6 ms·

US Gov't Pays IT Contractors Twice As Much As Its Own IT Workers

19 points by sytelus 15y ago

epoxyhockey 15y ago
Many of the slashdot comments state what is obvious. Contractor billing rates != government salaries. Once you account for government benefits, like sick time, vacation time, health insurance and retirement, then you can make better comparisons.
- fleitz 15y ago
  In addition a major factor for gov't employees is paying for all the non-performers plus pensions. Given that a good programmer is 10 to 100 times more productive than a poor programmer it's probably a good bargain for the money to pay twice as much.
  - _delirium 15y ago
    As far as I can tell, government contractors are quite full of "non-performers". It was pretty much the standing assumption around my alma mater that if you were an engineer wanting a bill-hours-and-do-nothing job for a few years past college, a place like Booz(e) Allen Hamilton was the way to go. Leverage your degree into some bullshit powerpoints and "recommendations", and rake in the cash.
- jcampbell1 15y ago
  According to Appendix A of the study, they baked in 36.5% for fringe benefits including retirement, healthcare, medicaid, and life insurance. The study does neglect vacation time, which appears to be an oversight by the researchers.
  - Steko 15y ago
    Yeah it looks like because vacation isn't an extra cost they don't factor it in but if you're only working 9 days out of 10 you shouldn't be compared against a contractor working 10 days.
- Steko 15y ago
  The main thing they are missing is the job security a federal worker has.
Symmetry 15y ago
The amount you pay contracting outfits to provide engineers is not at all comparable to the wages of engineers. There are some frictional costs to contracting agencies, but there's the HR expenses of the contracting house, and the engineer's insurance, vacation time, and pension.
veyron 15y ago
This is not exclusive to the government: most large companies pay contractors double the employee salary for the equivalent job
- bradleyland 15y ago
  Precisely. My consulting rate was $150/hr when I last did the work. Were I hired by just about any company to do the same job, I wouldn't make anywhere near $312,000 a year (assuming 40 hrs a week, 52 weeks a year salary), even when factoring in benefits. My staff counterparts within the corporations I worked with were making right around six-figures, so in that context, the government is doing really well.
  - philwelch 15y ago
    At those rates you start running into the backwards-bending supply curve. In other words, instead of making $312,000 a year working 52 full weeks, tons of people would be more than happy to make $200,000 working 33 weeks and a couple extra days, or some other point along the line.
    - gte910h 15y ago
      Exactly. I in no way set rates to hit the mythical 2000 hours a year number that recruiters love.
jarin 15y ago
This is exactly the same as companies. When you hire contractors, you don't have to pay for their taxes, benefits, desk space, training, recruiter commissions, computer, office supplies, etc., etc., etc.
- veyron 15y ago
  I agree, but it should be noted that a recruiter gets commission if you use a recruiter to hire an employee ...
evilduck 15y ago
Having been a government contractor, the agency I worked worked for hired us because their own staff were incapable of performing the job and typical government beauracracy meant that firing/hiring would have taken longer than the required deadlines for their projects. End result? A full staff of nearly useless government employees and a full staff of contracted workers who resented them and were treated as second class citizens in the work environment. Sure, the contracting company billed huge amounts, but our individual pay was always less than a comparable government employee pay grade. Most us would have gladly switched over to federal payroll if given the chance. The contractor churn rate was abysmal because of the work environment and pay.
- jcromartie 15y ago
  I worked as a gov't contractor at a federal office where there was one guy who was actually tasked with putting together puzzles and framing them (for wall decorations), because his technical skills were completely obsolete.
  - evilduck 15y ago
    I knew a government employee who was known to be actively damaging to the projects he was assigned to. This was known by everyone due to formal complaints up and down my contracting company's and the government's chain of command, and was propagated to everyone in earshot due to escalated verbal exchanges. I wish that guy was sidelined to puzzle assembly.
- evilduck 15y ago
  I'd add that contractors were a permanent fixture at that agency. The head count fluctuated a bit based on what projects were active but there were no apparent plans for the government to begin managing IT itself. (fluctuated slowly...project timelines were measured in years, I witnessed random but simultaneous resignations affect the contractor head count more than any project ending, it was rare for a single contractor to work on a project from spec/design to release)
RexRollman 15y ago
I am a former government contractor, and all things being equal, I believe the real reason that the government likes contractors is that they are non-union employees who are relatively easy to obtain and release.
hermanjunge 15y ago
It happens in lot of places. RT the ideas given by @evilduck
ck2 15y ago
This is common with every kind of government contractor. They pay twice what they would for military to do something to contractors too. http://www.nytimes.com/2011/09/18/opinion/sunday/runaway-spending-on-war-contractors.html http://www.nytimes.com/2011/09/18/opinion/sunday/runaway-spe... It's everyone taking a cut down the line. At least with IT it's not war profiteering.
justin_vanw 15y ago
As a former government IT contractor, I can say that all the government employees in my office were beyond incompetent. They didn't do any work, and would lash out at you if you suggested that they pitch in. It was widely accepted and acknowledged, by the contractors, by contractor management, and by government managers, that our jobs as contractors existed entirely to do the work that the government workers did not and could not do, due to incompetence and laziness.
- rjd 15y ago
  I used to work for a government as an employee and got fed up trying to deliver projects. I'm not the sort of person who can sit still and let the hours tick by. The whole culture of "not my problem" and staff to incompetent to do there jobs drove me nuts. I remember after one restructure I gained a new team member. HR dissolved her role, writing crystal reports with a GUI, and made her a .net software developer. I can remember one day trying to explain how an IF statement worked to her. There where members in my team which may have been better suited for the special olympics than programming. Then one day I gave up and quit. I contracted myself back to my manager and since then my ability to finish a project on time and budget is something I'm proud of. On the money side I don't think I really earnt a lot more, I sure as hell charged what I could get. But the fact was there was a lot more down time/unchargable hours, time lost chasing the next project. I had to buy/lease infrastructure of my own, liability insurance etc... When I tallied it all up I think I was probably 10% up on what I was before hand but doing so much extra work. But I did enjoy it a lot more being able to actually sit down and do a days work. I did about 6 years in total working for government (3 contracting) and Im solely working for private sector now.

19 points by sytelus 15y ago

Many of the slashdot comments state what is obvious. Contractor billing rates != government salaries. Once you account for government benefits, like sick time, vacation time, health insurance and retirement, then you can make better comparisons.

fleitz 15y ago
In addition a major factor for gov't employees is paying for all the non-performers plus pensions. Given that a good programmer is 10 to 100 times more productive than a poor programmer it's probably a good bargain for the money to pay twice as much.
- _delirium 15y ago
  As far as I can tell, government contractors are quite full of "non-performers". It was pretty much the standing assumption around my alma mater that if you were an engineer wanting a bill-hours-and-do-nothing job for a few years past college, a place like Booz(e) Allen Hamilton was the way to go. Leverage your degree into some bullshit powerpoints and "recommendations", and rake in the cash.
jcampbell1 15y ago
According to Appendix A of the study, they baked in 36.5% for fringe benefits including retirement, healthcare, medicaid, and life insurance. The study does neglect vacation time, which appears to be an oversight by the researchers.
- Steko 15y ago
  Yeah it looks like because vacation isn't an extra cost they don't factor it in but if you're only working 9 days out of 10 you shouldn't be compared against a contractor working 10 days.
Steko 15y ago
The main thing they are missing is the job security a federal worker has.

Symmetry 15y ago

The amount you pay contracting outfits to provide engineers is not at all comparable to the wages of engineers. There are some frictional costs to contracting agencies, but there's the HR expenses of the contracting house, and the engineer's insurance, vacation time, and pension.

veyron 15y ago

This is not exclusive to the government: most large companies pay contractors double the employee salary for the equivalent job

bradleyland 15y ago
Precisely. My consulting rate was $150/hr when I last did the work. Were I hired by just about any company to do the same job, I wouldn't make anywhere near $312,000 a year (assuming 40 hrs a week, 52 weeks a year salary), even when factoring in benefits. My staff counterparts within the corporations I worked with were making right around six-figures, so in that context, the government is doing really well.
- philwelch 15y ago
  At those rates you start running into the backwards-bending supply curve. In other words, instead of making $312,000 a year working 52 full weeks, tons of people would be more than happy to make $200,000 working 33 weeks and a couple extra days, or some other point along the line.
  - gte910h 15y ago
    Exactly. I in no way set rates to hit the mythical 2000 hours a year number that recruiters love.

jarin 15y ago

This is exactly the same as companies. When you hire contractors, you don't have to pay for their taxes, benefits, desk space, training, recruiter commissions, computer, office supplies, etc., etc., etc.

veyron 15y ago
I agree, but it should be noted that a recruiter gets commission if you use a recruiter to hire an employee ...

evilduck 15y ago

Having been a government contractor, the agency I worked worked for hired us because their own staff were incapable of performing the job and typical government beauracracy meant that firing/hiring would have taken longer than the required deadlines for their projects. End result? A full staff of nearly useless government employees and a full staff of contracted workers who resented them and were treated as second class citizens in the work environment. Sure, the contracting company billed huge amounts, but our individual pay was always less than a comparable government employee pay grade. Most us would have gladly switched over to federal payroll if given the chance. The contractor churn rate was abysmal because of the work environment and pay.

jcromartie 15y ago
I worked as a gov't contractor at a federal office where there was one guy who was actually tasked with putting together puzzles and framing them (for wall decorations), because his technical skills were completely obsolete.
- evilduck 15y ago
  I knew a government employee who was known to be actively damaging to the projects he was assigned to. This was known by everyone due to formal complaints up and down my contracting company's and the government's chain of command, and was propagated to everyone in earshot due to escalated verbal exchanges. I wish that guy was sidelined to puzzle assembly.
evilduck 15y ago
I'd add that contractors were a permanent fixture at that agency. The head count fluctuated a bit based on what projects were active but there were no apparent plans for the government to begin managing IT itself. (fluctuated slowly...project timelines were measured in years, I witnessed random but simultaneous resignations affect the contractor head count more than any project ending, it was rare for a single contractor to work on a project from spec/design to release)

RexRollman 15y ago

I am a former government contractor, and all things being equal, I believe the real reason that the government likes contractors is that they are non-union employees who are relatively easy to obtain and release.

hermanjunge 15y ago

It happens in lot of places. RT the ideas given by @evilduck

ck2 15y ago

This is common with every kind of government contractor. They pay twice what they would for military to do something to contractors too. http://www.nytimes.com/2011/09/18/opinion/sunday/runaway-spending-on-war-contractors.html http://www.nytimes.com/2011/09/18/opinion/sunday/runaway-spe... It's everyone taking a cut down the line. At least with IT it's not war profiteering.

justin_vanw 15y ago

As a former government IT contractor, I can say that all the government employees in my office were beyond incompetent. They didn't do any work, and would lash out at you if you suggested that they pitch in. It was widely accepted and acknowledged, by the contractors, by contractor management, and by government managers, that our jobs as contractors existed entirely to do the work that the government workers did not and could not do, due to incompetence and laziness.

rjd 15y ago
I used to work for a government as an employee and got fed up trying to deliver projects. I'm not the sort of person who can sit still and let the hours tick by. The whole culture of "not my problem" and staff to incompetent to do there jobs drove me nuts. I remember after one restructure I gained a new team member. HR dissolved her role, writing crystal reports with a GUI, and made her a .net software developer. I can remember one day trying to explain how an IF statement worked to her. There where members in my team which may have been better suited for the special olympics than programming. Then one day I gave up and quit. I contracted myself back to my manager and since then my ability to finish a project on time and budget is something I'm proud of. On the money side I don't think I really earnt a lot more, I sure as hell charged what I could get. But the fact was there was a lot more down time/unchargable hours, time lost chasing the next project. I had to buy/lease infrastructure of my own, liability insurance etc... When I tallied it all up I think I was probably 10% up on what I was before hand but doing so much extra work. But I did enjoy it a lot more being able to actually sit down and do a days work. I did about 6 years in total working for government (3 contracting) and Im solely working for private sector now.