Tag Archives: Obamacare rollout

Hollow Government

Media commentators are finally beginning to understand something that academics have been warning about for well over a decade: when government contracts out–“privatizes”–too aggressively, it loses critical capacity. In the memorable phrase of one researcher, it “hollows out” government’s ability to perform.

Steven Pearlstein, a respected business columnist for the Washington Post, recently wrote

Two of the biggest news events of the past year have been the leaks about top-secret snooping by the NSA and the disastrous rollout of Obamacare. But in an important way, they are both manifestations of a story that has been unfolding for decades — that of a federal government that has outsourced too much of what it does to private contractors while allowing the quality of its own workforce to atrophy.

Much of the public debate about outsourcing has focused on the management challenges involved, the undeniable opportunities for favoritism and corruption, and confusion about when constitutional limits on government action should be applied to private contractors doing government’s work. Less attention has been paid to the danger Pearlstein addresses, although it has been highlighted by several scholars: government is losing its capacity to perform, and with it, the capacity to manage the performance of others.

Recognition of the problems caused by indiscriminate contracting have been mounting. The Office of Personnel Management recently announced that final quality reviews for background investigations will be conducted by government employees — not contractors.  According to Federal News Radio,

The news comes amid an employee’s whistleblower lawsuit, also joined by the Justice Department, alleging that the government’s largest background-check contractor, USIS, had improperly signed off on hundreds of thousands of background investigations that had never been properly vetted — a practice known as “flushing” or “dumping” records

Although he identifies market ideologues as largely responsible for the federal government’s excessive reliance on contractingPearlstein also places considerable blame on the need to “work around” outdated bureaucratic rules and intransigent public unions.

Not only are there caps on the number of government workers, but there are also caps on government pay that ignore the realities of the marketplace — and that, too, has driven the outsourcing trend…..

In the end, taxpayers are not only indirectly paying the higher salaries they refuse to pay directly to government employees — they also wind up paying for the contractors’ profit and the costs of winning and managing contracts.

Pearlstein notes that federal contracting grew from about $200 billion in 2000 to about $550 billion in 2011 before falling back to $450 billion last year, and that sixty percent of that was for services. By some estimates, there are twice as many people doing government work under contract than there are salaried government workers. As I have previously pointed out, we are not making government smaller–we are just making it less visible,  less efficient and less accountable.

[L]ong before the botched rollout of Obamacare, even the Professional Services Council, the leading trade association for federal contractors, was complaining publicly that too many agencies lacked skilled workforce to manage the contracting process — in particular, contracts for complex new computer systems.

Those who want to make government small enough to drown in a bathtub are evidently getting their wish. It should remind us to be careful what we wish for.