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Does outsourcing work or is it worse possible government at the highest possible cost

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posted on Jul, 20 2019 @ 10:42 AM
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In my lifetime, since the 70s, almost every possible government function has been outsourced. It has been taken as gospel outsourcing government functions to private corporations is the best way. But is it really? If Congress were actually doing its job this would be an area of investigation. My theory is anywhere there are large sums of money being exchange there is corruption.

I think if outsourcing were really studied, we would find it creates the worse possible results for the greatest amount of cost. Outsourcing is an instant monopoly for the CEO. Every corporation is legally responsible to maximize return on investment to its shareholders. This drives CEOs to hire the least quality employees at the lowest possible price. When you have a boondoggle, there is no free-market to wring out any inefficiencies in CEO pay. With no free-market there is no incentive to provide quality work. With no free-market, cost plus monopoly prices can be charged.

This idea government has no role in ensuring open and free markets without any pricing collusion bothers me. I remember in the 70s and 80s Big Oil executives being brought before Congress to testify why oil prices were so high. The World is awash in oil. Tankers are just sitting on the ocean waiting to be refined. Yet in my opinion oil is costing twice as much as it should. Gasoline should be $1.50 per gallon not over $3.00. Where is the congressional oversight??? Non-existent because of ideology. Congress is too busing doing nothing meaningful!

And then there is the national security side of this argument. Many functions of NSA have been outsourced to Booz Allen Hamilton a private corporation. As I said a corporation's charter by law is to maximize return to shareholders. What is to stop BAH from selling state secrets to the highest bidder on the open market? Since Congress is too busy doing nothing there is no congressional oversight. BAH could be selling US state secrets to China for huge profits. Or even worse some schmuck could be hired off the street and have access to the highest possible security clearance information without being vetted. Outsourcing creates a black box of government function. Public officials never take the time to look into the black box to see what corruption is going on.

Lobbyist Grover Norquist got his wish of "My goal is to cut government in half in twenty-five years, to get it down to the size where we can drown it in the bathtub." Now we have the smallest possible government with the greatest possible cost with the lowest quality of service.

Or even the worse possible thing could be happening. Politicians are being given campaign donations in exchange for having no oversight!


edit on 20-7-2019 by dfnj2015 because: (no reason given)




posted on Jul, 20 2019 @ 10:47 AM
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a reply to: dfnj2015

Outsourcing works sometimes. Not everything can be outsourced effectively. The theory with outsourcing is that a private company has more incentive to do a good job or else they'd lose the contract. In most cases, this is fairly accurate.

A govt employee generally just won't GAF hence why service is so poor at the DMV and many other government functions.

Private companies outsource a lot of functions that are not a core competency of the business but are still necessary to run a company. Think payroll, HR, IT, etc.



posted on Jul, 20 2019 @ 10:50 AM
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a reply to: Edumakated

All the examples you cited are not a boondoggle but have a market with competition. Outsourcing government functions is an instant boondoggle monopoly. With a do-nothing Congress we will never know.



posted on Jul, 20 2019 @ 10:58 AM
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originally posted by: dfnj2015
a reply to: Edumakated

All the examples you cited are not a boondoggle but have a market with competition. Outsourcing government functions is an instant boondoggle monopoly. With a do-nothing Congress we will never know.


Government outsource functions all the time. The companies compete to win the business. I am not following your logic. For example, say Govt needs IT work done. They outsource it to a company that can do the work. Companies compete to win the contract. These contracts are often put up for reevaluation and bidding every couple of years.

Where govt often screws up with outsourcing is that they often create non-market criteria. For example, minority set asides. So they may need IT work, so all the major IT companies bid on the work. However, they will carve out a section so that a minority owned business can get part of the deal. It is stuff like that that often leads to poor execution because results are not necessarily the only criteria.

Give an example where there is no competition in outsourcing....



posted on Jul, 20 2019 @ 11:05 AM
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a reply to: dfnj2015

Excellent thought exercize....star flag and kudos.

Just a couple comments to get started.

Government programs are generally woefully inefficient so, in most cases, the fact that there are corpotate profits in probably a wash.

As you point out, private entities often cut costs by paying lower wages to substandard workers, but the goverment a lot of substandard (lazy) ppl as well.

As to "if congress did their job" , I don't even know where to go with that, as it has become such an alien concept, we might as well talk unicorns.

I do agree, totally, about outsourcing activities related to national security. That should not even be an option. Not only is it a license for ex polititions, official, and military types to steal via no compete gov contracts, it gives current pols a shield of plausible deniability, and breeds a culture where there is zero accountability.



posted on Jul, 20 2019 @ 11:13 AM
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originally posted by: Edumakated

originally posted by: dfnj2015
a reply to: Edumakated

All the examples you cited are not a boondoggle but have a market with competition. Outsourcing government functions is an instant boondoggle monopoly. With a do-nothing Congress we will never know.


Government outsource functions all the time. The companies compete to win the business. I am not following your logic. For example, say Govt needs IT work done. They outsource it to a company that can do the work. Companies compete to win the contract. These contracts are often put up for reevaluation and bidding every couple of years.

Where govt often screws up with outsourcing is that they often create non-market criteria. For example, minority set asides. So they may need IT work, so all the major IT companies bid on the work. However, they will carve out a section so that a minority owned business can get part of the deal. It is stuff like that that often leads to poor execution because results are not necessarily the only criteria.

Give an example where there is no competition in outsourcing....


Hold on, I will review every government contract in next 5 minutes. I'll be right back and give you some examples. But I suspect, where there's money there's corruption. I'm sure who decides which company gets the contract and at what price is something to be examined.

Besides, my argument is just as much about the nature of corporations maximizing profit above all other considerations. Getting the contract is one thing. Providing the service with the greatest amount of profit may not always be in the interest of the purpose of government.



posted on Jul, 20 2019 @ 11:19 AM
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Some times outsourcing or subbing out work is good. Other times it is not. Contractors bid on road construction around here, it keeps the costs in line. But big military contractors have limitations on who can actually bid on things and specific requirements on technology and specific manufacturers are often identified in the bids. It does not matter if the contractor is supplying reasonable labor to do something if certain materials they are required to use are super inflated. To change a special nut on a military jet might cost fifty bucks by the contractor if it is in a difficult spot, but the special patented nut might cost four grand to get. Do you see what I am saying, why can't that nut be a regular nut, why does it need to be special and expensive. That is just an example, it might not be a real scenario.



posted on Jul, 20 2019 @ 11:20 AM
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originally posted by: dfnj2015

originally posted by: Edumakated

originally posted by: dfnj2015
a reply to: Edumakated

All the examples you cited are not a boondoggle but have a market with competition. Outsourcing government functions is an instant boondoggle monopoly. With a do-nothing Congress we will never know.


Government outsource functions all the time. The companies compete to win the business. I am not following your logic. For example, say Govt needs IT work done. They outsource it to a company that can do the work. Companies compete to win the contract. These contracts are often put up for reevaluation and bidding every couple of years.

Where govt often screws up with outsourcing is that they often create non-market criteria. For example, minority set asides. So they may need IT work, so all the major IT companies bid on the work. However, they will carve out a section so that a minority owned business can get part of the deal. It is stuff like that that often leads to poor execution because results are not necessarily the only criteria.

Give an example where there is no competition in outsourcing....


Hold on, I will review every government contract in next 5 minutes. I'll be right back and give you some examples. But I suspect, where there's money there's corruption. I'm sure who decides which company gets the contract and at what price is something to be examined.

Besides, my argument is just as much about the nature of corporations maximizing profit above all other considerations. Getting the contract is one thing. Providing the service with the greatest amount of profit may not always be in the interest of the purpose of government.


You made the claim, so I asked for an example.

I've worked on outsourcing on both sides. Consulting for f500 companies engaging in outsourcing their functions, but also the other side where we are preparing RFPs and evaluating contractors.

IIRC,government RFPs are usually public. Government puts out a Request for Proposal seeking a company to do something as innocuous as provide office supplies or build a fighter jet. Companies compete to win the business and are selected.

Yes, there can be some corruption (more so at the state and city level) where favored companies win business. However, that is more a human problem than it really is an outsourcing problem.

I agree that certain things pertaining to national security should not be outsourced. However, even then there is a grey area as govt may not necessarily be equipped.



posted on Jul, 20 2019 @ 11:21 AM
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a reply to: dfnj2015

A look at education spending - the salaries going to admins and to new buildings more than to teaching kids - is but one example of where government is no better than the private sector. Monopoly power in any form breeds corruption.

I saved a great comment I saw a while back: When government didn't control commerce, businesses didn't bother to try and buy favors from politicians because they had none to offer. Now that government controls business so much more, they have a lot more to offer to the rich, provided they pay up and let the politician in on the deal.

Government can be effective. But only if the bureaucracy is kept in check. There needs to be a maximum ratio of people doing the actual work, and office support staff, management, etc. They also should not be paying more than the private sector equivalent - I see so much nepotism in all levels of government, blatant nepotism, because the salaries and benefits are so much better.



posted on Jul, 20 2019 @ 11:26 AM
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a reply to: dfnj2015

Anything we do can be used as a double-edged sword. Sometimes it's hard to weigh the pros and cons.

While outsourcing can lead to taking advantage of experts in their fields, it can also lead to cronyism that might not lead to the desirable results we expected.

While outsourcing could be more expensive in the short term, the alternative could be ineffective federal employees who are hard to get rid of and we still end up paying long term benefits for them.

While outsourcing could make it easier to reveal secrets, these outsiders might also be the only ones willing to blow the whistle on observed corruption in our processes.

It's a catch 22 and I'm not sure there's any easy way to measure it.



posted on Jul, 20 2019 @ 11:37 AM
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originally posted by: Annagramma
a reply to: dfnj2015

They also should not be paying more than the private sector equivalent - I see so much nepotism in all levels of government, blatant nepotism, because the salaries and benefits are so much better.

I agree with most of what you stated.

Just to play devils advocate what about at the upper management levels?

An aggressive well educated CEO is going to command a seven or eight figure salary in the private sector. He isn't going to work 30 years for a gov pension. Do you think he should be payed that on the taxpayers dime, or are you willing to let the government program be run by someone who couldn't cut it in the capitalist world?



posted on Jul, 20 2019 @ 11:46 AM
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The only outsourcing that works is the minutia, the trained monkey stuff. If it is important and you outsource it, the first thing you do is lose the sense of ownership in the worker. Its not 'their' project, its just an assignment. The second thing is that outsourcing anything other than the most basic types of work puts you in an endless cycle of training employees that is never profitable. That leads to: excessive costs with little results. That is probably the best five word description of our government there is.



posted on Jul, 20 2019 @ 12:38 PM
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a reply to: dfnj2015

You are right on - my friend. Outsourcing is the very worst option for both quality of work and cost of work.

Take this, from todays headlines:


An unnamed official at the Department of Health and Human Services told NBC News that housing costs $775 per child per day.

That's more than a $675 deluxe guest room at the Trump International Hotel in Washington, D.C. (The average U.S. hotel room costs $129.)

Maintenance reportedly eats up most of the $775 daily cost per child for the tent camps, since it's difficult to keep temporary structures suitable for humans in a desert.

In permanent facilities run by Health and Human Services, the cost is $256 per person per night, and NBC News estimates that even keeping children with their parents and guardians in Immigration and Customs Enforcement facilities would only cost $298 per night.


www.gq.com...

At that price - they should be able to bathe, eat good food and have a private bed with pillow and real blanket.

This is a way to make 'WE THE PEOPLE" give these predatory Company's and their large shareholders money for nothing.



posted on Jul, 20 2019 @ 12:53 PM
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originally posted by: FyreByrd
a reply to: dfnj2015

You are right on - my friend. Outsourcing is the very worst option for both quality of work and cost of work.

Take this, from todays headlines:


An unnamed official at the Department of Health and Human Services told NBC News that housing costs $775 per child per day.

That's more than a $675 deluxe guest room at the Trump International Hotel in Washington, D.C. (The average U.S. hotel room costs $129.)

Maintenance reportedly eats up most of the $775 daily cost per child for the tent camps, since it's difficult to keep temporary structures suitable for humans in a desert.

In permanent facilities run by Health and Human Services, the cost is $256 per person per night, and NBC News estimates that even keeping children with their parents and guardians in Immigration and Customs Enforcement facilities would only cost $298 per night.


www.gq.com...

At that price - they should be able to bathe, eat good food and have a private bed with pillow and real blanket.

This is a way to make 'WE THE PEOPLE" give these predatory Company's and their large shareholders money for nothing.



Blame the open borders crowd for that! Idiots who have been promoting to these economical refugees that they come on in and get FREE stuff can't expect buildings to pop up over night so therefore the outsourcing to make sure of everyones safety and that includes US citizens!


You picked a piss poor example in your attempt to support Communism...



posted on Jul, 20 2019 @ 01:12 PM
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originally posted by: seeker1963

originally posted by: FyreByrd
a reply to: dfnj2015

You are right on - my friend. Outsourcing is the very worst option for both quality of work and cost of work.

Take this, from todays headlines:


An unnamed official at the Department of Health and Human Services told NBC News that housing costs $775 per child per day.

That's more than a $675 deluxe guest room at the Trump International Hotel in Washington, D.C. (The average U.S. hotel room costs $129.)

Maintenance reportedly eats up most of the $775 daily cost per child for the tent camps, since it's difficult to keep temporary structures suitable for humans in a desert.

In permanent facilities run by Health and Human Services, the cost is $256 per person per night, and NBC News estimates that even keeping children with their parents and guardians in Immigration and Customs Enforcement facilities would only cost $298 per night.


www.gq.com...

At that price - they should be able to bathe, eat good food and have a private bed with pillow and real blanket.

This is a way to make 'WE THE PEOPLE" give these predatory Company's and their large shareholders money for nothing.



Blame the open borders crowd for that! Idiots who have been promoting to these economical refugees that they come on in and get FREE stuff can't expect buildings to pop up over night so therefore the outsourcing to make sure of everyones safety and that includes US citizens!


You picked a piss poor example in your attempt to support Communism...


Blame whomever you like - blame never leads to solutions.



posted on Jul, 20 2019 @ 03:09 PM
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It depends on whether there is adequate oversight, and if the people doing the oversight actually do their job, not look the other way b/c of laziness or bribery. I think we have all seen in the US most things w/o stringent oversight suck balls.



posted on Jul, 20 2019 @ 03:13 PM
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Contractors are a huge business in the govt...

And it makes sense financially.......Gov't employees require health care, retirement, etc. A contractor doesn't require any of that.


Contractors can easily provide a body for much less cost per employee.



posted on Jul, 20 2019 @ 03:37 PM
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a reply to: Edumakated

I've worked on both bidding and buying outsource services in the UK, for both Public and Private sectors.

All in all I'd say outsourcing typically fails to deliver the returns expected by all stakeholders.

The selling model is typically price low based on delivering the bare minimum, and price any changes / exceptions on a premium basis. Contracts tend to be long term - to offset the cost of floating an RFP in the first place - so the scope to coin it on change requests is vast.

The buying model is to go for cheapest price, with only glaring quality gaps being of significance.

Part of the reason here seems to me to be 'career horizon' - the managers making the buy decision are often promoted before the contract they have been promoted for structuring has been fully implemented. Short term it all looks good

So, as I see it Mergers and Acquisitions typically fail to deliver the returns projected. Outsource contracts are like very specific Acquisitions.

So my question is name an outsource that works for all stakeholders? I can't.



posted on Jul, 20 2019 @ 06:29 PM
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originally posted by: dfnj2015
In my lifetime, since the 70s, almost every possible government function has been outsourced. It has been taken as gospel outsourcing government functions to private corporations is the best way. But is it really? If Congress were actually doing its job this would be an area of investigation. My theory is anywhere there are large sums of money being exchange there is corruption.

I think if outsourcing were really studied, we would find it creates the worse possible results for the greatest amount of cost. Outsourcing is an instant monopoly for the CEO. Every corporation is legally responsible to maximize return on investment to its shareholders. This drives CEOs to hire the least quality employees at the lowest possible price. When you have a boondoggle, there is no free-market to wring out any inefficiencies in CEO pay. With no free-market there is no incentive to provide quality work. With no free-market, cost plus monopoly prices can be charged.

This idea government has no role in ensuring open and free markets without any pricing collusion bothers me. I remember in the 70s and 80s Big Oil executives being brought before Congress to testify why oil prices were so high. The World is awash in oil. Tankers are just sitting on the ocean waiting to be refined. Yet in my opinion oil is costing twice as much as it should. Gasoline should be $1.50 per gallon not over $3.00. Where is the congressional oversight??? Non-existent because of ideology. Congress is too busing doing nothing meaningful!

And then there is the national security side of this argument. Many functions of NSA have been outsourced to Booz Allen Hamilton a private corporation. As I said a corporation's charter by law is to maximize return to shareholders. What is to stop BAH from selling state secrets to the highest bidder on the open market? Since Congress is too busy doing nothing there is no congressional oversight. BAH could be selling US state secrets to China for huge profits. Or even worse some schmuck could be hired off the street and have access to the highest possible security clearance information without being vetted. Outsourcing creates a black box of government function. Public officials never take the time to look into the black box to see what corruption is going on.

Lobbyist Grover Norquist got his wish of "My goal is to cut government in half in twenty-five years, to get it down to the size where we can drown it in the bathtub." Now we have the smallest possible government with the greatest possible cost with the lowest quality of service.

Or even the worse possible thing could be happening. Politicians are being given campaign donations in exchange for having no oversight!



I think you're overlooking something. Practically no government agency has enough government employees such that the agency could do everything that Congress wants it to do, using only civil service employees. Most government agencies (including the one I worked for) have only about 1/4 or less of the people they need to spend all the money that Congress gives them. There is also a law that government money can be be spent and overseen only by employees working directly for the government who have sworn an oath of office. That's why we have the system we do where most government employees end up being contract monitors, one way or another. Congress wants the government to spend a certain amount of money on various programs, but only wants to have enough civil servants to cover a fraction of that work. That's because Civil Servants are harder to fire than contractors, and they have good pensions and health. care plans. I't's also because the private sector (Lockheed, for example) complains loudly when they see the government doing something that they view as "their" job.

In some abstract sense, outsourcing government jobs may or may not be the most efficient way to get those jobs done, but there is no other alternative under current law.




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