This document may be quoted, reproduced and/or distributed without permission provided that credit is given to Frank A. McDonough, author of "Advice to Fernando, understanding and enjoying success in high-level government jobs."
The 12th thing you need to know after you take office.
After receiving shoddy products from contractors during the Civil War, President Lincoln established the National Academy of Sciences to provide truthful information about the quality of gunpowder and other materials delivered to the government.
Years later, in 1941, echoing a similar theme, Senator Harry Truman (D-Missouri) said, “I have never yet found a contractor who, if not watched, would not leave the government holding the bag.” [ii]
In recent times, Rep. Henry A. Waxman (D-California), chair of the House Committee on Oversight and Government Reform, discussing contracts in Iraq and in the Department of Homeland Security said, “Billions of dollars are being squandered, and the taxpayer is being taken to the cleaners.” [iii]
David M. Walker, former head of the Government Accountability office, an arm of Congress, said contractors often fail to deliver the promised efficiency and savings. He said you cannot expect private companies to look out for taxpayers’ interests. “There’s something civil servants have that the private sector doesn’t. That is the duty of loyalty to the greater good—the duty of loyalty to the collective best interest of all rather than the interests of a few. Companies have duties of loyalty to their shareholders, not to the country.”
When Roger Johnson led GSA, he recognized that the government works with spinoff organizations created by the major corporations. The government, he said, does not have access to the talent in America’s major corporations. Aside from companies such as weapons manufacturers that sell mainly to the federal government, other Fortune 100 companies create independent spin-off organizations keeping separate books for government review.
Major suppliers to the federal government “. . . are not really companies,” said Peter W. Singer. “They are quasi-government agencies.” He pointed out that Lockheed Martin spent more than $53 million lobbying and $6 million on political donations between 2000 and 2006. In turn, these companies receive more money in contract awards than the Congress appropriates annually to the Departments of Justice or Energy.[iv]
Companies are not subject to the same accountability rules as government agencies. For example, companies are not subject to the Freedom of Information Act.
In addition, many contractor personnel hired to work with United States personnel in Iraq and Afghanistan are low wage recruits from the poorest countries, and their performance is questionable. For example, in 2008, government investigators charged Blackwater Worldwide Security guards working for the State Department for a shooting frenzy in Baghdad that left 17 Iraqi civilians dead.
In 2009, Wackenhut Service Company, owner of AmorGroup International, declined comment on a report by the Project on Government Oversight about the lewd behavior of its employees in Iraq. As reported on TV in the United States, the guards hired to protect government officials held parties where they urinated on themselves, drank vodka which had been poured over their bare buttocks, while the men fondled and kissed each other, and paraded around virtually nude.
Wackenhut’s firm recruited the guards from Nepal where wages are low. Most could not speak English although their job was to protect the United States embassy and the 1,000 diplomats, staffers, and Afghan nationals working in Iraq.[v]
During the second Iraqi war, there were at least 50,000 private security contractors in Iraq working alongside American troops and officials. In some cases, companies recruited these workers from the ranks of mercenaries in Chile, Nepal, South Africa, and other countries.
One of many stories coming out of Afghanistan and Iraq was about Shane Schmidt, a former Marine who served two tours in Afghanistan. Later, Triple Canopy, one of the larger contractors in Iraq hired him after he left the Marine Corps. He accused his civilian boss of randomly shooting at and perhaps killing civilians in Baghdad. He said that working in Iraq was a lot like going to war with the Marines, except there were fewer restrictions. In an interview with Steve Fainaru, author of “Big Boy Rules,” about the lawlessness of contractors working in Iraq, he said his company briefed him to take a shot if he ever felt threatened. [vi]
Contractors exploit a murky legal status. Under the Geneva Conventions, contractors are noncombatants. However, many contract personnel in Iraq served previously in America’s military. As civilians, they trained Iraqi security forces, and in that role they sometimes killed Iraqi civilians.
The government investigated employees from at least two military contractors—CACI of Arlington, Va., and Titan of San Diego—for their role in the alleged torture and sexual abuse at Abu Ghraib prison.
The CACI contract in particular drew attention because the Pentagon did not award it. Rather, the civilian agency, the Department of the Interior, negotiated the contract to provide computer network solutions, not for the prison guards and interrogators that the Defense Department hired.
Major companies supplying products and services to government often have more power than government contracting officers. Sitting across the negotiating table from a government-contracting officer are companies so big almost nothing can get their attention or hurt them. With several billion dollars in annual sales and a declining number of competitors, a major company can respond quickly and powerfully if its interests are threatened. In 24 hours, to protect its interests, it can muster several in-house lawyers for litigation, hire lobbyists for publicity or to confuse the issue, and employ perhaps ten more specialists on contract at $100,000 a week to start work immediately.[vii]
In addition, major companies have access to senior political officials in agencies that government contracting officers seldom meet, even once. Because of their generous campaign contributions, and their ability to provide perks, such as (until recently), the practice of providing seats on corporate jets, major companies have little trouble opening doors to lawmakers and their key staff members.
Finally, companies like Boeing, Northrop Grumman, and Lockheed Martin have the money to purchase full-page color ads in the Washington Post, in Capitol Hill publications such as Roll Call and the Hill, in Aviation News, and the Navy Times and elsewhere.
In one ad, Boeing advertised its AH-64D Apache helicopter as being the most powerful and effective combat helicopter in the world, a matter of little interest to most Washington Post readers, but it may have caught the eye of a few well-placed elected officials on the Hill.
Boeing and EADS fought it out publicly to build a new fleet of refueling tankers for the Air Force. Pratt and Whitney fought G.E. over a huge contract for the engines in the Joint Strike Fighter jet program. Pratt and Whitney argued that having two manufacturers would be a waste of money. G.E. and its partner Rolls Royce, in their posters, billboard ads, in Metro stations in Washington D.C. and on the radio responded that,
“Monopoly is not a game.” “ . . . Don’t accept a $100 billion, sole source contract.”
There is an indirect effect of these glamorous ads with square-jawed young men in the background. They create an image that killing weapons are not that, rather they are great technology, good for the country and patriotic, suggesting circuitously that investing in advanced weapons is natural, evolutionary, and a part of the fabric of American life.
As a result, agency contracting officers often find themselves outgunned and on the defensive. They are unable to access the media and lack similar access to Congress except through agency political appointees who may or may not be willing or able to provide support. To compete with the resources of a major company, one part-time agency lawyer, a generalist, might be the only support available to the government-contracting officer. Major suppliers often have more firepower than the government resembling an armed brigade facing a citizen standing alone.
Linda Blimes an assistant secretary of commerce during the Clinton administration teaching public policy at Harvard University’s Kennedy School of Government says that reducing the government workforce, a stated goal of many presidents, necessarily increases the role of private contractors; and she raises three questions. [viii]
Does it matter if contractors and civil servants have different motivations? “The goal, she said, of agencies is to meet their objectives, set generally by Congress, to serve the American public. The goal of contractors is to make money. It is unrealistic to assume that contractors have the same concern for the public interest as civil servants or soldiers.”
Outsourcing government jobs and responsibilities is problematic because the company that wins the award will do what it needs to do to show a profit and will do even more to show more profit. Take the simple example of an airport in a small state in the Northeast. In the restrooms, the contractor waters down the soap in one dispenser, leaving the other two empty. The toilet paper is so thin it could not withstand a spit from three feet. The contractor’s employees clean the facility in a way that the strong urine smell, reminds one of an unregulated nursing home.
Blimes asks, how do we decide which jobs are so mission-critical they simply must be done by government employees? Most agree that government employees should perform some jobs, but which? The pendulum has swung so far in favor of contracting government jobs that the government now hires contractors to audit the work of other government contractors.
OMB has claimed that 400,000 federal employees occupy jobs the private sector could perform, and outsourcing those jobs would save $5 billion or $12,500 per employee. This estimate should not be the basis for action because it can fluctuate wildly up or down depending on dozens of factors. Significantly, the normally conservative president’s budget office, never attempts to calculate the actual after-the–fact savings or losses after an outsourcing action
Blimes also asks if taxpayers get value for money spent to hire contractors. While many assume that the private sector is more efficient than the government, analyses do not always validate that assumption. Rep. Henry A. Waxman (D-Calif), pointed out non-Iraqi contractors signed up by the United States military charged $25 million to repaint 20 police stations. The governor of Basra in Iraq claimed local firms could have done the work for $5 million. Of course, the larger question is why the military is spending taxpayer dollars to paint Iraqi police stations.
Considering the prices paid by the government to contractors for computer personnel, it is questionable whether OMB’s anticipated cost savings are realistic. One firm doing routine performance management studies for GSA was paid $270 per labor hour. This is an annual fee of $486,000 for one person for one year (1,800 hours, or 36 hours a week for 50 weeks) of routine work. The government could hire three employees and pay their salaries and benefits for the amount paid to this firm for the equivalent of one person.
In another example, the State Department awarded a defense-oriented firm a $545.7 million follow-on contract (extending the original contract) to continue police training in Iraq. In the 22-month contract, the company was responsible for recruiting about 800 civilian police advisors to help train the Iraqi Police Service, and law enforcement officials in the Minister of the Interior, and in the Department of Border Enforcement. The cost for developing each of the 800 civilian police advisors, presumably including the actual training provided, computes out to $682,000 each— not bad in a country in which the 10-year war reduced employment to almost zero.
In a decade, according to the Commission on Wartime Contracting in Iraq and Afghanistan, the Defense Department and the State Department have wasted more than $30 billion, and possibly another $30 billion, in contracts and grants in Iraq and Afghanistan, the latter a country where 42 percent of the people are unemployed and 36 percent have a daily income of less than one U.S. dollar.[ix]
In the United States, there are about four contractors for every career government employee, according to Paul Light. Yet, the government anticipates additional and massive outsourcing in the future because of retirements and a shortage of certain skills, caused in part by presidential practices since the Carter administration. [x]
IBM provides an example of future outsourcing with “Watson,” its remarkable artificial intelligence tool. [xi]
Watson, IBM’s question-answering system, runs on roughly 2,500 parallel processor cores, each able to perform up to 33 billion operations a second. It competed in February 2011 and trounced two expert humans on television’s Jeopardy in a follow-on to the 1997 match when IBM’s machine, Big Blue, defeated the world’s reigning chess champion. Watson has the potential to do the jobs of hundreds of thousands of analysts in the government and many more elsewhere.
Futurists Arnold Brown and Martin Ford forecast a different version of government outsourcing, predicting that robots, networks, and other forms of non-human electronic decision-makers will routinely substitute for humans in the future.