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Federal Contractors Are $600 Screwdrivers 593

ideonexus writes "Last month an article appeared on Slashdot about how the government pays IT contractors twice what it pays its own workers. Missing from the article was how much the IT contractor pays its own workers. After working for a federal contractor for 10 years, a document accidentally leaked to employees by the contractor illustrated the incredible disparity between what the contractor was paying us and what they were charging the government. Like most contracts according to the GAO, the government provided our offices, utilities, computers, and training, leaving our salaries as the only overhead to the IT contractor, giving them an incredible incentive to keep them as low as possible to maximize profits. When the top 100 defense contractors cost taxpayers $306 billion, eliminating the federal contractor middle-man seems like an obvious place to start the austerity measures."
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Federal Contractors Are $600 Screwdrivers

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  • The salary is just one factor of the cost of employment.

    If the government hired all of these sub-contractors as employees, then they would all be members of various federal unions, and the government would then be on the hook for all those unions' juice benefit plans and pensions. Also they would be paying payroll tax for them all (yes the government has to pay tax too).

    If all these costs were accounted for then the supposed gap would be much narrower or potentially even non-existent.

  • by hjf ( 703092 ) on Monday October 31, 2011 @11:39AM (#37895472) Homepage

    So the answer is outlawing unions and having all workers negotiate their own contract terms?

    Sure, that worked really good for the industrial revolution. Welcome to your 112 hour work week, don't like it? Fuck off, there's a line of people behind you waiting for a job.

  • by Anonymous Coward on Monday October 31, 2011 @11:40AM (#37895480)

    In what world are outsourced IT workers in unions? Talk about putting the blinders on and diverting the issue. This was supposed to be that privatized haven the fiscal right is asking for, turns out the reality is just as crappy as what they complain about.

  • by ibsteve2u ( 1184603 ) on Monday October 31, 2011 @11:41AM (#37895486)
    You're not supposed to reveal that "privatization" is a scam...that's "top secret".
  • by tnk1 ( 899206 ) on Monday October 31, 2011 @11:45AM (#37895542)

    And yet, there has to be a middle ground. If you give the employer too much power, they take complete advantage of it. If you give the Unions too much power, you can't keep people accountable even for basic tasks and efficiency.

    We have to stop saying that any limits on union power mean a return to sweatshops, because that's just as wrong as saying that returning to no unions will fix all of our economic problems.

  • by khallow ( 566160 ) on Monday October 31, 2011 @11:50AM (#37895628)

    Sure, that worked really good for the industrial revolution. Welcome to your 112 hour work week, don't like it? Fuck off, there's a line of people behind you waiting for a job.

    The 19th Century thinking here is remarkable. It makes me wonder who are the conservatives.

  • by gumbi west ( 610122 ) on Monday October 31, 2011 @11:51AM (#37895648) Journal

    Not true. I worked for the USG for a few years and in that time my boss fired 2 of the 15 people reporting to him (fired, not laid off).

    The real issue is that people think that and then never check how the process works.

  • by dominion ( 3153 ) on Monday October 31, 2011 @11:53AM (#37895668) Homepage
    Dude here punched his boss in the face and they were unable to fire him

    Something tells me there's more to this story...
  • by dr_dank ( 472072 ) on Monday October 31, 2011 @11:54AM (#37895684) Homepage Journal

    Unless you're a rockstar, compensation is usually a "take it or leave it" proposition. Especially so in an economy where people are desperate for jobs and will take anything to put food on the table.

  • by erroneus ( 253617 ) on Monday October 31, 2011 @12:10PM (#37895952) Homepage

    I'm sorry, but I just have to call BS on that claim. A guy gets punched in the face by a contractor, you call the police, not HR. You call management to get them banned from the building. If the contract says "you have to keep him paid until it is resolved" then fine. But just moving the offender to another department doesn't hold water even in fantasy land.

    You'll have to cite references before I begin to believe that.

  • by dougmc ( 70836 ) <> on Monday October 31, 2011 @12:14PM (#37896026) Homepage

    So the answer is outlawing unions and having all workers negotiate their own contract terms?

    No, but there should be a middle ground.

    Unions are good, but this whole "protect every employee at any cost" thing has to go. Outlawing the union is going way too far in the other direction, but there has to be a better solution.

    Personally, I think that these claims that people are impossible to fire are largely made up. Maybe people are difficult to fire, but impossible? As for punching his boss in the face, I certainly don't have all the details (or any of them, really), but I'll bet there's more to that story. Certainly, if the guy punched his boss for no reason, he'd be arrested for assault and battery and I'm guessing he'd be easy to fire, union or not.

  • Re:Um.... (Score:4, Insightful)

    by elrous0 ( 869638 ) * on Monday October 31, 2011 @12:16PM (#37896072)

    *Knowing* it and getting a Congress that's absolutely owned by said contractors to do jackshit about it are two very different things.

  • by Antisyzygy ( 1495469 ) on Monday October 31, 2011 @12:31PM (#37896316)
    What are you even talking about? How are conservatives trying to do that? All I see conservatives doing is trying to maintain the status quo.
  • by gtbritishskull ( 1435843 ) on Monday October 31, 2011 @12:33PM (#37896354)

    That depends on a lot of factors. Still if it weren't cheaper for them to pay contractors they would just hire employees. It's obviously cheaper.

    How do you figure that? Your argument is that the US government always makes the most cost-effective decision? From what I have seen, political influence has a lot more to do with the decision making process than cost-effectiveness.

  • by IMightB ( 533307 ) on Monday October 31, 2011 @12:44PM (#37896534) Journal

    I never understood this either. You have the same capitol, running, maintenance and probably higher payroll costs. Plus, the need to make a profit. Yet somehow, the silver bullet of privatization and deregulation are supposed to be somehow, magically, saving the end-user/taxpayer money.

  • Re:Um.... (Score:5, Insightful)

    by CastrTroy ( 595695 ) on Monday October 31, 2011 @12:51PM (#37896642) Homepage
    The way contracts work in the government is that usually they have a specific contractor they want to use anyway. So they'll word the contract in such a way that only that specific contractor can meet all the requirements. Same goes when they want to hire a specific person. Because of government regulations, they have to have an open competition for contracts and positions, but many times they already know who they want to work with. On one hand it's unfair to the others who want the contract or job. On the other hand, it's a lot less risky for them to pick somebody they know will get the job done (regardless of the cost) over someone they have never worked with before.
  • by hjf ( 703092 ) on Monday October 31, 2011 @12:54PM (#37896690) Homepage

    All I read in your post was this:

    I come from a middle-class family, there was always food in my table and growing up was easy, then I started working and was always happy with my paycheck, and I even found ways to avoid overpaying taxes. I don't see why people say they can't find jobs... you just go somewhere and say "hi, here's my qualifications, i want a job" and you get it. It's not so difficult.

    Which is fine, except that in real life there are other factors, like genetically stupid people, or people who didn't have proper nutrition as children, or whose mothers drank, smoked, or did drugs during pregnancy. Or teenage mothers, or many other factors that automatically get you out of the American Dream elegibility.

    If you stop for a minute and think that, gee, not everyone is like you. Not everyone can negotiate, can afford to "meet people", or HEY! they don't even have the kind of job you are doing (I doubt a walmart cashier can benefit of "getting in touch with people", since she's probably there because she can't do anything else.)

    (BTW, i'm from a middle-class family, I have a decent living, I got my "gigs" by meeting people, etc. But I also have empathy for other people and I can see why things are the way they are. It's either that, or we kill all idiots, "they're useless anyway")

  • Re:Um.... (Score:5, Insightful)

    by ackthpt ( 218170 ) on Monday October 31, 2011 @01:16PM (#37897032) Homepage Journal

    "You don't actually think they spend $20,000.00 on a hammer, $30,000.00 on a toilet seat do you?" - Independence Day, 1996

    See, this is the thing. Golden Fleeces were being handed out, fingers pointed, voices of indignation were hollering at every microphone and camera they could find - it was like a scene out of Bloom County - so preposterous and yet happening.

    Forward a few years and instead of buying a special model of hammer or seat meeting a particular specification, we now have contracted out an enormous amount of work - and from what I've seen, a lot of the result is garbage - it's far worse now than $600 toilet seats. The contractors who flooded Iraq were taking home tons of money, while much of the work was done by sub-standard hires - and we saw some of the results in the news, but Cheney's old company made a sickening haul and nobody seemed to do more than bat an eye at this seeming corruption - Just how was it that Halliburton was awarded a giant no-bid contract, because they were the only company seen to be prepared to handle it? Talk of inside information .. there must have been a conversation including something like this from Cheney, "Get oil, security, contruction, everything ready now, because we're going to invade Iraq in a year and if you are ready, we give you a fat no-bid contract, OK?"

    Old advice, too, from someone in my past - if you want to make money, get contracts for government - education, too. You can sell rubbish which you could never get away with in the private sector markets.

  • by TheLink ( 130905 ) on Monday October 31, 2011 @01:44PM (#37897388) Journal

    When I say smaller government, I mean less revenue, less spending, and lower page count if the US Code is printed.

    That's still obsessing over quantity, and that's still stupid.

    Assume enough of you ask for it and they actually give it to you. Given their track record what will happen is they'll chop bits off the government/State and give the profitable bits to corporations owned by their cronies (I believe this happens in Russia and elsewhere). Corporations that can completely ignore the voters rather than pretend to listen and throw you a few bread and circuses from time to time. Look at the recent Slashdot article on the 147 companies in the world that control most stuff, or this article: []
    Do those look like they listen to US voters? Some of those companies may listen to their customers, but how many US voters are customers/shareholders they will pay attention to?

    If that happens you'd have a small government with less revenue, less spending, lower page count in the US Code, heck lower page count in your Constitution too if enough of you ask for it. And you'd be as screwed or worse.

    All the roads and highways could be private property owned by corporations - you'd have to pay for access. All the utilities too, but without any pesky Government regulation (just the way most libertarians like it). Your currency is already controlled by organization that's not quite government, so hey why not have a fully private corporation be in charge of it too with no regulation or one with "low page count".

    When your dreams are granted you can vote for whoever you want and it would make even less of a difference.

    Even if the crazy Libertarians took over there would be little they can do, since the government by then would be a weakling with no practical power over anything.

    They can threaten the corporations but the corporations could then say: "You and whose army?". No revenue = no army.

    If the voters haven't been using their brains and ballots well, I doubt they'd do a good job voting with bullets either.

  • Re:Um.... (Score:4, Insightful)

    by systemeng ( 998953 ) on Monday October 31, 2011 @01:52PM (#37897522)
    I went to a class on Federal Contracts and we were taught that only about 15% of contracts are really open for competition. The rest are wired for the incumbent and surviving in the industry is based on identifying which contracts are wired and not bothering to bid on them.
  • by s73v3r ( 963317 ) <s73v3r@gmail.RABBITcom minus herbivore> on Monday October 31, 2011 @01:57PM (#37897582)

    And this is my problem how?

    Because you assume your privileged ass is the norm, so you decide that anything that benefits those that don't have it so great is unneeded. Pull your head out of your ass sometime, and you'll see that your situation is not the norm.

    I mean, no one said the world was fair, nor that everyone starts out on the same level, some have it harder than others.

    So we should continue trying to keep it unfair?

  • by daem0n1x ( 748565 ) on Monday October 31, 2011 @02:02PM (#37897644)

    This biggest issue caused by the unions is an unwillingness to reduce benefits to match the current economic state.

    Which economic state are you talking about? If the few rich are richer than ever before, why should the be workers who accept to reduce their benefits? Clearly there's enough money to satisfy their benefits, it's just poorly distributed.

  • by s73v3r ( 963317 ) <s73v3r@gmail.RABBITcom minus herbivore> on Monday October 31, 2011 @02:05PM (#37897680)

    No, the point of the story is that nobody knows shit, especially about how to do their jobs. If someone punches another employee in the face, and you can't get them fired, then you are the one that doesn't know how to do your job.

  • Re:Um.... (Score:5, Insightful)

    by pnutjam ( 523990 ) <[gro.zciworob] [ta] [todhsals]> on Monday October 31, 2011 @02:54PM (#37898348) Homepage Journal
    The real problem is the way the produce billing. Say they need a toolkit for a specific plane. They get the specs for space and everything. Someone specs out and tests each component of the toolkit. The time and materials comes out to $6k, for a 10 piece tool kit, ok $6k divided by ten pieces, $600 per tool.
  • by TiggertheMad ( 556308 ) on Monday October 31, 2011 @03:54PM (#37899284) Homepage Journal
    I have a friend that was doing help desk work for a large software company around the time that the whole Iraq thing started. He was a competent guy, but he didn't posses any special tech skills. I suspect that he was making about 35k a year with a few benefits. He caught wind of a job that was providing help desk support to the troops in Iraq that paid something like 90 or 100k per year, and jumped on it.

    At the time, I was rather shocked at the rate of pay. He was making something like 2 to 3 times what you would realistically pay someone for the same thing stateside. Then I heard a few stories from him as time passed. They were sequestered in a military base 24/7 for the duration of their time in country, so they wouldn't get murdered. I asked him once about why he slept in a tent in their base, and his reply was that 'The buildings tend to draw mortar fire', so there were some dynamics that made life more interesting than most help desk gigs.

    As an outsider who just sees the 100k a year job without understanding what it entails, it seems like a $600 hammer. The government isn't stupid (well, mostly not stupid), so there is usually a reason for things.

    I could have taken the job, but getting possibly shelled, shot at, and trapped in a desert base surrounded by 18 year old marines with SAWs for 10 months, no benefits and no promise of a job past the current contract wasn't worth the money.
  • Re:Um.... (Score:4, Insightful)

    by Anthony Mouse ( 1927662 ) on Monday October 31, 2011 @04:46PM (#37900006)


    A lot of those contracts were to deliver X thing that costs $15 at any hardware store. But the delivery was to the middle of Afghanistan on a specific time table while people are shooting. It turns out it costs more to deliver a thing to Kandahar than it does to Baltimore.

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