Talking with a friend at lunch yesterday, I found out he’s retiring early. It seems his company lost the contract for support to another company that underbid them by a considerable amount, even though they’ve been the incumbents for 15 years, and done an outstanding job.

Said company apparently has no footprint in the area, and is ‘offering’ to keep some of the folks on for a ‘minor’ pay cut of 30%…

This is yet another fallout of sequestration that isn’t apparent to folks outside government, but it’s costing people their jobs and in some cases ending long term relationships with various governmental organizations.

He’s in the ‘know’ so to speak, and said the direction from the powers that be was money was the driving force in the selection process. NOTHING else! Apparently said company was judged to be minimally qualified in all areas, where his company was rated outstanding in all areas… But MONEY!!!

Some fairly significant programs have effectively been shut down by this logic, as people who can do the jobs required are apparently not willing to take the pay cuts, nor or they willing to ‘extend’ for a month or two to train their replacements (who apparently in some cases have NO experience).

I’m also hearing the government is now apparently capping pay individuals can earn as contractors/consultants at the equivalent of a fully-loaded GS-15, ($170835) which seems like a lot until you start figuring out the various rates/calculations that go into contracted labor rates.  Pretty much a standard multiplier is 2.0-2.5% so dividing by .23 yields a rate of $74276, which is significantly less than the $130000 range most of the very senior/experienced PHD contractors make. I can’t think of many folks who are willing to take an almost 50% pay cut to continue to work in these highly stressful jobs. I’ve also heard of at least six PHDs that I personally know that have left government to return to academia sighting the pressures and ‘unrealistic’ expectations of management in the last two years.

If you really want to get down in the weeds, HERE is a Project on Government Oversight (POGO) report from 2013.

Much of the contracting lies at the feet of Bill Clinton, who ‘cut’ the size of the federal government by cutting positions (inside the government), which were immediately turned into contractor positions at 1.5-2.0 times the salary in the next weeks.

Realistically, due to the cuts in active duty military personnel, and reductions in workforce structure inside the government to ‘try’ to comply with personnel costs, there is no workable path forward for the Defense Department to functionally manage the levels of complexity today. We’ve all seen the cost over-runs, the contracting nightmares, etc. Why do they occur?

Simple- When you only pay for a mid-grade contracts specialist, and an even lower grade analyst, you don’t get the quality of personnel to actually MANAGE large, sometimes multi-billion dollar projects. And when you only have three or four people to ‘monitor’ two-four projects that large, what do you think happens?

The contractors have entire TEAMS of accountants and lawyers doing that billing and oversight. They’re going to bill everything allowable under the contract to the benefit of the contractor.

Of course all this is happening at the same time as entitlements continue to rise, and there doesn’t seem to be any ‘controls’ in place on that side of the contracting…

Funny isn’t it???