Privatization Doesn’t Pay, POGO Study Proves

by Clyde Weiss  |  September 13, 2011

Government contractors cost taxpayers more than federal public service workers to do the same work, according to a new report by the Project on Government Oversight (POGO).

AFSCME has long opposed privatization of public services. We’ve noted that outsourcing not only wastes taxpayers’ money, but also opens the door to corruption. In its latest study, “Bad Business: Billions of Taxpayer Dollars Wasted on Hiring Contractors,” POGO reveals just how expensive contracting out really is.

Each year, the report notes, the federal government spends about $320 billion on contractors, whose workers are often paid “at rates far exceeding the cost of employing federal employees to perform comparable functions.”

A look at the billing rates for 35 different categories of contractors doing more than 550 types of jobs revealed that the contractors get 1.83 times more pay than federal workers in total compensation. Moreover, those contractors are paid more than twice the total compensation paid in the private sector for comparable work.

The study also shows that federal employees were less expensive than contractors in 33 out of those 35 categories that POGO reviewed. Yet the government apparently isn’t aware of that fact because it “has failed to determine how much money it saves or wastes by outsourcing, insourcing, or retaining services, and has no system for doing so,” the report states.

Said AFSCME Pres. Gerald W. McEntee: “In the wake of the worst recession in our lifetime, our U.S. government should not be doling out billions of dollars to private contractors to perform services that can be done more efficiently by federal workers. This study confirms what AFSCME and its allies have been saying time and time again: privatizing services leads to cost overruns and in most cases, a lower quality of services.” Read his entire statement here.

Learn more about why privatization is bad for taxpayers and recipients of public services.

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