One thing House Democrats and Republicans can agree on is the fact that the U.S. government wastes millions—even billions—of dollars every year because of fraud or abuse.

But the parties split when it comes to determining exactly where the waste occurs. Republicans are pointing fingers at bloated federal programs, while Democrats lay blame on the misuse of federal contractors.

Conservative figures detailed numerous government programs and offices that could be cut, eliminated, or more closely examined. Dems called out contracting, as roughly half of the most wasteful spending identified in a Government Accountability Office report involved contracting.

Private sector experts have stepped up to offer solutions to the government spending problem, including recommending repealing the Davis-Bacon Act, which states that contractors pay the prevailing wage on federal construction projects costing more than $2,000.

Other analysts argue that the private sector, not the feds, is better suited to run organizations like Amtrak, the U.S. Postal Service and the air traffic control system.

What do you think? Where is the government wasting its money—in over-large programs, with government contractors, or both? Are there any other areas that government is wasteful with its funds?

A Major Setback to the Public Sector

Employee productivity is a key concern for the Federal government, particularly in regards to the spending of tax payers’ money. According to the Office and Management Budget Director, Peter Orszag, much is to be desired of Washington’s IT performance. Orszag acknowledged that there appears to be a “significant IT gap” between the public and private sector.

Speaking at the Center for American Progress on June 8, Orszag said, “Public sector productivity growth matched the private sector until about 1987. But something changed in the late 1980s. From 1987 until 1995, private sector productivity rose by an average 4 of 1.5 percent a year. Meanwhile, the public sector’s productivity rose by only 0.4 percent per year – or about one-third as much – over roughly the same period.”

Orszag said that it was difficult to get the public sector productivity data after that point, as the Bureau of Labor Statistics stopped collecting the numbers as a part of their cost-cutting initiative. He cited an observation made by the McKinsey Global Institute, suggesting that the public sector continued to fall behind the private sector after 1995.

According to Orszag, “Some of this increasing gap has to do with advances in management techniques in the private sector. Some, undoubtedly, has to do with the challenges the federal government has in attracting and hiring top talent.” He said that “The average time it takes to hire a new federal employee is 140 days – and by that time, many of the best candidates, understandably, have gone elsewhere. But I believe that the biggest driver of this productivity divide is the information technology gap.”

Though the quantification of the extent to which there exists an “IT gap” between the feds and the private sector will be open to interpretation; Orszag offered some telling metrics, however:

• IBM reduced the number of data centers it uses from 235 to 12, while Hewlett-Packard has consolidated 14 data centers into one
• Since 1998, the number of federal government-operated data centers climbed from 432 to more than 1,100

Orszag also noted that:

• In the private sector, “high-performing” firms kill about one of three IT projects within their first six months
• Uncle Sam rarely ends a single one