Contractor workforce grows as civil service shrinks

The government's "shadow workforce" of contractors grew by 727,000 positions between 1999 and 2002, while the civil service got smaller, according to a new estimate by the Brookings Institution.

The estimate, which is sure to fuel the debate over federal outsourcing efforts, finds that as of the end of 2002, federal contracts were generating 5.17 million jobs, while grants supported another 2.86 million jobs, the highest figures since the end of the Cold War in 1990. At the same time, the number of civil servants continued to shrink-in 2002, federal agencies had 1.76 million civil servants on the payroll, 418,000 fewer than they did in 1990. The figures do not include postal workers or uniformed military personnel.

In all, Brookings estimates the federal government relied on 16.7 million employees to carry out its missions in 2002, a figure that includes civil servants, military personnel, postal workers and people who work under federal contracts, grants and mandates imposed on state and local governments. In 1999, this overall figure stood at 15.6 million workers.

The estimate is the work of Paul Light, a senior fellow at Brookings, who believes officials should consider government's contract and grantee workforce as they debate outsourcing and civil service reforms. "I believe all the jobs should be on the table for discussion," he said. "Virtually no one ever says that contractors and grantees might be doing jobs that should be in the civil service or back in the military." Eagle Eye Publishers Inc. of Fairfax, Va, helped compile Light's new estimate.

Most, if not all, agency personnel strategies only include civil servants. Contracting, and the contractor workforce, is seen as a procurement issue. In April, the General Accounting Office urged the Defense Department to consider the role of contractors in its "human capital" plan, but Defense demurred. "The use of contractors is just another tool the department uses to accomplish its mission, not a separate workforce, with separate needs, to manage," the department said in comments to GAO.

Federal contractors and unions were quick to react to the new figures. "Light's update reminds us that contracting out doesn't reduce the size of the federal government; rather, it merely makes federal services delivered by contractors less accountable to taxpayers and customers," said John Gage, the new president of the American Federation of Government Employees.

Stan Soloway, President of the Professional Services Council, an Arlington, Va.-based contractors association, said Light's estimate of contract positions should be viewed with caution. "I don't dispute the general trends he's talking about, but I think we need to be very careful about the [contract] numbers being thrown around," he said. "It doesn't measure direct functional work; it measures jobs created as a result of federal spending."

Light's method uses Commerce Department data to estimate the total employment generated by federal contracts and grants. "I like to say that federal contracts created an estimated 727,000 new jobs," said Light, who is also a professor at New York University's Wagner School of Public Service.

Soloway added that the new numbers show that contractors are not replacing federal employees, since the growth of the contractor workforce since 1999 far outpaced the drop in federal employment over the same period. The civil service lost 46,000 positions from 1999 to 2002.

"If the government only lost roughly 50,000 positions [since 1999], yet he's saying there were a million positions created by virtue of contracts and grants, it certainly defeats the argument that we are contracting out on the backs of civil servants," said Soloway. "And if [the government] is creating a million new jobs, that's a good thing."

Light's analysis shows that the contract workforce has grown rapidly under the Bush administration, both through new defense spending and in contracts issued by civilian agencies.

"Many of these jobs have been added at agencies involved in the war on terrorism, but many have also been added at domestic agencies such as Health and Human Services," he said.

Since 1999, civilian agencies have added 550,000 contract and grantee jobs. Civilian agencies added only 300,000 such jobs from 1993 to 1999, during the Clinton administration.

Overall, the growth in contract and grantee jobs has replaced three-fourths of the 2 million jobs cut at the end of the Cold War, according to Light. "When all the jobs are totaled, the federal government has added back all but 500,000 of the jobs cut after the Cold War," he said.

Both Gage and Colleen Kelley, president of the National Treasury Employees Union, said Light's numbers should prompt the Bush administration to reconsider its competitive sourcing initiative, which lets contractors bid on federal jobs. "I hope some people are shocked," said Kelley. "I would say these numbers show that there is more than enough work that has already been moved to private contractors and in many instances not through any competition whatsoever."

The Office of Management and Budget did not respond to questions on Light's estimates.

Light's analysis shows that federal grants supported 333,000 more jobs in 2002 than they did in 1999. In 2001, a Bush administration study found agencies have little data on the effectiveness of federal grant programs.