“But it was a Facilitation Payment, I Swear!”
Last week, the Department of Justice announced that U.S. Army Reserve Sergeant Amasha King, age 33, had pleaded guilty to one count of “conspiracy to defraud the Department of Defense.”
Sergeant King served at Camp Arifjan, Kuwait. We’ve written about Camp Arijfan before. We had more to say about the rather infamous Camp here, where we noted “nearly unbelievable levels of corruption.” At least sixteen individuals have pleaded guilty to bribery and money laundering and other counts of fraud and corruption. Sergeant King makes seventeen—so far as we know. The true count may be higher.
Sergeant King served in the 347th Finance Battalion where she “was responsible for receiving and processing pay vouchers and invoices from military contractors for various contracts and blanket purchase agreements (BPAs), including BPAs for bottled potable water.” King was responsible for approving contractor payments and for issuing payment checks.
King took money from one contractor—about $20,500, according to the DOJ announcement—in order to ensure that the contractor’s invoices were processed “much faster than usual.” King directed the contractor to make wire payments to people in the United States, and to ensure that the individual wire transfer amounts were less than $10,000, so as to avoid bank reporting requirements.
According to the DOJ announcement—
King agreed to receive money from a military contractor in return for defrauding the United States by preferentially processing the contractor’s invoices outside of the proper procedures and protocols for payment. This allowed the contractor to be paid much faster than usual and ultimately to bid for more contracts than it otherwise could have financed.
We are against government employee corruption as much as the next guy, perhaps more than most (based on the word count we’ve devoted to the topic). But in this case, we’re unsure how heinous the crime actually was.
This strikes us as a case of “facilitation payments.” Facilitation payments, according to this anti-corruption website, are defined as “a form of bribery made with the purpose of expediting or facilitating the performance by a public official of a routine governmental action and not to obtain or retain business or any other undue advantage.”
The website goes on to say—
A distinction is generally made between facilitation payments and outright bribery and corruption. In some countries, it may be considered normal to provide small unofficial payments under certain circumstances, although this practice is illegal in most countries.
Facilitation payments are one of the unsettled questions in the OECD Convention, meaning that the convention does not establish them as an offence….
Some countries i.e. the United Kingdom and Germany criminalise facilitation payments abroad. Other countries, such as the United States, do not prohibit such payments abroad and have no upper limit for them, although only very low amounts of money would be regarded as facilitation payments.
It’s very clear that U.S. Government officials and military service men and women cannot accept “facilitation payments” in order to expedite execution of their duties. On the other hand, it’s not like the Sergeant’s actions as reported here were, themselves, violations of any laws. She simply ensured that contractually obligated payments were made, albeit faster than would normally be the case.
Despite the DOJ attorneys trying to make the point that early receipt of contractually due payments permitted the contractor to “bid for more contracts than it otherwise could have financed,” we think that’s a fairly speculative stretch. That’s a pretty tenuous benefit, if benefit it was.
We have an out-of-the-box idea. Make it an official practice: offer expedited payment processing to all government contractors. How much would your company pay to receive DFAS payments in ten days? One week? Three days? How much would it be worth to you, in terms of the time value of money?
Look: there’s a budget deficit at the moment. (Maybe you’ve heard about it?) Our idea would generate some cash that would seemingly help with that problem. Maybe the Pentagon should consider it.
The Defense Industrial Policy Debate, Election-Year Version
We recently wrote about the budget pressures facing the Federal government in the context of comparing the costs of “in-sourcing” versus “outsourcing”. But the policy battles between the in-sourcers and the outsourcers is simply one aspect of the overall budgetary debate taking place in this election year—and the Pentagon is at the center of the budgetary cross-hairs.
The Pentagon’s policy problem may be described as one of “defense industrial policy”—i.e., how to effectively manage the defense industrial base to cut the costs of weapon systems, while at the same time preserving critical skills unique to the aerospace/defense industry and making sure key strategic suppliers don’t fold-up their tents and sneak away in the night, leaving landlords looking for back rent money. It’s not a skill that the Pentagon historically has been known to possess.
In this article in National Defense magazine, author Sandra Erwin discusses the defense industrial policy debate. She wrote—
The Pentagon [historically] has shown little appetite for picking winners and losers, and has been more comfortable with a laissez-faire approach. After the Cold War ended, the Defense Department stepped out of the way and for five years let contractors consolidate at will. … Industrial policy mandates have existed since the 1950s but most administrations have ignored them, particularly in the post-Reagan era when even the suggestion that the government should manage the private sector is laughed off as a grandiose Stalin five-year plan. …
A recent study by the nonpartisan Center for Strategic and Budgetary Assessments predicts an ‘erosion of design capabilities for military-unique products’ and calls for the Defense Department to actively protect segments of the defense industrial base that are ‘truly important to retain,’ such as tactical aviation, nuclear submarines and spy satellites. ‘It is not unrealistic to foresee a day in which the U.S. defense industry no longer possesses the design or production capabilities for certain weapons systems,’ says the study.
The prevailing attitude that the defense industry is a free-market, Darwinian system is a myth, CSBA analysts contend. They note that the defense industry is a highly regulated sector of the U.S. economy in which the government is both the sole customer and the regulator. It is a ‘serious misunderstanding of the realities of weapons acquisition in the United States to think that the U.S. defense industry operates like a normal free market,’ says the study.
Defense policymakers assume that the industry has the ability to automatically resize as demand changes and still maintain competitiveness, but that is not how it works, says Marty Bollinger, director of Booz & Company’s aerospace and defense practice. Within the core of defense companies that produce military-unique equipment, the idea that there is a free market or real competition is a fairy tale, Bollinger says.
In this Reuters article, Frank Kendall (Under Secretary for Defense, Acquisition, Technology & Logistics, Acting) tried to walk a nice tightrope between reassuring contractors that the Pentagon will protect them, while warning them that they better reduce prices and focus on delivering on-time and on-budget. The article reported—
The Pentagon's acting acquisition chief Frank Kendall assured industry executives on Tuesday that there was still money to be made in defense, but said companies would have to deliver weapons within budgets and on time to be competitive. … ‘If you are not delivering on cost and schedule ... you are very vulnerable,’ Kendall … told a conference hosted by Aviation Week. …
Tighter budgets will increase competition for fewer programs, U.S. defense officials and industry executives said at the conference … They predicted that the number of bid protests would grow, and said companies would have to redouble their efforts to cut costs and overhead to be competitive. …
Discord between the U.S. Defense Department and its suppliers has led to protracted contract competitions because of what they called onerous contract terms. …
‘We're not looking to put you out of business,’ Robert Hale, the Pentagon's top budget official, said at the conference on Tuesday.
Readers will note that Messrs. Kendall and Hale were reiterating the same talking points Mr. Shay Assad recently uttered. We wrote at the time—
Mr. Assad has emphasized several times that he’s not looking to impact contractor profitability—just their costs. He’s fine with contractors making a reasonable profit (as he should be, given that it’s official Government policy). He reiterated this position again, quite recently, and the MSM and others who follow the defense industry picked-up on his words and reported them (again) as if they were some kind of promise of safe-harbor in the upcoming storm of sequestered DOD budgets.
Here’s a GovExec article on the subject. It discusses Mr. Kendall’s assurances as well as warnings from industry associations that cuts are going to hurt smaller companies the most. It reported—
Fred Downey, vice president of national security at the Aerospace Industries Association, told Government Executive that ‘ongoing reductions in defense spending coupled with the threat of sequestration cuts are causing a great deal of concern among smaller companies in the supply chain. Many of these companies have unique capabilities that could be lost if their workflow is interrupted by cancellations and delays.’ …
Alan Chvotkin, executive vice president and counsel of the Professional Services Council, which represents contractors, said the comments were ‘reassuring in that they demonstrate renewed attention at high levels. But a bailout, for lack of a better word, should not be counted on as a strategy by companies as the Pentagon takes steps to make sure the supply chain is not disrupted.’
On a related note, Jim McAleese issued a detailed look at the DOD’s FY 2013 budget request, and concluded, “Strong Performers are being rewarded. Poor Performers will be fired.” So it’s not necessarily only critical skills that the DOD Industrial Policy Directorate needs to consider; it’s program execution skills as well.
The foregoing messages should not be news to readers of Apogee Consulting, Inc.’s blog. We’ve been pushing program execution and supply chain management for years. For example, in this article we opined that—
We can save quite a bit of money if we manage programs better in an environment that’s conducive to effective program management. Congress can save money by reducing funding uncertainty and by rationalizing acquisition statutes and regulations. DOD can save money by partnering with its contractors instead of attacking them and by improving the quality of its acquisition management workforce. And contractors can save money by partnering with their subcontractors instead of trying to maximize their own profit at the expense of their subs
What’s more, way back in August, 2009, we warned readers by saying, “Look for increased pressure to cut costs and to trim overhead.” In this self-titled “rant,” we opined—
As we reported in this article, many major defense acquisition programs are dependent on rare earth magnets produced in China. You have a problem with that? It’s called free-market capitalism, cupcake. Free-market capitalism is what our country is supposed to be about.
Free-market capitalism is what happens when companies close-down production in locations with high labor costs or high insurance costs or high income taxes, and move their production facilities and/or workforce down the road a piece to where it’s cheaper to operate and the margins are higher. If by “down the road” one means “across the ocean to a foreign land” then so be it. You don’t like the results, then change the business climate, sweetheart.
You got a problem with loss of manufacturing capacity, loss of skilled jobs and industrial capacity, loss of critical technologies, and/or loss of ability to produce “American-made” defense weapons and programs? Then you better turn the Titanic around, Einstein, ‘cause the Pentagon hit that particular iceberg about 20 years ago.
In the meantime, while you’re running for the wheelhouse and pleading with the Captain to turn the ship around, we have work to do.
Finally, we want to point readers toward this little piece discussing DOD’s FY 2012 budget request to Congress. In that blog article, and in the context of surviving DOD budget cuts, we asserted—
Program execution matters. … Perhaps you should let the funding games play out as they may, trusting that your political action committees and lobbyists will do their jobs while you do yours. To that end, may we suggest (once again) that program execution and supply chain management be your priorities. In this new age of fiscal slash-and-burn, with a new (and perhaps newly focused) Congress sensitive to taxpayers’ concerns, nobody wants any more bad news. Your program’s on-time delivery and on-budget spending will be the good news that may guarantee you continued funding, now and into the future.
As we look at the recently enacted FY 2012 National Defense Authorization Act, or as we peruse McAleese’s analysis of the DOD FY 2013 budget request to Congress, we see no reason to change our consistent position on how best to handle the current and forecasted budgetary pressure on DOD programs.
While the DOD Industrial Policy Directorate pursues its “S2T2” analysis of the defense industrial base (and we wish them good luck with that), and while industry associations such as AIA, PSC, and NDIA fire up their legislators to oppose defense cuts while current law (and several grass-roots political groups) call for them, we think the best strategy for contractors is to execute spectacularly well on the contracts they have in-house. And as our readers know, this means managing program supply chains spectacularly well, as well.
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Ineligible Healthcare Dependents – Round 4
We promise to stop beating this dead horse when DOD stops flogging it. Until then, we will continue to bring you news regarding this exemplar of misapplied Pentagon oversight.
For those less familiar with the situation to date, here are a couple of links to get you up to speed:
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August 2009 – We opine that DCAA audit guidance is “troubling” and “contractors should immediately review their procedures associated with verifying dependent eligibility and shore them up as appropriate.”
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October 2010 – DCMA tells its Contracting Officers that HQ has agreed with DCAA that healthcare costs associated with ineligible dependents should be treated as “expressly unallowable” costs. So much for Contracting Officer “independent business judgment.”
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March 2011 – DCAA issues updated audit guidance to direct auditors that they should treat instances of contractors inadvertently claiming costs of ineligible dependents as a noncompliance with the requirements of Cost Accounting Standard (CAS) 405.
In the last update we concluded with a plea for the use of materiality and proportionality by government oversight officials. We wrote—
This insanity can be stopped, but only if adults step in to supervise the children. DCMA and DCAA are clearly caught up in ‘much ado about nothing’ and DOD leadership needs to realize the price that is being paid by its contractors, who will have to resolve these issues through the courts—since they see no other avenue available to them.
Well, here we are yet again—this time with a bit of a mixed message from DOD Leadership.
On February 17, 2012, Mr. Shay Assad, DOD Director of Pricing, issued a policy memo addressing this issue. Here’s a link to the memo in question. Mr. Assad, who has acted as intermediary in related matters before, wrote—
… costs that were incurred for ineligible dependent health care are unallowable under FAR 31.201-3 because it would be unreasonable to reimburse costs incurred due to invalid claims made by employees, also the costs are in violation of the selected cost principle at 31.205-6(m). …
The Department of Defense will continue to disallow ineligible dependent health care benefit costs. To the extent that these costs were bid on fixed price sole source contracts, the costs were an inaccurate representation of the allowable cost. Contractors are encouraged to voluntarily refund the increase in price they received on their fixed price contracts as a result of including these unallowable costs in their proposals and hence, their negotiated prices. In some cases the ineligible health care benefit costs may have resulted in defectively priced contracts that were certified in accordance with TINA.
If you took the time to refresh you short-term memory with our three previous articles, you should already be feeling a stabbing feeling in the back of your skull. There may be some momentary nausea and disorientation. Ignore all that, get a hold of yourself, and let’s evaluate DOD’s current position, vis-à-vis some significant moved goalposts.
The first thing you ought to notice in the foregoing policy statement is that it is being asserted that the costs in question should be unallowable “because it would be unreasonable to reimburse [them].”
You know what you do when you ass-ert something? Yeah, that.
Anyway, that assertion is wrong. First, “reasonableness” is a term of art, defined by the general (or “cornerstone”) cost principle at FAR 31.201-3 (“Determining Reasonableness”). “Reasonableness” is an allowability evaluation criterion that is applied to costs claimed by a contractor. It does not apply to the decision-making of the DOD Leadership Team. (If it did apply, then … wow. So much language would have to be stricken from the regulations. But we digress.)
That clear misuse of the term was our first indication that this policy position was going to be as firm and tenable as Birnham Wood. (Yeah, it’s a Shakespeare reference. Go look it up.) But that’s not the end of the analysis, by any means. Let us continue:
We don’t know—and neither does the DOD Leadership—whether or not it would be reasonable to permit contractors to include the costs of ineligible dependents in costs they propose, negotiate and, presumably, bill to the Pentagon. We don’t know the amount of such costs, and how much it would cost to identify and segregate them from other claimed costs. Is DOD proposing that contractors each spend $10 million in order to save $50,000? We hope not, because that would be an unreasonable waste of contractor (and taxpayer) funds. To restate: it may be entirely reasonable to permit contractors to claim such costs—if the costs are immaterial in amount and the expense of identifying them and excluding them would exceed the amounts being claimed. We don’t know the facts (and neither does Mr. Assad), and so it’s clearly premature to assert that reimbursing the costs is (or would be) unreasonable.
Let’s also remember that “reasonableness” has a fairly lengthy FAR definition which can be summed up as the comparison of the nature of the activity and the amount of costs in question to “that which would be incurred by a prudent person in the conduct of competitive business.” Since this issue has been, by all reported accounts, a problem across the entire defense industry, we wonder whether it might be found to meet the FAR reasonableness test simply by existing in the first place. But that’s for the Courts to decide….
We also want to smirk a bit at the assertion in the policy memo that the costs in question are “in violation of the selected cost principle at 31.205-6(m).” Maybe. Or maybe not. The policy memo summarizes the requirements of that piece of the Compensation Cost Principle in its first sentence (without—we note—an attribution, and before it subsequently misapplies the term “reasonable”). Putting aside the “reasonableness” focus for a minute (out of the kindness of our hearts), let’s look at the implied assertion that ineligible dependent health care costs are unallowable because they are in violation of the contractor’s established policy.
If that’s the only basis for the cost disallowance, then the fix would be entirely straight-forward. Each contractor should simply amend its policy to permit formerly ineligible dependents to now be eligible for health care benefits. There. Problem solved. And you’re welcome.
The thing is: that change is already in process. And the Federal government is mandating it.
What do we mean? Well, check out the details of President Obama’s health care reform. You will note that one of the individual reforms is to mandate coverage of young adults on their parent’s health care benefit plans until they are 26 years old. That’s a fairly decent proportion of the formerly “ineligible” dependents right there. So the Pentagon’s problem is already shrinking by executive direction (or public law, if you prefer).
But returning to the matter at hand, we are left with the unfortunate conclusion that this entire problem is all about contractors’ policy. Rewrite the policy and what do the auditors have to base their assertions upon? Nada. Zip. Nothing.
But we are not done yet. Not by a long shot.
Look at the second paragraph in the policy memo. We’ll repeat it for your convenience:
To the extent that these costs were bid on fixed price sole source contracts, the costs were an inaccurate representation of the allowable cost. Contractors are encouraged to voluntarily refund the increase in price they received on their fixed price contracts as a result of including these unallowable costs in their proposals and hence, their negotiated prices. In some cases the ineligible health care benefit costs may have resulted in defectively priced contracts that were certified in accordance with TINA.
Again, the assertion that the costs of the ineligible dependents “were an inaccurate representation of the allowable [health care] cost” is completely without support and absolutely up for debate. The policy memo is fairly clear that the health care costs in question are being bid, accounted-for, and billed as part of contractors’ “fringe benefit” indirect cost pools. If that’s so, then the question of fact that needs to be answered is whether the costs of the ineligible dependents were of sufficient magnitude to change the indirect cost rate being proposed (and accounted-for, and billed). If the costs were de minimis in amount and did not affect the indirect cost rate, then the costs were not inaccurately represented and the Government suffered no harm.
Further, we need to point out that FAR 31.102 undercuts the memo’s assertions. It states (in part)—
However, application of cost principles to fixed-price contracts and subcontracts shall not be construed as a requirement to negotiate agreements on individual elements of cost in arriving at agreement on the total price. The final price accepted by the parties reflects agreement only on the total price.
(Emphasis added.)
In other words, even if the fringe benefit costs proposed on Fixed Price contracts were inflated by the inclusion of the costs of ineligible dependents, once the price is negotiated it no longer matters. The price was fair and reasonable, and that’s sufficient for government contracting purposes.
Given the foregoing, it should be clear that there had better be a compelling business reason that would lead one to think it was appropriate to agree to a “voluntarily refund” of any price increase (assuming one even existed). We note the thinly veiled threat in the memo that contractors who fail to “voluntarily refund” their allegedly ill-gotten gains may be subject to allegations of defective pricing. That’s pretty much a crock an error, in our view. We don’t think that threat should play a factor in the decision-making surrounding this entire brouhaha.
The Truth-in-Negotiation Act (TINA) is a disclosure requirement, not a use requirement. In order to disclose, somebody has to know. Logically, the contractor had to know it had ineligible dependents; it had to know the number of ineligible dependents; and it had to know how much health care costs were being increased by the ineligible dependents. And knowing, it had to fail to disclose. Given that most contractors didn’t even know about the issue until DCAA decided to make an issue of it, that series of “had to knows” is very unlikely to have happened.
And we’re not even going to go into the FAR 2.101 definition of “cost or pricing data” (another term of art) that states that such data is that which, “prudent buyers and sellers would reasonably expect to affect price negotiations significantly.” We’re not going to wonder whether anybody in their right minds would expect the cost of ineligible dependents to “significantly” affect price negotiations. Because if we did wonder about that, we’d be very skeptical.
So, having hopefully poked a few holes in the policy memo, you might reasonably think we’d be done. But first we have a few more shots to fire.
The Assad policy memo concludes with the following statement—
The Department will not pursue application of penalties under FAR 42.709 to these ineligible dependent health care benefit costs. However, it is our intention to amend the DFARS to make future ineligible dependent health care benefit costs expressly unallowable and thus subject to penalties.
We are pleased that the Pentagon policy-makers realized that it was going to be a bumpy road, fraught with peril, to try to assert that the costs were expressly unallowable. (See our previous comments on that issue in the links above.) Apparently somebody read the case law and realized it was going to be a loser.
But the fact that Mr. Assad’s organization feels so strongly about this issue that it wants to amend the DFARS to bolster its position is just … puzzling. It never was that big of a deal and, as the memo itself acknowledges, “contractors, in large measure, have already corrected the problem and they are now not including the costs … in their claimed and estimated indirect rates.” So, problem solved—but apparently that’s just not good enough for the folks at the DOD. They seemingly feel the burning need to put a stake in the heart of this issue so that it can never rise again.
In our view, this has always been “much ado about nothing” and we are sad that the DOD policy-makers can’t move on to something more important, like contractor defined-benefit pension costs. Like a dog with a bone, they keep worrying and worrying at it.
Maybe they should just bury this particular bone in the ground for a while. We’re quite sure there are more meaty issues around to deal with.
Will In-Sourcing Help Solve Federal Budget Problems?
For at least a decade, the Federal government has used A-76 competitions and other opportunities to replace government employees with contractor employees—a practice generally known as “outsourcing”. It was generally held that outsourcing resulted in taxpayer savings. But late last year, the self-appointed watchdogs over at the Project on Government Oversight (POGO) released a study that claimed that using contractors to perform services formerly performed by government employees “actually increases costs to taxpayers” instead of resulting in savings.
POGO asserted that “while federal government salaries are higher than private sector salaries, contractor billing rates average 83 percent more than what it would cost to do the work in-house.” POGO reported—
POGO’s study compared 35 federal job classifications, covering more than 550 service activities. The occupations included everything from auditing and law enforcement to food inspection. The results surprised even POGO investigators…
In 33 of the 35 job classifications POGO looked at, the average contractor billing rate was significantly steeper than the average compensation for federal employees. The two jobs where it was more cost-effective to hire contractors were groundskeeper and medical records technician. So when the White House needs its lawn mowed, it shouldn’t hire in-house. Still, in every other case, it was cheaper for the government do the job itself.
In some occupations, the difference in price was so dramatic, any coupon-clipping soccer mom could easily have seen the government was getting ripped off. When the government hired a claims examiner for example, it paid the contractor nearly five times more than if it had gone with a federal employee.
(Emphasis in original.)
In a follow-up article, POGO asserted the following—
For years, federal agencies have assumed that outsourcing work to contractors would reap the benefits of private sector efficiencies and save taxpayer dollars. Policy makers have debated the size of the government and whether federal employees are overpaid, often relying on studies that simply compare federal and private sector salaries.
However, those analyses have not recognized that the cost of outsourcing is not what the employees of contractors are paid by their employers, but rather the amount that the government pays to the employing private sector contractors. As a result, previous analyses did not reflect the fact that actual government contractor billing rates for federal service contractors are significantly higher than the full costs (salary and fringe benefits) of hiring federal employees.
In that same article, POGO also responded to several criticisms it had received regarding its methodology.
Long-time readers of our blog may recall that we’ve addressed this issue before. We reported on a GAO study that indicated that use of State Department employees to perform OCONUS security functions was significantly more expensive than using contractor employees. As we reported—
So in three of four contract scenarios evaluated, using contractors actually saved the State Department money. And not just a little bit of money—GAO reported that use of Government employees was more than 10 times more expensive than using contractors. Moreover, where use of Government employees would have been cheaper, GAO noted that ‘because the State Department does not currently have a sufficient number of trained personnel to provide security in Iraq, the department would need to recruit, hire, and train additional employees at an additional cost of $162 million.’ In other words, when one adds the additional $162 million in government costs to the State Department’s estimated annual estimated cost of $240 million, one gets $402 million versus the contractor’s charges of $380 million—i.e., the contractor is marginally cheaper. To sum up, GAO found no instance where use of State Department employees to replace contractors would result in any cost savings to the U.S. Government or to the taxpayers.
That GAO finding was consistent with the viewpoint expressed by Dr. Loren Thompson of The Lexington Institute.
Adding more acquisition, audit, and program management professionals to DoD’s ranks … will compound the problem. … Dr. Thompson notes that those new heads will take additional funds—not just to cover the costs of salary and benefits, but also to cover the costs of training, equipping, housing and supporting them. As Dr. Thompson notes, ‘When you add up all these costs, the long-term burden of taking on 20,000 new acquisition professionals will be over $80 billion -- which just happens to be the projected cost of buying a replacement for the Trident ballistic-missile sub.’
So POGO says it’s dramatically more expensive to use contractor employees, while GAO and Dr. Thompson have reached the opposite conclusion. Who’s right?
Well, we’re not sure. But in late January, 2012, Government Executive reported on a study by the Congressional Budget Office (CBO) that government employees received higher compensation than their private industry counterparts—but that the pay gap varied by education level. GovExec reported—
In a comparison of civilian federal employees to private sector workers with similar observable characteristics, CBO found that federal workers come out on top in average wages (2 percent higher), benefits (48 percent higher) and total compensation (16 percent more). … After separating out the data by level of education, more distinctions became apparent. Federal civilian workers with only a high school diploma or less fared much better than private sector employees with the same: They earned 21 percent more wages, 72 percent higher benefits and 36 percent more in total compensation.
Government workers with bachelor’s degrees still did better, but not by as much. Though they earned roughly the same hourly wages, they made 46 percent more in benefits and averaged 15 percent higher total compensation than their private sector counterparts.
In contrast, among employees with a professional degree or doctorate, federal workers earned 23 percent less in wages and 18 percent lower total compensation, while receiving about the same benefits as the private sector employees with identical degrees.
In addition to the foregoing, GovExec reported that CBO found that Federal employees averaged four years higher in age—45 years versus 41 years.
This debate is not going away as long as there is a Federal budget deficit and politicians ready to point fingers at one side or the other. In the meantime, our readers may want to consider in detail the various studies summarized in this article--the POGO study, the GAO study, and the CBO study—and decide for themselves who’s right and who’s wrong.
While you’re doing that, we’re going to be busy reading a recent Accenture study on “human capital” issues facing the A&D industry, which is going to be the subject of a future blog article.
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First, thanks to the Federal Times for bringing this issue to our attention. Its story on the topic can be found here. But we are not going to recap the FedTimes story, because we obtained the official NASA IG report in question, reviewed it and, thus, have our own opinion to share with you.
