Government “waste” is often corporate inefficiency in disguise

A growing body of research is revealing how costly privatization can be.


If there’s one thing I learned during seven years of working for government contractors, it’s that corporations aren’t as efficient as they’re cracked up to be.

As a proposal manager, my most important job was to help my company hold on to their existing contracts — because that’s how the big bucks are made. Once we got our foot in the door at a federal agency, our goal was to negotiate higher overhead rates (i.e., increase our profit) and add more employees to our contracts.

That’s what paid for my boss’s Porsche: a lot more government spending coming our way for only a little bit more work.

And we were a small, humble company. Rep. Alexandria Ocasio-Cortez recently made headlines for calling out a military contractor for charging a 4,436 percent markup on an engine part.

Now, some might say, well, that just shows the government can’t do anything right. “A list of things government doesn’t do well is a very long list,” the president likes to say.

Like many things Trump says, the truth is quite the opposite. A growing body of research is showing that insourcing government functions by bringing them back under public control often cuts costs and improves service quality.

In the Public Interest just pulled this research together in a new brief: Insourcing often leads to better service and cost-savings.

For example, a 2011 study by the Project on Government Oversight showed that the federal government pays almost twice as much for contracted services than if public employees performed the same job, even when accounting for the long-term employee benefits of federal workers.

Then there are experiences of governments big and small, nationwide.

Like, when the Department of Homeland Security insourced 200 previously contracted technology jobs in 2010 and saved $27 million that year. And, no, they didn’t lower wages — they removed the fees the agency was paying a private contractor.

In 2015, New York City brought technology services back in-house, calculating that the city would save $3.6 million the first year and as much as $100 million over a five-year period.

Then there’s the small Georgia town of Sandy Springs, which privatized almost all of its services when it was founded in 2005. Earlier this year, town leaders decided to insource many of those operations due to rising costs, estimating more than $14 million in savings over the next five years.

The next time you hear somebody spout the talking point that government wastes money, you tell them what’s what.


Want a free ebook?

Dismantling Democracy tells the story of the 40-year conservative attack on government and sketches a pro-public strategy for fighting back.

Download it here.

Or, sign up to get email updates from In the Public Interest.