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Federal Contracts and the Contracted Workforce 1 (March 11, 2015)

handle is hein.congrec/cbo2125 and id is 1 raw text is: O CONGRESSIONAL BUDGET OFFICE Douglas W Elmendorf, Director U.S. Congress Washington, DC 20515 March 11, 2015 Honorable Chris Van Hollen Ranking Member Committee on the Budget U.S. House of Representatives Washington, DC 20515 Re: Federal Contracts and the Contracted Workforce Dear Congressman: As you requested, the Congressional Budget Office has performed a brief analysis of federal contracts in an attempt to ascertain the size and cost of the federal government's contracted workforce. Regrettably, CBO is unaware of any comprehensive information about the size of the federal government's contracted workforce. However, using a database of federal contracts, CBO determined that federal agencies spent over $500 billion for contracted products and services in 2012. Between 2000 and 2012, such spending grew more quickly than inflation and also grew as a percentage of total federal spending. The category of spending that grew the most in dollar terms was contracts for professional, administrative, and management services, and the category that grew the most in percentage terms was contracts for medical services. Because the database that CBO used is not complete and because questions have been raised about its accuracy, those findings should be considered approximate. Using Contracts to Perform Government Operations Federal agencies perform their missions in various ways. They use government employees and purchase other inputs, such as office supplies and computers, from the private sector. In some cases, they purchase not only inputs but also finished goods and services, such as fighter aircraft and facility maintenance, from the private sector. In general, they mix those two approaches on the basis of what is convenient, less costly, and allowed by law.I Such purchases from the private sector are necessary because it would not make sense for a government agency to provide all of the goods and services necessary to carry out its work. An agency (or a company) would never make its own pencils, of course; it is much more economical to buy them from a retail store or to write a contract to procure a large quantity from a supplier. In many cases, however, the government would not make purchases from the private sector; for example, the Department of Defense (DoD) would not hire contractors to command troops in battle or contract with a private think tank to make high-level decisions about military policy. Federal agencies may also make agreements or provide grants to obtain goods and services from other agencies, state or local governments, foreign governments, or universities. www.cbo.gov

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