Time to Start Fixing Federal Contracting

Privatization works when it is done right. The Bush years saw a large expansion in federal contracting, some of which worked very well and some which did not. Unfortunately, those years saw an explosion in substandard contracting practices.

For example, this article points out the significant increase under Bush in cost-plus contracts, which reimburse contractors for expenses, thus putting the risk up higher costs on the government, and giving contractors little incentive to keep costs down. Sometimes it is appropriate for the government to take those risks. But it is not obvious there has been a big expansion in those circumstances in recent years. More likely cost plus was a quick and easy way to reach a contract, and “we’ll worry about the costs later.” No surprise from such a spendthrift administration.

As the Obama administration overhauls federal privatization (though the tendency right now seems to be to end it), they should put some real emphasis (for starters) on:

a) Systematic analysis of the proper contracting tools in each case, balancing risks and responsibilities properly, and

b) Putting real managment emphasis on acquisition management and workforce to have the skills needs and the appropriate managment emphasis and attention.

Adrian Moore

Adrian Moore, Ph.D., is vice president of policy at Reason Foundation, a non-profit think tank advancing free minds and free markets.