Federal agencies spent $500 billion procuring products and services in 2012.
How many contractor employees does the federal government rely on, at what cost per person, and how does that compare with the cost of assigning the same task to a full-time hire?
When asked by Rep. Chris Van Hollen, D-Md., ranking member of the House Budget Committee, the Congressional Budget Office took a shot but left the $64,000 question unresolved.
“Regrettably, CBO is unaware of any comprehensive information about the size of the federal government’s contracted workforce,” the nonpartisan analysts wrote in response. “However, using a database of federal contracts, CBO determined that federal agencies spent over $500 billion for contracted products and services in 2012.”
Spending on contracting grew between 2000 and 2012 more quickly than inflation and as a percentage of total federal spending, the response said. The fastest-growing category in dollars was contracts for professional, administrative and management services, CBO wrote—the top-expanding category being medical services.
But CBO’s efforts to deepen the analysis to help the lawmaker determine whether contracting is more expensive than hiring federal employees ran aground on shoals of incomplete data.
The Federal Procurement Data System–Next Generation (called FPDS-NG), the letter noted, “is the only comprehensive source of information about federal spending on contracts.” Still, the data in FPDS-NG are incomplete, and “several government reports have called the accuracy of some of those data into question,” the analysts said, noting there are 3,000 product or service codes that are ungrouped by topic.
CBO adopted 16 categories offered by the nonprofit Center for Strategic and International Studies to calculate the share among agencies such as the Defense, Energy, Veterans Affairs and State departments, along with NASA, the U.S. Agency for International Development, the Centers for Disease Control and Prevention, the Federal Bureau of Prisons, the Federal Aviation Administration, the Centers for Medicare and Medicaid Services, and the National Institutes of Health.
“In recent years, DoD has started to collect and report the number of full-time equivalent positions funded by some of its service contracts,” CBO continued. “However, that report, called the Inventory of Contracts for Services (ICS), excludes contracts for products, as well as service contracts that are related to facilities. Furthermore, some of the data in ICS are reported by contractors, and other data are estimated by DoD officials. ICS is relatively new, and its accuracy and completeness are unknown.”
The Pentagon’s method does not factor in that contractors may perform tasks differently from an agency employee, using a small or less experienced workforce, trained differently and using different facilities, the scorers noted.
That database, CBO concluded, does not by itself allow analysts to compare the cost of performing a task with contracted employees against the cost of performing the same task with federal employees.
Critics of contracting such as the American Federation of Government Employees and the Project on Government Oversight have long expressed skepticism that contracting is cheaper than hiring government workers. Advocates for contractors, such as the Professional Services Council, disagree and call for a public-private balance.