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Tuesday, May 15, 2007
Comment on the CAP Contracting Report
A quick comment on the CAP report- it focuses on the surge in non-competitive contracts. But non-competitive bids are just the most obvious example of how market forces are not being applied in government contracting. The most damning observation that the CAP report makes is that even if these bids were competitive, the work wouldn't be done efficiently. Agencies need resources to hold contractors accountable, but they often don't have them. Congress needs to fulfill its constitutional role to conduct oversight, but often it doesn't. And sometimes contract oversight is being done by contractors, too. But who keeps them honest?
The upshot here is that price competition is not strong enough in government work to promote efficiency by itself. The principle virtue of the market- the capacity of the "invisible hand" to efficiently allocate resources- does not automatically pertain to government contracts. Agencies have to make an active effort to ensure that contractors do their job. That takes money- more money than might be saved by contracting out. So economy is not a self-evident reason to outsource government work.
The onus is on the contractors to show that, taking all costs into account, they do a better job than government workers. That hasn't been proven definitively, despite the ample evidence available since the surge in contracting began in 2000. Until that happens, it would seem that efficiency alone is insufficient ground on which to consider outsourcing government work.
Posted by Matt Lewis
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