Panel: Larry Allen, Executive Vice President Coalition for Government Procurement
Robert O'Harrow, investigative reporter, Washington Post and author of "No Place To Hide"
Daniel Guttman, Fellow, Johns Hopkins Center for Study of American Government, former special counsel to senate oversight of contracting, and co-author of The Shadow Government
Diane Rehm: From day to day government function to high level intelligence work, private sector contractors are playing an increasingly large role in our federal government. Outsourced work has almost doubled in the current administration from about 207 billion in 2000 to about 400 billion in 2006. But many say the number of federal workers keeping track of these contractors has not kept pace. …Robert O’Harrow, let me start with you. Most people think of contracting out as contracting out for the war in Iraq. But there’s a much broader playing field, isn’t there!
Robert O’Harrow: Yes. There’s been a major shift over the last decade or so in how the government tries to provide the services that we expect. Back in the ‘90’s, in the Clinton administration, they revised many, many rules to introduce market values into the way government operates. This was supposed to streamline government, eliminate red tape. And we’ve seen since then a dramatic rise in the amount of money that’s spent, for example, on high technology and services. It’s an extraordinary change which means that in many agencies it’s hard to distinguish the government employees from the contractors who are providing expertise and ideas.
DR: Dan Guttman, turning to you, the use of government contractors is certainly nothing new. Even before the Clinton administration. What’s the history? How far back does it go? And how of an expansion are we really seeing?
[Note: Dan Guttman was speaking on a (sat?) phone from Shanghai. He was sometimes difficult to hear.]
Dan Guttman: Well, first of all, Robert and his colleagues at the Post have been doing terrific work. My context is really talking about one of the great reforms of 20th century American government. And if you want to go all the way back, the age of empire, when we had our Constitution, countries like America and Britain used private mercenaries. Starting at the end of World War II, there was a bipartisan decision to grow government by contracting out. There were three basic reasons. One was that Americans don’t like big government but our leaders wisely knew that we needed it to fight Russia, to build hospitals, to clean up the environment. Two, as Don Price, who was first Dean of the Kennedy School, wrote in 1965, big corporations could be terrifically supportive of the growth of government if they could be beneficiaries as contractors. [inaudible]…Third, of course, was the private sector resources. As Paul Light at NYU has said, we put this into effect by limiting the number of officials. So by definition, whenever we had a program after ’45 or ’50, it had to be contracted out. In the 1960’s, first President Eisenhower talked about the military-industrial complex. Then there was a blue-ribbon cabinet panel under President Kennedy which said, in 1962,”We have a profound philosophical change in American government – the blurring of the boundaries between public and private.” And it said the real fear was the loss of public control. That was 1962. Because of the Cold War, that report said these problems were too profound to deal with, so we kept on automatic pilot every time we had a new agency or new program contracting out. So what Robert and his colleagues are chronicling is the pedal went to the metal in the Clinton administration and now the Bush administration is accelerating it. But the real underlying structural question was the reform of the 1940’s and ‘50’s – great successes, man on the moon, Cold War successes – but now the legacy of that is [inaudible] beyond the control of officials [inaudible].
DR: And, Larry Allen, to what extent are we really seeing a huge growth in contracting out?
Larry Allen: Today we expect more from our government than at any other time since, I think, World War II. Other panelists have pointed out that inside the federal government we simply don’t have the infrastructure to provide the kinds of citizen services as well as the core functions of government -- defense, security -- inside the government infrastructure. So we are seeing a very great role of the contractor community in the functions of government-like operations. I think it’s a function though of the people who are putting the demands on it – taxpayers and citizens – and government contractors are those who are most readily available to meet that challenge.
DR: …Robert O’Harrow, surely there have to be guidelines as to what you can contract out and what has to be done with a clear direction and oversight of the federal government.
RO: There are elaborate guidelines, the Federal Acquisition Regulation and a number of related regulations are supposed to guide in great detail the process of awarding contracts, competing for contracts, documenting each stage. The idea here is that you get competition to get a low price, the best price, and you have a contracting workforce that keeps a close watch on how the contract develops, so that both the government and the contractors are held to account. What we’ve seen, however, is a very, very sharp rise in sole-source or un-competed contracts that are given to contractors because in many cases federal agencies are familiar with the contractors, they like the work. It’s simply easier. We’ve documented a number of very unsettling cases where because, for example, the Department of Homeland Security needed or felt it needed to move quickly, they’ve dispensed completely with any paperwork whatsoever while spending hundreds of millions of dollars…
DR: …Give me an example!
RO: Well, several years ago, after the September 11 terror attacks, the government decided that it needed a screening workforce. In the midst of trying to hire all those screeners, which was a monumental task, there were some command-and-control decisions to change the approach for hiring… and instead of doing public buildings, they went to resorts, hotels, etc. It was a decision that cost $343m for which they had zero paperwork. No one was fired; no one was held to account for that. It’s something people can look up in the Washington Post.
DR: Larry Allen?
LA: There are a couple of things that I want to bring up, Diane. One is that, underlying much of this contracting out, there are government rules that say that government should be contracting out to the private sector functions that are not inherently governmental. Those have been rules commonly called A-guidelines, vilified, but there they are! They’ve been on the books in one shape or manner for about 45 years.
DR: And what did they have to do with?
LA: Well, they talk about how the government will outsource non-inherently governmental functions.
DR: But I don’t understand what “non-inherently governmental functions are”!
LA: Well, things that are not national defense. For example, something specialized – sensitive security – would be something inherently governmental.
DR: And yet, we’ve read a great deal about Department of Defense contractors. You’ve had the federal government subcontracting in some areas quite a lot more than is the rule. The Department of Defense being one, the Department of Homeland Security, the Department of State! How do you figure?
RO: Since 9/11, we’ve had a huge reliance on contractors, and in many cases it’s a good reliance because they’re smart and they know the technology. But it’s troubling because it’s intelligence. And so we’re outsourcing so much intelligence and security functions that you might come to think of this area as the Security Industrial Complex! A lot of Homeland Security relies on contractors. Let me give you one example. Boos, Allen, Hamilton is a consultant that is very tech-savvy, very intelligence-savvy. They were hired right after Department of Homeland Security (DHS) was formed to stand up some intelligence operations. It was a $2m contract that grew to $30m. It was a sole source contract. They found that it was deeply problematical or even an illegal contract. So the Department said, “Well, we’ll need to compete this.” Before they competed it, it rose to $73m. And then they had five contracts awarded, all of them at Boos, Allen, and the amount spent in total as of not too long ago was $124m.
DR: I know Daniel Guttman will want to comment on that. …
DG: Well, let me give you the context of your question, the core of your question: aren’t there functions which are inherently governmental, to use that technical term. The answer is an interesting and somewhat complicated one. If you look at the Constitution, the president has got to be an elected official. But the question is, can the president ask anybody to do something. Can he say to Henry Kissinger, who’s a private citizen today, “Go negotiate with China.” And if you look at our Constitution, it provides that we can give “letters of marque and reprisal” for pirates to go fight the British. So our constitutional history is a mixed one. What happened at the dawn of the age we’re talking about – the 1950’s – was when the cows were leaving the barn. The Eisenhower administration put into effect two policies which have been adopted in every administration since. Larry Allen referred to the technical name, “A-76.” They were original in a circular, A-49, and they said two things. One is that government officials may do only what is inherently governmental. And the other is commercial activities which it tried to contract out. The problem is that at the very time that went into effect, we also had limits on the numbers of officials – new civil servants, as Paul Light has pointed out. And so by definition, that rule was violated routinely from the day it went into effect. So in my work with Senator Pryor in 1980-89 we went into agencies and we found – and this was 20… 25 years ago – we found every kind of basic function was done by contractors, teaching civil servants, enforcing law, writing budgets, writing policies. So then you get to these two questions: what is it in practice that is inherently governmental, and in 1989 we found the Secretary of Energy’s Congressional testimony was written by a contractor! The Energy Department’s position was, well, he gave it, he spoke the words – so we could have a contractor write it. So the notion is as long as the official signs and rubber stamps, then the contractor can do anything! And the second is that there are things that aren’t inherently governmental, like managing contractors – in General Motors and Microsoft there are contract managers – but they are core. So today we have a fig leaf, a fiction, a policy adopted by every president, which is ignored in reality. The Abu Ghraib-CACI contract to interrogate the prisoners, the Army in 2000-2001 saying prisoner interrogation is inherently governmental and can’t be contracted out. But of course nobody looked at that. We contracted it out because that’s our governing principle. You don’t hire more civil servants. So the “inherently government” concept is a useful but amorphous one and in practice it’s been honored in the breach ever since it’s been on paper in the 1950’s.
DR: So, Robert O’Harrow, what we’ve got here is a government that in fact becomes, as Daniel Guttman call is, a shadow government.
RO: Yes. I think that’s a fascinating phrase, an evocative phrase. I think it’s worth pointing out that a lot of the contractors that the government uses provide services that we, as taxpayers, want. Essential services. They provide smarts particularly with IT—information technology. I guess the thing that I bring to this and that my colleagues in my business bring to this is the sense that there’s not enough transparency. There’s a lot of what you might call shucking and jiving when you ask questions: where’s the money being spent, who’s getting money… And the problem that we’ve seen over and over again is that the money is being spent in many cases willy-nilly. There’s no way to hold people accountable because the lines between government and contractors is so fuzzed out.
DR: What about pay scales for private contractors as opposed to the same salaries that would be given to a government employee?
RO: It’s very hard to compare apples to apples in that case. It’s important to note that. Larry can echo that idea. You’re going to have someone in the private sector who’s going to have a skill-set, as they would say, and know things that a government employee might not know. That said, sometimes you see these contracts and you see these pay scales of 300, 400, $500/hour consultants who are being hired by the government. I took contracting school to prepare myself for this stuff. Our teacher was a veteran government contracting officer. He kept tell us, “Watch for the consultants who are two or three places at one time, earning $300/hour. “ So this is part of the reason that at the financial desk, where I work, we decided to start government.inc so there’s this rolling sort of dialogue in a blog form for trying to keep an eye on this while I doing the enterprise…
DR: Do we know which companies are the largest that are government-contracted to?
RO: Sure. The number one now for many years is Lockheed Martin. And I generated some numbers with help from a company that keeps track of this sort of thing with an eagle eye. Lockheed Martin in 2000 reported revenues from the government of about $19b.
DR: To do what?
RO: Well, just about everything!
DR: But what?!
RO: Well, they help with defense systems. They provide analysts. They’ll provide financial systems for agencies. They’ll provide employees, consultants, and analysts…
DR: So as we’re shrinking the government itself, we are increasing the size of the responsibilities and the [?] of these outside contractors, Larry.
LA: Well, we are relying heavily on government contractors but I don’t necessarily think that’s always the worst thing in the world. As Robert pointed out, there are some core things that contractors do and have done for a while – as contractor work, not inherently governmental – that are necessary things to get done in order to deliver basic services like making sure people get their Social Security checks on time.
DR: …Wait a minute! You mean the Social Security Administration does not have enough talented people, informed people, educated people to get Social Security checks to recipients around the country?
LA: I don’t know that they ever have had enough people in house… There have been decisions made over the past 50 years that they should be relying on contractors just as other people do. The full extent to which Social Security relies on them I couldn’t tell you. I’m just using that as an example…
DR: …Sure. I understand…
LA: However, I think it’s a good bet to say that somewhere in the process there’s a contractor involved who makes sure that the systems – the IT systems – are operating correctly and that there are probably some other support services being provided.
DR: And, Daniel Guttman, I would assume that those IT providers are making probably double…?
DG: Let me provide a couple of comments on your excellent questions. The first: this was pointed out in 1962 by the JFK cabinet report. We have two sets of rules that apply to contractors and officials. We want to protect ourselves against government abuse. The Bill of Rights and the 4th Amendment of the Constitution says the government can’t knock your door down. That applies to officials, not contractors. Freedom of Information Act, conflict of interest rules. And the same with pay scales. Now that’s okay if in fact we have officials who are capable of overseeing the contractors. But what was said in 1962 is what we have. Because we don’t have tabs on contractors is [due to] a migration from the official Civil Service work force. People get trained the Civil Service. Then they go out in the contract work force and make any amount of money. So, yes, they’re talented. But where did they get their training? Lockheed, unlike Boeing, is mostly a government company. If we look at Iraq, where did people from Blackwater –the people who are doing the military work – where did they get their training? By definition, from the Army, the Air Force and local police.
DR: All right, let me interrupt you because we now have on the line with us Jim Webb, the US Senator from Virginia. Good morning to you, sir! Thanks for joining us! I gather that a group of Democratic freshmen are about to introduce an amendment to the pending Defense Authorization Bill. Tell me about that.
Jim Webb: Actually, all of the Democratic freshmen, including Bernie Sanders who is categorized as an independent, all nine of us are going to introduce this bill which would create a bipartisan, independent commission to look at wartime contracting. We’ve had many, many discussions over the past several months about how to approach this problem. I talked about it a lot during my campaign last year in terms of accountability. So we decided to use as a model the Truman committee from World War II but also to make it backward looking. In other words, what we’re going to do is to try to look at three things here. One is to go back and look at these hundreds of billions of dollars of contracts in Iraq and Afghanistan and find where the money went. I’m on the Foreign Relations committee and the Armed Services committee. I started in February asking questions about to whom the contracts were let, where the money was spent, and what the result was. It’s very difficult to get clear answers. So we want to go back and look at where the money was spent, get some accountability – in some cases, legal accountability for fraud, waste and abuse, and in some cases actual contractual liability. If you didn’t perform in your contract, we want our money back! The second thing we’re going to do is to be prospective here and try to find a better way to recommend to move forward. Claire McCaskill, who’s the other lead sponsor, the senator from Missouri, is a former state auditor and has a real expertise in that area. The third thing we want to look at is something that has concerned me for a great period of time as someone who’s spent time in and around the military all my life, and that is this notion of quasi-military independent contractors that have been operating in Iraq. There’s a variety of reasons for why this force has grown so large. But the bottom line is we’ve got people over there doing security work that’s very similar to what the military does, but without the legal structure over them. It’s very problematic in terms of how we define the functions of the American military in our society.
DR: I know, Larry Allen, you want to pose a question.
LA: I just want to weigh in on what the Senator was saying. I think it’s important to note that, even though the Coalition for Government Procurement is a contractor organization, we don’t have any interest in seeing people perpetuating fraud, waste, and abuse on the government. On the contrary, our members try and operate in an above-board manner pretty much all the time. Sometimes companies – even large ones who try their best – can get tripped up by the complex government contracting rules. But most of our member companies – all of our member companies or otherwise we kick ‘em out! – try and do the right thing. Also, we’re talking about thousands of government contract transactions that take place every year. It’s only a few small ones that make the headlines. So I think it’s important to put that in context.
DR: Well, the ones that make the headlines are also rather large ones, I would say. Senator Webb, what about these no-bid contracts?
JW: Well, let me first say that it’s important to point out that there are a lot of reputable and worthwhile operations in Virginia. There’s no question of that. But there’s a tremendous amount of waste and abuse and in some cases fraud going on. There’s no way around that. Part of it is sole-source. I don’t have to say this out of my own mouth. You can just look at the USA Today article today. There’s a long piece on government auditors reviewing KBR’s annual cost estimates and the hundreds of millions of dollars that were wasted there. All we’re saying is, where it hasn’t worked then there should be accountability. Where it has worked? Fine!
DR: How do you plan to go about doing this if, as it would seem, you would have to spend a fair amount of money, resources, and effort to try to get to the bottom of it?
JW: I think we can get to the bottom of this, Diane, and we can do it very efficiently. This is why we spent a good bit of time figuring out the structure of this. It’ll be a two-year commission, if we succeed in this vote. It’ll be sunsetted after two years. There will be a mandatory report after the first year but there can be reports at any time that the members of the commission find things to report. This is not going to be a bunch of senators and congressmen sitting up there. We’re all really, really busy. We’re going to get professionals to come in and staff the commission. The commission will have the authority to refer matters to the Department of Justice. And in terms of the actual examination process, what we want to do is take advantage of the Special Inspector General for Iraq Reconstruction (SIGIR) which is already on the ground and doing a good job. So we want to take advantage of existing structure. We want to get this thing done fast. And then we want to get it over with!
DR: Okay. And of course this pending Defense Authorization Bill is in and of itself going to take a huge effort on the part of the leaders on the Democratic side as well as some Republicans. How much support have you got for your amendment?
JW: We just introduced it on Friday. We’re going to hopefully have our press conference this afternoon, depending on other things going on at the senate floor. Carl Levin, who’s the Armed Services Committee chairman, is with us as is Senator Durbin. I hope we’ll get broad support on this. Let’s just fix the problem. As the gentleman said, where people are reputable, they ought to walk on this. It will clear the air for them and will allow them to operate more efficiently. At the same time, the people who have not been all the way on the table should have some accountability. I’ve got to run to a Foreign Relations committee meeting!
DR: Thank you so much for joining us! …Here’s an email from Evan, who says, “I worked as a scientist at NIH in the ‘90’s. I was a federal employee. My colleague worked alongside me did the same work. But he was a contractor because when he was hired there was a freeze on federal hires. Now the kicker: When the contractor, who was my colleague’s employer, was forced to submit a bid for their job to renew their contract with NIH, they were outbid by another contractor who underbid them. How did the low bidder achieve that savings? By stripping their employees of vacation time. Who were their employees? Exactly the same people who were formerly employed by the first contractor. The whole arrangement is phony. It allows politicians to claim they are holding the line on federal hires and allows the contractors to get federal jobs by cutting their budgets on the backs of the employees. Employees who do inherently governmental functions.” Robert O’Harrow?
RO: There are a lot of ways this remarkable trend manifests itself. One of the things I wanted to point out is there are interesting spin-off effects when government agencies outsource to other government agencies the responsibility for buying things. This happens all the time. And what you have is one agency going to another agency and saying, “I need a million widgets.” The other agency will buy those from a contractor, or they’ll buy a computer system from the contractor, and then the question arises as the money starts to flow: who’s responsible for making sure that the system works, that taxpayers are getting what they paid for, etc. We see over and over again that the answer is…
DR: … nobody knows because there’s no oversight. There is no money for oversight. Is that right Daniel Guttman?
DG: Yes. There is, of course, a lot of oversight. But basically there is no core oversight of the sort any citizen would expect. To go back to what Senator Webb was saying, it’s clear the problem is not simply fraud, waste, and abuse of contractors. There are plenty of terrific contractors…. But when you take the Army, right before Iraq, Secretary of the Army White did a memo to Rumsfeld’s deputy saying, “We have no clue how many contracting employees we have, what we pay them, or where they’re located. We know all those things with the soldiers.” So we have, at the highest levels of government, very limited understanding of who the contractors are. And the same goes for this notion of competition. It’s very important. Competition… My friends in the Democratic Party when I was in the Clinton administration liked to say what’s missing here is competition. As did President Bush. And as the emailer just pointed out, a lot of this competition is spurious. Fifty years ago the definitive book on weapons contracting by two great economists said, “You really are not talking about free markets when you’re talking about government contracting.” So we also have to look at these core questions of what is the structure of government oversight, and what do we really think we can get out of competition. It’s not a question of “a few bad apples,” it’s the structure.
DR: Let’s go now to St. Louis, Missouri.
Lydia: I’m an ex-federal employee whose agency was contracted out to private industry and they awarded the contract for double the estimate they gave to Congress and $120m more than they put in for government performance. The contract was supposed to be completed in 2003. It’s not completed yet. Government contracting-out is just a means of putting public money in private pockets. Most of the contractors who are doing it you’ll notice… look at how much they’re giving in campaign contributions. It’s all connected. It’s a farce.
RO: I’d like to point out that the theory that the government was pursuing in reforming procurement back, in the latest wave, a decade ago, in the ‘90’s, is as elegant as can be. When you look at it on paper you see that there are all sorts of incentives to do the right thing to get the best price for the government in outsourcing. The reality here is that there are so many gaps, that all sides of this, including government employees are taking, including the contractors who know the law inside and out as well as anybody, that we’re spending billions and billions of dollars with no accountability. Let me give you one example. The government wanted to link all the airports in a high-speed network. They wanted to do it quickly, so they had a limited competition which, as far as I can tell, wasn’t a real competition. It took place in a couple of weeks. They came up with a figure that it was going to cost $1b. When my partner and I at the Post examined this contract from the corporation that was providing this stuff we found out that the government literally made up that $1b to placate Congress and that the actual cost was going to be $3b. That’s the sort of thing that happens here and I find it troubling because who’s going to be able to go into the intricacies and hold accountable these…
DR: Of course! And what about her comment regarding monies paid?
RO: The reality here is that federal contracting is subject to the exact same influences as the rest of the government, and that is campaign finance. You can’t make a direct equation between this dollar given and that service or that decision made.
DR: You sure can make an inference if you can’t make a direct implication…
RO: We know that certain lawmakers who represent high-tech districts received huge amounts of money from the contractors themselves. And they hold court with the contractors and they have them, before them [in hearings], giving testimony.
DG: Actually, it’s also the other way around. One of the real basic drivers of the past fifty years in contracting is the government wants the contractor to lobby Congress for the government! The classic work of the Rand Corporation, the quintessential think thank, people inside the Army Air Force (the Army was the sovereign of the Air Force, the Air Force wanted to get out) they couldn’t lobby Congress, they couldn’t go around their bosses, so they created the Rand Project to go lobby Congress. We just saw this in the deep-water port -- which Robert has covered, this $20b disaster where Lockheed is turning the Coast Guard into the 21st century. According to the Coast Guard, they knew they didn’t have the people to manage this. But they hoped that Lockheed’s lobbyist would get that budget continued to get the Congress flowing the money. It’s really nefarious and it works both ways! The civil service says, “We need help. Nobody trusts us.” And they get Lockheed’s lobbyists to get money for their programs!
DR: What kinds of feedback, Robert O’Harrow, have you gotten on your articles? Are people somewhat taken aback? Have they had a different impression of government? Tell me what kind of response you’ve gotten.
RO: Thank you for asking. I want to point out something that’s very, very simple here, and we lose sight of it. It’s not that there’s something inherently wrong with contracting, because there isn’t. What’s frustrating here is that we have some core values in our country about accountability, oversight, and so on, and while there’s been this extraordinary, almost mind-bending increase in spending outside the government, there’s been diminished oversight. And it’s just very, very frustrating. How can we watch where our money is being spent and whether, for example, we’re safer as a result, and the environment is better, and we’re getting the services we deserve? The response over the last couple of years has been very, very strong. But it feels ephemeral. It feels as though it’s hard for people to get their mind around this.
DR: Right. It’s hard to get hold of because it’s so broad and because the assumption was – from the ‘20’s through the ‘50’s – “big government.” And then “big government” became the enemy. When Ronald Reagan came into office and talked about “big government,” he began to find ways to change that whole equation from what was done by the government to what began being done outside the government. I think you’re taking people aback which is why they haven’t got their hands on it yet.
RO: Well, government.inc, to go back to that again, is supposed to be a very accessible way of understanding this.
DR: Let’s go now to Ann Arbor, Michigan.
Johnny: The comments you’re making about… it’s interesting to hear about economics and accountability when we’re talking about privatization of public functions. Public service and things like the national forests, which were never meant to be made a profit of and were a public trust, and the privatization of public lands and how that’s actually ideologically driven rather than economically driven. I wonder if the guests could talk about the ideological foundations of privatizing government services.
LA: I’ll talk a little bit about that. I’m not holding myself out as an expert on public lands. But you are correct in saying there are political drivers of many stripes. Part of it, as both Robert and Daniel alluded to, is that you have elected officials who have a lot of different stresses on them, a lot of different obligations to fulfill. They want to take care of their constituents. Senator Webb, whom we had on the show earlier today – we did a quick and dirty analysis in the Coalition a few weeks ago and found that, just in the GSA schedules program we focus on, there are companies that generate in Virginia over $15b a year through that one program and 90% of those are small businesses. Whether or not that’s contracting out, that’s everything. So multiply that by 50 different states, 100 senators, 435 congressmen – they are anxious to be responsive, or at least perceived as being responsive to their local business communities who are looking for ways to promote their business, to bring economic viability into that state or district. So there’s that part of it as well. One other thing I’d like to say… we’ve been talking a couple of times about best price today. It’s important to note that the overriding value in government contracting has been best value. That was really something that started during the Clinton administration. What’s ironic is that we see today, at this stage in the Bush administration, that this is starting to erode back to best price. We could do another whole show on best price vs. best value but I think it’s important to note that it’s not always the low price and the government procurement rules aren’t always written that way. They’re written for a best-value solution in many cases.
RO: Just a quick thought on the caller’s question. I believe that the ideology here transcends political boundaries and it’s really the embrace of market values. I think it’s notable that this embrace by the Clinton administration, the idea that the market can solve all these problems, one of the big problems here is not the government and vice versa. That is a huge, core issue that needs to be resolved.
DR: It takes me back to the new book that’s out on the good and bad of capitalism. You’ve got the money and the market driving certain forces, and then you’ve got it tilted one way in certain directions that may be at some point don’t make sense. Let’s take a call here from Washington.
Deborah: The conversation seems to be going in many different directions, but there’s one I’d like to not lose sight of, and that’s the value of public good. I have worked as a small businesswoman, single-source person, to government and the conclusion that I’m coming to is that we contractors are becoming custodians of a government that is not there. You can walk down hall after hall in various government agencies and see empty doorways. This is all converging at a time when the federal work force is aging. So, in fact, we have a perfect storm with the convergence of the aging work force and the drivers from the president’s management agenda calling for outsourcing. That is, federal agencies must take an inventory of their functions and define whether they can be done by the private sector or not. If they cannot defend their government function, it is likely to be outsourced in an A76.
DR: Really interesting comments, Deborah! I want Daniel Guttman to respond.
DG: I’ve been thinking about this at a distance. A lot of people are talking about new laws and fraud, waste and abuse, but really – as I think Larry and Robert are saying – we are going to have contractors. And the question is, what is public service ethos of the contractors? And what we have today is a fiction that officials are in control so the contractors – whatever they are doing - they can say, “It’s the official who told us to do it.” It came home to me with Abu Ghraib when the Washington Post interviewed some lawyers for the contractors and asked, “The contracts you had, they could have been illegal.” And the lawyers said, “Well, it’s not our fault that they’re illegal. It’s the government’s fault.” I think this is a response to the caller: you really get the notion that if you can have contractors doing the basic work of government, then there’s got to be an ethos that they have the same public service obligation to deal straight. You can’t take advantage of the government because you have more information that the government doesn’t know.
Deborah: …One more comment, and this is the notion of “process maturity.” Private sector corporations generally devote more time to doing their processes. To Daniel’s point, government folks, in terms of oversight, are basically looking at invoices and stamping invoices to see that the hours were performed and they match the bill. They’re not looking to see that performance was done for work. In addition to that, it’s a revolving door. There is no public ethos. There is no sense of commitment. There is no wisdom. And government people are being demoralized. They’re losing their sense of commitment. So my point is that we need to reinstill a sense of commitment to public good, that government is worthy, and people need to have an institutional memory and a solid government.
RO: This is very, very smart stuff. I think some listeners might get lost in the detail. I just want to point out that at root here we have a huge increase in spending and we have very, very little oversight, all things considered.