If they’re so risk averse, why are their systems failing so severely?
It’s absolutely a corruption issue, in that the government prefers to pay 2-3x what they would to solve things internally to contractors who then perform a poor job and lobby to keep whatever they build in place for decades.
> It’s absolutely a corruption issue, in that the government prefers to pay 2-3x
Being serious, I wish I could find one of these 2-3x multiple payouts in government. Every time I've looked at anything government related (including direct contractors) the pay is garbage. Usually 15% to 50% of what the private market pays for my skill set.
The contracting company receives usually 2-3x what the actual developer makes- so if the gov't pays $300K for a developer, they get a $100K developer. Some of that overhead is justified, but a lot of it is the company's profit.
The old answer used to be for the government to hire directly, but that's been hamstrung for like 40 years by now.
At my old firm, our federal project profit margin was a bit lower than median, though once you factor in the sales, contracting, and leg overhead the bottom line was somewhat worse than the project actuals made them look. Since our side of the house did relatively short-burn contracts (6-12 months), federal work was generally not that valuable for us; I used it for filler work when our usual sales pipeline was weak. The real value was for the side of the house that did long-term software and support work or heavy citizen support outsourcing, when contract durations can be measured in decades. Same for a friend who inked a $5bn DOD deal; the margin isn’t great, but it’s a 10-year deal that gives her a stable cash flow basis to grow on.
(Also, OP is probably underestimating the full-sheet cost of a federal FTE, as well as the complexities of fund-based budgeting and forecasting.)
Worked for a govt contractor years ago and I would imagine the payout from the govt contract was at least 2-3x. There were usually 2-3 layers of people getting paid and I don't think any of them were hurting. Of course no employee was getting a massive payout compared to private.
Govt > contractor > sub-contractor > employee was pretty common. I never knew of anyone being a direct contractor to the agency since the contracts were so large and involved a lot of employees.
It's been several years since I've done contracting work (and for the FAA no less), but that can't really happen to the extent you're implying. The open roles for contract positions specify a pay range based on experience (degrees and/or years of experience). You can have a prime and then a sub contractor, but the amount that each can add for management overhead is limited and depends on the contract vehicle. I want to say it was around 5-10%.
The actual employer can pay the employed contractor whatever they want, but the rates are published and if they underpay too much the employee will be poached by a competitor. Because the rates are public info the employee can look up how much profit their employer is making any time they want.
I am not sure if you ever dealt with a very entrenched system that has been in place longer than you have been alive, but it is not easy. It is also not easy to hire to deal with these things. Especially at government rates which are lower than the private sector.
If you were the FAA and started up an internal startup to find only the best to replace systems that have been running forever you would face a lot of problems.
1. Nobody would give you the funding until something like what happened yesterday did
2. Your developers getting paid more than the FAA directors will get lots of political attention
3. Even a great internal engineering team would most likely take ages to do something like this. This isn't move fast and break stuff with a greenfield, it is painful deconstruction and analysis of a very complicated system.
4. Many people won't want to work on this no matter how much you are paying.
It is also out of the wheel house of an agency tasked with flight safety. So expensive contractors arise. Do they do a poor job often? Yes. But these are jobs that are really hard to scope and execute. If it is really a case of overpaid contractors coming in and not doing the work, people here should start a startup and hire a SEAL team six of 1970's computer system rip and replacers and make a lot of money.
Imagine how bad it would be if Kim Jong Un *weren't* so pro-american. It's a ridiculous hypothetical. Everything can always be worse, that is not a testament to an entity's quality.
It’s absolutely a corruption issue, in that the government prefers to pay 2-3x what they would to solve things internally to contractors who then perform a poor job and lobby to keep whatever they build in place for decades.