Friday, March 30, 2007

Government Ousourcing

The WSJ today has an excellent article about how the government is increasingly using contractors and consultants for its project. The article highlights especially Booz Allen Hamilton, one of the Big 4 consulting firms (McKinsey, Boston Consulting Group, Bain, and Booz). The company has grown fast thanks to its large number of government contracts, which now make up more than 50% of revenue for the firm.

This raises a lot of questions. I suspect that a big part of the problem of why the government can't do it themselves is that they're not willing to pay talent the appropriate price, and most talented people they get leave quickly for the private sector.

Still, on one level it's probably good that the government is getting a lot of expert help. The article makes it seem like the government is wasting money. No bid contracts are a problem, even though for security reasons it might make sense, but I sense that there is some efficiency going on there as well.

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