#Federal Contracting, or Why the Government Can’t Do Anything Right

I ran across this post tonight from Matt Yglesias, and since it addresses something near and dear to my heart, I thought I would post my thoughts about it.

Mostly it’s about the incredible boom in federal contracting, or jobs that the government contracts out to private firms. At first blush this might sound like a great idea. In some places this probably saves money, but in others it doesn’t.

So, the government has a job to do. It bids it out to, say, a landscape architecture firm. The lowest bid wins (problem 1). More often than not, this firm is either inept (low bid = bad estimate), or slimy (low bid = plan to make the profit on change orders/whining), which leads to a poor product (problem 2). The government contact is either a landscape architect who sucks/frustrated with their job and doesn’t care, or a bureaucrat who minds the contract but has no concept of what a good and correct job looks like (problem 3). This leads to a poor end result, taxpayers mad at government because it is inept and wastes money, and a contractor well-compensated and ready to screw the taxpayers again but more than willing to spread the word about the idiot they worked with on that government job.

Why do we think this is a good system?

Edit: Also interesting in the post is this graph of government employees:

Look at the time frame of 1982ish to 1990. Who presided over an increase in federal employment by over 300,000 workers, higher than any level since? Why, that would be the patron saint of small government himself, Ronald Reagan. I’m going to poke holes in that fairy tale whenever I get the chance.

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