Another GOP myth debunked: outsourcing to private contractors does not save money

Posted by AzBlueMeanie:

This is one of my favorite GOP myths: Private contractors can always do it better and cheaper than government employees. GOPers like Sen. "Don't make me angry" Frank Antenori repeat this line all the time. This myth is the foundation of his private contracting for city services bill that Governor Brewer vetoed last session, and that Antenori is threatening to revive in January.

Like much of what Antenori believes, it is simply not true. Brad Plumer writes at Ezra Klein's Wonkblog Study: Privatizing government doesn’t actually save money:

The theory that the federal government should outsource its operations to private firms usually rests on a simple premise: It saves money. But why should we believe it saves money? Often the argument is made by pointing to salaries for public- and private-sector employees in comparable jobs and noting that the private-sector employees make less. So outsourcing the task to the private worker should be cheaper, right? That’s the theory, at least. But a new study from the Project on Government Oversight (POGO) suggests that this theory is quite wrong. In many cases, privatizing government turns out to be far more costly.

For its study, POGO decided to do something different than the usual method of comparing public- and private-sector salaries. Instead, the group scrutinized the actual contracts that were awarded to companies for specific tasks and compared them with what it cost the government to do the same job in-house. They looked at 550 contracts — all deemed “fair and reasonable”— for 35 different jobs across government agencies, from auditors and engineers to food inspectors and groundskeepers.

As it turned out, the private contractors cost more in 33 of those 35 jobs. On average, the service contracts paid private employees 83 percent more than the government would pay a federal employee doing the same job (and that’s even taking into account health care benefits, pensions, and so on). There’s a long debate about whether workers in the private sector actually make less than their federal counterparts, but it turns out this is all beside the point. The POGO analysis found that private contractors working with the government make, on average, twice as much as a comparable private-sector worker.

A cost-benefit analysis with meaningful parameters like that in this POGO study should be required before anyone like Antenori goes off half-cocked trying to mandate privatization of government functions based upon the myth that "Private contractors can always do it better and cheaper than government employees." It's going to wind up costing taxpayers more in the long run. But at least his campaign contributors who will profit at our expense will be happy.