A Contracted Government

By David Epstein
Thanks so much to Brigitte for letting me add my voice to her excellent blog. To begin with, let's start with a subject near and dear to my heart: delegation. Don't miss this front page article from the New York Times about the increasing use of contractors by the federal government. A choice excerpt:

Without a public debate or formal policy decision, contractors have become a virtual fourth branch of government. On the rise for decades, spending on federal contracts has soared during the Bush administration, to about $400 billion last year from $207 billion in 2000, fueled by the war in Iraq, domestic security and Hurricane Katrina, but also by a philosophy that encourages outsourcing almost everything government does.

Contractors still build ships and satellites, but they also collect income taxes and work up agency budgets, fly pilotless spy aircraft and take the minutes at policy meetings on the war. They sit next to federal employees at nearly every agency; far more people work under contracts than are directly employed by the government. Even the government’s online database for tracking contracts, the Federal Procurement Data System, has been outsourced (and is famously difficult to use).

 

I attended a conference last fall where this  topic  was mentioned, and it was eye-opening, even to someone like me who thinks they know something about how the government works.

Two points to make. First, this rise in contractors is what's behind claims by politicians that they're "reducing the size of government." This makes sense -- the government isn't doing less, so the only way to explain the reduction in the number of government employees is to see that their jobs have been handed out to contractors. That is, they have been shifted from federal employees to the private sector. I'll leave the partisan implications to the reader to figure out, but the size of the lobbying sector that has formed around creating and getting these contracting jobs is clearly enormous. And as the article makes clear, the end result often means spending more money on the same services, rather than less.

Which leads me to my second point. In the government vs. markets debate, the latter option often has the luster of efficiency attached to it. And it's true that a pure market in goods and services is usually allocates resources better than governments. But this is not the same thing as saying that any amount of market practices makes things better -- it's often more likely that a purely governmental solution will be more efficient than a mixed private/public arrangement. The complications of the contracts and the difficulty keeping up with them makes it seem that the tail of contractors may now be wagging the dog of government.

And this is all without even mentioning the use of contractors as substitutes for our armed services -- remember the role they played in Abu Ghraib? As I said, read the article, and then let's look out for the results of the hearing that Waxman is about to hold.

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It is even said that contractors work more efficiently since they are reviewed more carefully than those who have it made. They cannot go on strike or they will just be replaced by others. They have to earn their keep on an ongoing basis. Result. They work to impress, so they work better.

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