12/24/2009 03:25 pm ET Updated May 25, 2011

The $44,000 cost saving?

Talk about serendipity, or at the least, good timing. Yesterday I wrote on the issue of contractors and cost effectiveness.

Today the Washington Post's Walter Pincus has this article "Pentagon Sees Big Savings In Replacing Contractors With Federal Employees."

The Defense Department estimates it will save an average of $44,000 a year for every contractor it replaces with full-time federal personnel to perform critical defense jobs, according to the House-Senate conference report on the fiscal 2010 defense appropriation bill.

Now that is an interesting number. But in fairness to all parties, both public and private, one hopes that there is more detail forthcoming on the methodology used to come up with that number.

All that the report Pincus mentions says (down in the part where the one hour general debate begins) is this:

Civilian Workforce and In-Sourcing: The bill supports increased funding for DoD civilian personnel to in-source workload. The Department estimates that every position converted from contract to federal civilian saves on average $44,000 per year. Additionally, the bill includes general provisions to suspend further conversions by the Department of Defense from government functions to contractors.

Spencer Ackerman offer this useful analysis of the Pincus article

One should also remember the DoD estimate is not saying there is a cost saving when every private contractor is replaced. It is saying "critical defense jobs." While that presumably does not mean people doing laundry or preparing meals it still leaves a wide range of jobs, and not just those doing private security.

There are some other interesting provisions of the bill that Pincus does not mention. Consider just one example, Sec. 8016, which indicates a certain cautiousness about outsourcing yet more military functions to the private sector. It says:

Sec. 8016. (a) None of the funds appropriated by this Act shall be available to convert to contractor performance an activity or function of the Department of Defense that, on or after the date of the enactment of this Act, is performed by more than 10 Department of Defense civilian employees unless--
(1) the conversion is based on the result of a public-private competition that includes a most efficient and cost effective organization plan developed by such activity or function;
(2) the Competitive Sourcing Official determines that, over all performance periods stated in the solicitation of offers for performance of the activity or function, the cost of performance of the activity or function by a contractor would be less costly to the Department of Defense by an amount that equals or exceeds the lesser of--
(A) 10 percent of the most efficient organization's personnel-related costs for performance of that activity or function by Federal employees; or
(B) $10,000,000; and
(3) the contractor does not receive an advantage for a proposal that would reduce costs for the Department of Defense by--
(A) not making an employer-sponsored health insurance plan available to the workers who are to be employed in the performance of that activity or function under the contract; or
(B) offering to such workers an employer-sponsored health benefits plan that requires the employer to contribute less towards the premium or subscription share than the amount that is paid by the Department of Defense for health benefits for civilian employees under chapter 89 of title 5, United States Code.
(b)(1) The Department of Defense, without regard to subsection (a) of this section or subsection (a), (b), or (c) of section 2461 of title 10, United States Code, and notwithstanding any administrative regulation, requirement, or policy to the contrary shall have full authority to enter into a contract for the performance of any commercial or industrial type function of the Department of Defense that--
(A) is included on the procurement list established pursuant to section 2 of the Javits-Wagner-O'Day Act (41 U.S.C. 47);
(B) is planned to be converted to performance by a qualified nonprofit agency for the blind or by a qualified nonprofit agency for other severely handicapped individuals in accordance with that Act; or
(C) is planned to be converted to performance by a qualified firm under at least 51 percent ownership by an Indian tribe, as defined in section 4(e) of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b(e)), or a Native Hawaiian Organization, as defined in section 8(a)(15) of the Small Business Act (15 U.S.C. 637(a)(15)).
(2) This section shall not apply to depot contracts or contracts for depot maintenance as provided in sections 2469 and 2474 of title 10, United States Code.
(c) The conversion of any activity or function of the Department of Defense under the authority provided by this section shall be credited toward any competitive or outsourcing goal, target, or measurement that may be established by statute, regulation, or policy and is deemed to be awarded under the authority of, and in compliance with, subsection (h) of section 2304 of title 10, United States Code, for the competition or outsourcing of commercial activities.