count. So, what is the current number? In fiscal year 2011, DoD reported that there were 710,000 full time equivalent (FTEs) contractor employees working on DoD contracts, led by the Army with 250,000 of those. Now that's a lot of people.

By comparison, there are about 800,000 DoD (Department of Defense) civilian employees. That's almost a one-to-one ratio of contractor employee to civilian employee.

Right now, the competition between contracting for services versus in-house hiring is favoring the in-sourcing crowd. Usually the decision to in-source is made for one of two reasons. First, someone has determined that its cheaper to hire than to contract for the same services. Or secondly, the service is "inherently governmental" and should never have been contracted out int he first place.

The arguments over which method is cheaper is on-going and will never be resolved. Contractors have a profit motive so that tips the scale on the side of Government employment. Contractors often argue that a contracted workforce is more efficient, thus tipping the scale back to the contractor side. We've looked at audits performed by the Government and audits performed by non-Governmental entities. There is no doubt that non-Governmental organizations take less time to do similar audits. On the other hand, those audits are not nearly as comprehensive or in-depth as those performed by Governmental agencies. Whether the added assurance the taxpayer receives from a Government agency performed audit is worth the additional cost, is left for the policy makers.

See related article in Government Executive. Interesting comment that during the last drawdown, DoD shed 200,000 civilians but then, hired that many more contractor employees.

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