Last week I came across the Confessions of a $600 Hammer on Slashdot. As a former member of the Overpriced Tools of the Federal Government Club, I couldn't help but nod in agreement with a lot in that post. All the same, I think it doesn't necessarily paint a complete picture of the situation when it comes to government contracting, or government IT in general.
It's definitely true that incentives are completely out of whack when it comes to the bill rate/pay rate disparity for contractors, but this isn't a problem unique to the U.S. Government, either. In fact, it's prevalent in the private sector as well: I once worked with someone whose previous job was working for a large, well-known tech company as an on-site tech servicing many of their customers, and while the pay rate this individual received was pretty damn good, it paled in comparison to the billing rate that this company charged their customers, and makes the disparity commonly seen in Federal contracts look quaint by comparison -- and mind you this individual wasn't working on Federal contracts at the time.
Nevertheless, this doesn't really excuse the situation: It's a travesty that the U.S. Government (or more appropriately, U.S. Taxpayers) will get overcharged to such a high degree, and doubly so when the contracting companies turn around and either hire sub-standard labor to fill the positions (the most common approach, based on my experience), or force out anyone competent enough to do the job by refusing to pay whatever the going rate is for the work being done (in which case they simply leave for greener pastures), thereby guaranteeing that any work done will be sub-par at best.
But the flip side of this is that you have plenty of individuals on the government side of the equation that have no business being paid for doing same kind of work the contractors do, either. Many of them are paid considerably more than the contractors (albeit less than the bill rate of the contracting companies). In fact, while the work the contractors do might be sub-par, sometimes it's leaps and bounds better than what the people on the government side are even capable of.
I have personally witnessed individuals -- government employees -- who were supposed to be Software Developers yet were unable to understand basic logic, could not solve problems at all, and couldn't write a simple "Hello World" program even if you gave them the code to type into the editor. I once waited months for a single "database developer" to code up one simple stored procedure to save a record to the database (I wasn't permitted to do it myself because I wasn't classified as a "Database Developer"...but that's a whole other story...); The individual barely understood how a database even worked. Thankfully there was someone else -- a contractor -- that was able to complete the work and thereby allowed me to get my own work done.
Even in the cases where people on the government side actually knew what they were doing, their experience was woefully outdated: In my time as a contractor, there were people on the government side having fits about getting rid of ColdFusion....in 2007! I've had to spend far too much time having to convince people to use tried-and-tested technologies that were already years past their prime just to try to drag them into the 21st-century way of developing software...many times failing in the process.
I'm certainly not trying to paint all government employees as incompetent (they most certainly are not), but only trying to illuminate some of the other issues around government contracting that people don't think about: When people hear how the badly the Federal Government gets overcharged for contracting work, they cry foul (as they should), but they never see that taxpayers might be getting overcharged on the government side as well -- through over-paid and under-qualified workers who really have no business doing the work they do, or through deliberate internal politics...not just the contractor-in-the-back-pocket-of-the-politicians kind.
Of course, I haven't even gotten into the internal politics part of the equation...but that's a story for another day...