You Got to Be Kidding Me!

Federal contractors have massive cost overruns?

Posted in Economics, Politics by Stacy McMahon on February 8, 2007

Imagine that. Of course we don’t have to:

The “floodgates of fraud reporting” have opened at the National Reconnaissance Office, the nation’s top-secret builder and operator of spy satellites. This bit of news comes from no less a source than the NRO’s inspector general, Eric Feldman.

The problems are so deep they “threaten the U.S. edge in high-tech reconnaissance satellites” according to USA Today. Specifically:

The agency’s troubled next-generation satellite, a $25 billion boondoggle called Future Imagery Architecture, has been so dogged by cost overruns and technical trouble that the director of national intelligence cut the project in half last year.

Being a veteran of federal contracting myself, I think one of the biggest problems is actually related to the rules surrouding outsourcing and contracting. For one thing, it’s often against those rules for an individual employee to split their time between contracts, negating most of the economic case for outsourcing in any line of work. For another, entire large projects like the aforementioned satellite replacement are outsourced to a prime contractor which becomes almost a department of the agency. These contracts are sometimes paid per full-time staff position, as opposed to a flat fee or even time and materials to accomplish specific goals. Of course the contractor’s primary incentive is to keep the contract going as long as possible, not finish the job and move on.

And then there’s the competence factor. Most government contracting jobs, both DOD and civilian, require a security clearance, but the process of getting a new clearance for an employee is extremely difficult and expensive, and is all placed on the contractor’s shoulders. Therefore, even the largest contracting firms with the deepest pockets avoid getting new clearances whenever possible, even if it means hiring marginally-qualified people to do sophisticated work. Future Imagery Architecture is far from the only massive federal high-tech project to be years and billions of dollars past due.

My condo board, or your household (or mine) does it closer to right. We do the overall project management ourselves, bidding out narrow and specific jobs to qualified contractors. That’s how the government should do it–keep project management in house and bid out specific pieces with tight scopes of work, and no rules about anything but getting the job done (and disclosure, if needed)

At any rate, I’ll leave you with this original demotivator by Clint, which really captures the morass well:

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2 Responses

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  1. Clint said, on February 9, 2007 at 1:37 pm

    Pictures hotlinked off flickr are required to link to the flickr page holding it. (Their terms of service, but I think it makes sense, though inconvenient.)

    I wont tell ’em 🙂 But next time click ‘all sizes’ – at the bottom of the page there is 1-click-to-clipboard code for doing this 🙂 It’s actually less work than right-clicking on the image and copying its address anwyay. . . . so that’s good incentive.

    Anyway — thanks for including that! I’m glad I could help inspire!

    I’m doing another demotivator soon. I already got the image for it, but had to ask permission of the guy on flickr becuase he didn’t have his pictures under creative commons (but if i get no response, I’ll probably steal it anyway). It’s going to be “IMMORTALITY: It’s all fun and games until your sun supernovas.” Now try to imagine the best picture for that. Finding it is hard. 🙂

  2. Stacy McMahon said, on February 9, 2007 at 2:16 pm

    Clint: “Pictures hotlinked off flickr are required to link to the flickr page holding it.

    I fixed it, thanks for the heads-up.


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