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hiredgun · 08-12-2008, 01:25 PM

This is a question with a lot of dimensions. For certain functions, it seems to me that whether you have a public or a private entity is not at all crucial. Does it really matter whether a private firm is building the barracks, road, or bridge, or the Army Corps of Engineers? Does it matter whether junior military folks staff the mess halls, or KBR / Halliburton? To my mind what matters here is the effectiveness rather than the identity of the people doing the work. (Combat roles - folks with guns, who often enough are shooting at people - are a different story.)

The big reason for the rise of contracting - this includes stateside outsourcing of research, policy, and even intelligence work, as well as in-theater support staff and in-theater combat roles a la Blackwater) - is a legitimate frustration with the ability of traditional government employment models to deliver the needed skills and results in a timely and cost-effective manner. The federal government employment process is one utterly broken behemoth, from A to Z. Pay schedules are mapped out in byzantine, preset tables according to rank, with pre-scheduled 'step' and 'grade' rises corresponding to increased pay. It is a Cold War system, designed to maintain a large, stable national security bureaucracy in place through years of quiet, waiting for a moment of huge confrontation or crisis. The system is terrible at attracting or retaining talent, as it does little to reward it. Every new hire is also an enormous liability - it is almost impossible to fire someone. So when you hire someone, you're taking on the liability of their current salary, future scheduled increases, benefits, pension.... And because it is hard to get rid of people, the worst personnel usually just get shuffled from office to office, or worse, promoted simply to get them out of the way. And the clearance process! The clearance process is broken, plain and simple. It screens out many of the most valuable candidates from highly-cleared positions because those people have seen too much of the world, or had contact with too many foreign nationals, to be trusted.

Suffice it to say, for the government to staff a project is mind-numbingly and needlessly difficult, like trying to escape a straitjacket while suspended in a vat of molasses.

By contrast, private enterprise is free of almost all of those restrictions. They can offer competitive salaries and re-organize (hire and fire) almost at will, so they have the ability to stand up new capabilities quickly and flexibly. They can do in weeks or months what the government might achieve in years.

You can see why the temptation is there for those handling budgets to do it this way. I am speaking here about national security contracting in general, not just for deployment in-theater.

Add to that your very accurate assessment of the administration's decisions: Rumsfeld was a true believer in the modern 'lean' military (read Woodward's account and it is astonishing; the Secretary of Defense was literally reading and re-reading purchase and troop requests, crossing out individual line items of personnel and equipment. It is fairly unprecedented as DOD micro-management goes) and the administration needed desperately to preserve its delicate hold on public opinion, meaning that they would take every avenue possible to reduce the impact of the war on ordinary Americans.

A sidenote on that - managing public opinion is a part of almost every big decision in statecraft. That this was a consideration in how they did things, I do not find to be an evil in itself. On the contrary, it would be foolhardy for any foreign policy team to take a decision without considering how public opinion might affect their ability to execute a policy effectively.

That the contracting for this war has been so laden with problems, I take to be a result primarily of two factors, one of which is systemic, and one of which is particular to this war. The systemic problem is that the contracting process is quite remarkably different from anything a sane person would call 'free enterprise' or competition. It is a world marked by a lack of oversight and transparency, by graft, corruption, and backdoor dealing, and by a remarkably cavalier attitude toward the disbursement of billions of taxpayer dollars. The problems are complex. The contracting officer and other decisionmakers may not be expert or even knowledgeable in the field in which they are awarding contracts. Enforcing fair competition proves almost impossible, as quotes can be cherrypicked in order to produce the desired winner. A few enormous firms control the majority of contract money and routinely gobble up the smaller players. The control of these few firms is further entrenched by byzantine contract rules and access to 'contract vehicles' through which funds must be awarded. And when gov folks do take the time to pore through a large number of proposals, they often have no way of sorting the bullshit from the legitimate. When you get a response to an RFP in pretty letterhead, from a firm with a slick website, promising to deliver at 30% less cost than their nearest competitor, you may take it. Once the money is awarded, it is an arduous and difficult process to hold contractors to account, especially when they have been careful to hit all the necessary checkboxes in the Statement of Work. Quality suffers accordingly. The problem here is not that the private sector cannot deliver good service. It is that the contracting environment does not at all resemble the idealized market competition of an econ textbook, or even the realistic market competition in which most ordinary industries operate.

The problem particular to this war is that the contracting arrangements - like everything else - were made in utter haste. This meant less oversight, less scrutiny of bidders, and more excuses for closed, no-bid or sole-source contracts processed on compressed timelines. It also meant that because the contractors were delivering huge projects on short notice, enormous premiums were paid in order to facilitate the logistics of it all.

Blimey this is a long post. I'll stop now.

08-12-2008, 01:25 PM	#2 (permalink)
hiredgun Addict	This is a question with a lot of dimensions. For certain functions, it seems to me that whether you have a public or a private entity is not at all crucial. Does it really matter whether a private firm is building the barracks, road, or bridge, or the Army Corps of Engineers? Does it matter whether junior military folks staff the mess halls, or KBR / Halliburton? To my mind what matters here is the effectiveness rather than the identity of the people doing the work. (Combat roles - folks with guns, who often enough are shooting at people - are a different story.) The big reason for the rise of contracting - this includes stateside outsourcing of research, policy, and even intelligence work, as well as in-theater support staff and in-theater combat roles a la Blackwater) - is a legitimate frustration with the ability of traditional government employment models to deliver the needed skills and results in a timely and cost-effective manner. The federal government employment process is one utterly broken behemoth, from A to Z. Pay schedules are mapped out in byzantine, preset tables according to rank, with pre-scheduled 'step' and 'grade' rises corresponding to increased pay. It is a Cold War system, designed to maintain a large, stable national security bureaucracy in place through years of quiet, waiting for a moment of huge confrontation or crisis. The system is terrible at attracting or retaining talent, as it does little to reward it. Every new hire is also an enormous liability - it is almost impossible to fire someone. So when you hire someone, you're taking on the liability of their current salary, future scheduled increases, benefits, pension.... And because it is hard to get rid of people, the worst personnel usually just get shuffled from office to office, or worse, promoted simply to get them out of the way. And the clearance process! The clearance process is broken, plain and simple. It screens out many of the most valuable candidates from highly-cleared positions because those people have seen too much of the world, or had contact with too many foreign nationals, to be trusted. Suffice it to say, for the government to staff a project is mind-numbingly and needlessly difficult, like trying to escape a straitjacket while suspended in a vat of molasses. By contrast, private enterprise is free of almost all of those restrictions. They can offer competitive salaries and re-organize (hire and fire) almost at will, so they have the ability to stand up new capabilities quickly and flexibly. They can do in weeks or months what the government might achieve in years. You can see why the temptation is there for those handling budgets to do it this way. I am speaking here about national security contracting in general, not just for deployment in-theater. Add to that your very accurate assessment of the administration's decisions: Rumsfeld was a true believer in the modern 'lean' military (read Woodward's account and it is astonishing; the Secretary of Defense was literally reading and re-reading purchase and troop requests, crossing out individual line items of personnel and equipment. It is fairly unprecedented as DOD micro-management goes) and the administration needed desperately to preserve its delicate hold on public opinion, meaning that they would take every avenue possible to reduce the impact of the war on ordinary Americans. A sidenote on that - managing public opinion is a part of almost every big decision in statecraft. That this was a consideration in how they did things, I do not find to be an evil in itself. On the contrary, it would be foolhardy for any foreign policy team to take a decision without considering how public opinion might affect their ability to execute a policy effectively. That the contracting for this war has been so laden with problems, I take to be a result primarily of two factors, one of which is systemic, and one of which is particular to this war. The systemic problem is that the contracting process is quite remarkably different from anything a sane person would call 'free enterprise' or competition. It is a world marked by a lack of oversight and transparency, by graft, corruption, and backdoor dealing, and by a remarkably cavalier attitude toward the disbursement of billions of taxpayer dollars. The problems are complex. The contracting officer and other decisionmakers may not be expert or even knowledgeable in the field in which they are awarding contracts. Enforcing fair competition proves almost impossible, as quotes can be cherrypicked in order to produce the desired winner. A few enormous firms control the majority of contract money and routinely gobble up the smaller players. The control of these few firms is further entrenched by byzantine contract rules and access to 'contract vehicles' through which funds must be awarded. And when gov folks do take the time to pore through a large number of proposals, they often have no way of sorting the bullshit from the legitimate. When you get a response to an RFP in pretty letterhead, from a firm with a slick website, promising to deliver at 30% less cost than their nearest competitor, you may take it. Once the money is awarded, it is an arduous and difficult process to hold contractors to account, especially when they have been careful to hit all the necessary checkboxes in the Statement of Work. Quality suffers accordingly. The problem here is not that the private sector cannot deliver good service. It is that the contracting environment does not at all resemble the idealized market competition of an econ textbook, or even the realistic market competition in which most ordinary industries operate. The problem particular to this war is that the contracting arrangements - like everything else - were made in utter haste. This meant less oversight, less scrutiny of bidders, and more excuses for closed, no-bid or sole-source contracts processed on compressed timelines. It also meant that because the contractors were delivering huge projects on short notice, enormous premiums were paid in order to facilitate the logistics of it all. Blimey this is a long post. I'll stop now.