New study puts DoD contractors on the chopping block, but is this the right approach?

Contractors speak out

Jack Murphy
July 02, 2020 - 11:50 am
Corps of Engineers contractors

Photo by San Luciano Vera

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In her recent study, Heidi Peltier argues against what she calls the "Camo Economy" in a new study, arguing against neo-liberal principles which long held that free-market solutions would help drive down the costs associated with certain tasks normally assigned to the military.

"The Growth of the 'Camo Economy' and the Commercialization of the Post-9/11 Wars," points out that the commercialization of the military, replacing soldiers with private contractors, has actually driven costs up. 

"In 2019, the Pentagon spent $370 billion on contracting – more than half the total defense budget of $676 billion and a whopping 164% higher than its spending on contractors in 2001," she writes.

One of the key findings of the study is that using private contractors is not quite as much of a free market solution as it is advertised in the first place.

"All this means that only large, well-established firms, or sometimes only one firm, can feasibly offer these services. And once such a firm establishes itself in the theater of war it essentially becomes a monopoly," the study says.

Connecting Vets reached out to former and current DOD contractors regarding the contents of the study, and received a variety of opinions.

Alex Hollings worked as a contractor for an aerospace company where he oversaw other contractors working on aviation components. While acknowledging that the study draws some important conclusions about government contractors, he also felt that some key issues were left out of the findings.

"She cites Lockheed Martin 14 times in this piece, but at no point addresses the fact that only two U.S. military contractors, Lockheed Martin and Northrop Grumman, have ever built operational stealth aircraft," Hollings told Connecting Vets. "Stealth is an ever-present absence throughout this analysis, as she suggests that Lockheed and other contractors skew competitive labor rates. The insinuation here is that a mechanical engineer is a mechanical engineer, regardless of expertise or experience, but that’s simply not the case when discussing highly advanced, classified technologies."

Hollings, a former Marine, went on to explains that, "It isn’t a bad thing that people with expertise in the realm of low observable technologies earn a higher income than those working to develop new bicycles for the private sector. If the lead engineers working on the B-21 Raider could potentially be poached by Huffy, or find themselves feeling underpaid for their contribution, it opens the door for higher turnover or worse, espionage."

When it came to the issue of the efficiency of contractors vs service members, Gary Hart found a lot to agree with. "I started contracting to the military in 1987, and I would have argued at the time that the pundits are right; that it did represent a cost savings," he told Connecting Vets. "16 guys replaced 40 Air Force personnel at FE Warren Air Force Base on a helicopter contract. The Air Force not only had those folks on salary there, but was no longer required to feed, house, or provide medical care for those members and their families. Although we were paid rather well for the time, we still represented a rather substantial cost reduction per flight hour on those 9 aircraft."

However, he also pointed out that the dynamics of military contracting has changed since the '80s.

"Fast forward to 2009, Dyncorp replaces Blackwater as the Embassy's air wing. Essentially, the same number of aircraft and fewer missions. The aircraft were flying shitheaps that actually belong to the State Department as opposed to Blackwater's ownership of the departing airframes. Tallil Air Base, the southern remote base, went from 9 mechanics, 12 pilots, 12 door gunners, one supply tech and one personnel support tech to the same number of pilots and crew chiefs who replaced the door gunners, 10 mechanics, 2 QC, 2 site leads, an armament specialist, an IT tech, a flight equipment tech, and a site manager, all now living on our own self contained compound with built-in plumbing, a meeting room, a recreational room, and associated offices. DynCorp in place in Tallil was costing the taxpayers something like 3 times what it cost for Blackwater to fly the same missions. And that contract was no-bid just because that's what State Department was comfortable with, similar to references in the article," he said.

Hollings also pointed out that the claim that contractors earn up to 166% more than uniformed military personnel is also misleading unless you also factor in various hidden costs such as life and health insurance provided by the military, Veteran's Affairs support, none of which are available to DOD contractors.

"Aside from specialized technology, contracting labor in places like dining facilities does represent a lower potential cost for the taxpayer, while the overall contracts may not," he said.

But Gary Hart had some experiences as a DOD contractor that left him skeptical. 

"The typically contracted aircraft mechanic is as bad as any union labor from what I have personally witnessed," he said. "I often have joked (although it isn't really funny) that at any given maintenance contract, 25 to 30% of the people do the actual work, and the rest just fill in the manning requirements."

"The larger the contract, the worse it gets," Hart said.

In regards to the way DOD contractors are created and bid upon, Hollings felt the study made some great points.

"The F-35 Joint Strike Fighter is a shining example of how terrible cost-type contracts can be for the U.S., but it’s important to note that the inane costs associated with the F-35 were driven first by the demand to create one platform to fill multiple roles across multiple service branches. The F-35 program’s costs can be largely attributed to poor planning, which isn’t inherent to a contract process, but is instead an internal military and political issue," he said. 

"She’s right, this approach to contracting is bad for business, and is also why Boeing was able to secure a number of high profile contracts in recent years based on their willingness to absorb research and development costs at a fixed rate. This sort of contract has become increasingly prevalent since the F-35 for the reasons stated above," Hollings pointed out. 

The study suggests drastically cutting the number of contractors hired by DOD in order to retain those same services in-house as uniformed soldiers. There are benefits to such a move, but as some contractors point out, there will be drawbacks as well.

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Reach Jack Murphy: jack@connectingvets.com or @JackMurphyRGR.