http://www.matthewyglesias.com/archives/2007/02/the_trouble_with_contracting/
The Trouble With Contracting
The trouble with government work, as opposed to the private sector is that there's a lack of efficiency. It's important to understand, however, that there's nothing intrinsically efficient about private sector work. No magical "it's the free market" dust comes and renders private enterprises effective. Rather, the idea is simply that an inefficiently run private enterprise (and there are many) would simply go out of business. An inefficiently run government office, by contrast, goes out of business when it loses political support and sees its budget grow as long as it maintains political support. Thus, you see public sector dollars flowing to whatever there's a strong political constituency for, whereas private sector dollars flow to wherever well-managed firms are meeting demand.
Then enter government contractors which, as The New York Times points out, have exploded to unprecedented levels under George W. Bush and the late unlamented Republican congress. Here you have private enterprises displacing government. Why? For the private sector efficiency, of course! But you don't actually get that efficiency. It's still a government program. Funding is still being determined by political support. The cash doesn't go to companies that can do a really good job, it just goes to companies that have political clout -- i.e. ones that recycle a share of their profits into campaign contributions. It's essentially the worst of both worlds, since you get the inherent problems of the public sector plus the need for owners to be taking a slice off the top in profit margins. It is, however, a very good deal for politicians interested in union-busting and for politicians interested in raking money in from government contractors. Shockingly, the GOP loves it.
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Colin Brace
Amsterdam