Has Sequestration Hit Defense Contractors Hard Enough?

A lawmaker on Tuesday pressed Defense Secretary Chuck Hagel on the high price-tag of contractors as part of the Pentagon’s workforce.

The comments came from Sen. Dick Durbin, D-Ill., during a hearing of the Senate Defense Appropriations Subcommittee on the Pentagon’s fiscal 2014 budget request. Durbin framed his comments in the context of the recent leak at the National Security Agency by a Booz Allen Hamilton contractor, and said he was “concerned about the cost” of the contractor workforce in the Defense Department. 

He cited a recent report that said contractors, on average, were two-to three-times more expensive than civilian employees. Durbin said data from Defense also indicated that contractors make up 22 percent of the Pentagon’s workforce, but account for 50 percent of its personnel-related costs. With sequestration forcing 11-day furloughs for hundreds thousands of civilian employees, Durbin questioned how much of the recent budget cuts had fallen on contractors.

“I wholeheartedly support the idea of exempting uniformed personnel from sequestration cuts; we owe it to these men and women not to put a hardship on them when they’re literally risking their lives for America,” Durbin said.  “But then when we take a look at the civilian workforce in the Department of Defense, here’s what we find: there’s not been a civilian pay raise since 2011. So my question to you is this, if we’re setting out to save money, has the civilian hiring freeze resulted in more, or fewer contract employees, and if so, how are you tracking the cost ramifications? Has contractor pay in the Department of Defense increased during the civilian hiring freeze?”

Hagel said the department was in the process of reviewing all contractors and contracts given the current situation. He said that many contractors, especially ones with technical, or niche skills, were necessary for some functions. However, Hagel said there would be a time when the Pentagon would have to make some “tough choices” on the size and scope of the contractor workforce as budgets become increasingly lean.

“I don’t disagree with any of your general analysis about contractors,” Hagel said. “I think when you look at the buildup over the last 12 years, and I was in this body during a significant amount of that, as that buildup occurred, money flowed in to different departments and institutions because we felt they were required for the national security of this country.”

Defense Comptroller Robert Hale added that the $37 billion in sequestration cuts in fiscal 2013 would likely result in a “sharp drop” in contractors. When questioned on the number of service contractors currently at Defense, he said that he didn’t have an exact figure, but estimated that more than 700,000 were working in some capacity.

“Well I have found … a sense of disdain toward DoD civilian employees and a sense of benign neglect when it comes to contract employees,” Durbin said. “And I think if there’s going to be sacrifice, it has to be across-the-board, if we’re going to save money, it shouldn’t be at the expense of those who are willing to work in the civil service.”