Wednesday, March 17, 2010

Cost Comparison of State Dept Employees vs. Contractors

For Security Services in Iraq

The Government Accountability Office has recently released a 20-page report, “Warfighter Support: A Cost Comparison of Using State Department Employees versus Contractors for Security Services in Iraq. Excerpt below:

For this engagement, congressional interest specifically focused on determining the costs to the Department of Defense and the State Department of using private security contractors for security services versus using federal employees to provide the same services. However, DOD was unable to provide us with the information necessary to address our engagement objective. Although DOD provided some data on military personnel costs,4 DOD officials told us they could not provide other data necessary to complete a cost comparison. Therefore, we focused our review on the comparison of the State Department’s costs to use private security contractors—to perform both personal and static security functions—as opposed to using State Department employees to perform those same functions.

To address our objective, we reviewed the task orders and contract which provided security in Iraq and that were current when we began our review—four task orders of the Worldwide Personal Protective Services (WPPS) II contracts and one contract for Baghdad embassy security

These assumptions included (1) the State Department would have to recruit, hire, and train new employees who would all be U.S. citizens; (2) the employees would serve 1 year in Iraq and then return to the United States; and (3) the State Department would use the same number of employees the contractors use to provide security. We focused our analysis on the major quantifiable cost components such as salary, benefits, overseas costs, training, recruitment, background screenings, and support.

Results in Brief

Our comparison of likely State Department costs versus contractor costs for four task orders and one contract awarded by the State Department for security services in Iraq showed that for three of the task orders and the contract, the cost of using State Department employees would be greater than using contractors, while the State Department’s estimated cost to use federal employees was less for the other task order.

For example, using State Department employees to provide static security for the embassy in Baghdad would have cost the department approximately $858 million for 1 year compared to the approximately $78 million charged by the contractor for the same time period. In contrast, our cost comparison of the task order for providing personal security for State Department employees while in the Baghdad region—which required personnel that have security clearances—showed that for this task order, the State Department’s estimated annual cost would have been about $240 million, whereas the contractor charged approximately $380 million for 1 year. However, because the State Department does not currently have a sufficient number of trained personnel to provide security in Iraq, the department would need to recruit, hire, and train additional employees at an additional cost of $162 million. Contract requirements are a major factor in determining whether contractors or government personnel are less expensive—especially factors such as whether personnel need security clearances. However, there are other factors that may play a role in the decision of whether to perform security services with federal employees or

Overall, the difference between the contractors’ cost and the estimated State Department cost ranged from about $3 million for one task order to over $785 million for the contract. [...] Although the State Department had not performed a cost comparison for security services, for our cost comparison, the State Department said it would use 100 percent U.S. citizen employees and would use the same number of personnel the contractor provided to perform the services as a start point for the comparison. However, because the State Department lacks a sufficient number of personnel to provide security in Iraq it would need to hire thousands of new security personnel. Furthermore, under State’s rotation policy, U.S. citizen employees typically only serve 1 year in Iraq and then are reassigned to a position in the United States. As such, in order to provide more than 1 year of deployed security services, State Department officials stated they would need to hire additional employees to meet a one-to-one ratio of stateside and deployed employees, which will double some of State’s estimated costs to provide security services. These additional employees would need to be hired about 1 year prior to being deployed to allow sufficient time for completing the State Department’s training program for Foreign Service agents, which is approximately 1 year.

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