PSC Again Disputes Claim on Cost Comparison Between Public and Private Sector Workforces

By Jeremy Madson | April 17, 2017

Two press stories last week – one in Politico and one in Government Executive – repeated the well-discredited myth that using federal employees to perform work is always more cost-effective than using contractor employees, citing as its source a 2011 study by the Project on Government Oversight. In addition, the Politico article concluded that federal spending grew from $400 billion in 1962 to $4 trillion today because “of ballooning the size of the private sector workforce who whom the federal government contracted out the work”!  As PSC detailed when the POGO study was released almost six years ago, the weaknesses in their data are glaring. But explaining the entire cause for the growth in federal spending since 1962 to contracting out —without mentioning entitlement programs and interest on the debt—is patently wrong and disingenuous. PSC President and CEO David Berteau provided a rapid response to Politico, but only a small portion of that response was included in Monday’s “Morning Shift,” buried in the middle of a long string of stories. You can read PSC’s full response below. PSC will also soon be publicly addressing related information.


“The contractor community plays a vital role in assisting the government in providing services to the American people and the benefits of a strong contractor base cannot be overstated,” said David Berteau, President and CEO of the Professional Services Council. Referencing the POGO study, Berteau continued, “As PSC detailed when the [POGO] study was released almost six years ago, the weaknesses in the data are glaring: the report compares ‘fully burdened’ contractor rates, which include operating costs and capital investments, with the cost of government salaries, which do not. While there are instances where it may be cheaper to use federal employees, it may actually be more efficient to rely on a contractor workforce that can be turned on or off as needed, rather than hiring, training and retaining federal employees. A better approach—and one PSC continues to work with the government to help achieve—is to ensure that the appropriate balance is struck that allows the government to operate in the most effective and efficient matter.”

“In addition," Berteau noted, "The dominant cause of growth in federal spending since 1962 has been in entitlement programs—Medicare, Social Security, and Medicaid—and in payment of interest on the debt, not in outsourcing."