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RAND on government cost controls…

There was a time during my life that RAND was considered one of the minions of anti-Christ, thus I didn’t expect to see something like this piece out of them:

Cost Controls:  How Government Can Get More Bang for Its Buck

As a short summary – it’s a very interesting piece on how to reduce government costs and many of the recommendations are quite sensible (at least within the framework of the “status quo”).

However, of particular interest though are their comments on the outsourcing of government jobs with the use of “contractors’. Here they spell out clearly what many of us have known:

Contractors don’t save money.

An example from the analysis:

In 1991, GAO compared the costs of 12 contractors with the costs of government employees working for the U.S. Department of Energy. On average, 11 of the 12 contractors were 25 percent more costly than their federal counterparts. In 2007, the U.S. House Select Committee on Intelligence found that, on average, an intelligence community contractor cost almost twice as much as a government employee. In 2008, the U.S. Office of the Director of National Intelligence concluded that the full salary and benefits for government employees averaged $125,000, whereas the direct labor cost per contractor, excluding overhead, averaged $207,000.

In the end, at least in my opinion, contractors are sort of the worst of both worlds of the public versus private argument. They combine government growth with crony capitalism – you end up with a bigger government, but more expensive, less effective, and less accountable.

In that regards I would agree with the Libertarians – if you’re going to strip the government, strip it, but don’t just move it to your unaccountable “friends”.

Anyway, worth reading and adding to your information “arsenal”.

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