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Study: Federal government spends more on contract workers

Posted on September 19th, 2011 Read time: 1 minutes

According to a recent study released by the Project on Government Oversight, the cost of hiring a contract worker is generally more than the annual salary of a federal employee.

The study, called Bad Business: Billions of Taxpayer Dollars Wasted on Hiring Contractors, compared the annual compensation for federal and private sector employees with federal contractor billing rates to determine how much the government pays to outsource its services.

Total compensation paid to federal and private sector employees were analyzed for the study, in addition to the annual billing rates for contract workers across 35 occupations covering 550 service activities.

Researchers found that the government approves contract billing rates 1.83 times more than it pays its federal employees in annual compensation, and more than two times the rate paid for private sector employees for comparable services.

"On the grand scale, people in government are operating under the assumption that contracting out saves money and [they] don't question that," said POGO's general counsel Scott Amey, as quoted by the Federal Times.

One of the reasons the government hires contract workers, according to Amey, is because Congress imposes ceilings on how many people it can employ. This can lead to contract workers getting hired before agencies have time to negotiate a lower price.  

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