Defense’s Solution to Budget Busting Projects: Nationalize Contractors?
Recent audits revealed that the Department of Defense (DoD) overpaid for numerous contracts putting heavy pressure on DoD to reform. Defense, vowing to return to its supposed frugal past, plans to convert 3,000 formerly contracted jobs to federal positions, leading a former Defense acquisition chief, Jacques Gansler, to warn against a “global war on contractors.”
Instead of accepting responsibility for overpaying contractors Defense’s threat to nationalize contracting jobs is an overreaction that looks to blame contractors for accepting generous terms. If someone offered to pay you $20 or $15 to rake their lawn, which rate would you accept? The $20 contract, obviously.
The reason bloated contracts are dolled out regularly is due to distortions in the free market. Gansler explains how Defense’s current system for awarding contracts is flawed and inflates price tags, “funding often has been available through supplemental spending bills, if not through the regular appropriations process.” Shocking, when companies do not compete through the traditional appropriations process, businesses bidding for contracts, defense spending unnecessarily rises.
Instead of removing the obstacles that are driving up cost, using a procurement process rooted in competition, Defense plans to scrap the entire system and put its own people in place. It is hard to see how insulating Defense contractors completely, by making them federal employees, will save anyone any money.
This move can best be understood when looked at through Democrats desire to expand the size of government. Dems use the same argument in the health care debate, “private businesses (insurance companies or Defense contractors) aren’t keeping costs down, we can do better,” right. Both problems call for market reforms, not a federal takeover.
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Government nationalizing services would lower costs by reducing overhead costs. This is a known fact, come on people.
>> Mark L. November 18, 2009 18:09 pm
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