The cost of contracting

I’m working on an article about how to honestly budget for war and why it’s important to do so. As part of it, I interviewed Harvard’s Linda Bilmes, co-author, along with Joe Stiglitz (interviewed here), of “The Three Trillion Dollar War.” One of the things she said that won’t make it into the piece was that after publishing the book, a number of serving members of the military got in touch to suggest other costs she and Stiglitz hadn’t considered. Consider, for instance, the cost of contracting.

The normal way you tally up the cost of contractors is to look at how much we pay for them. That misses a couple of important expenses — the cost of monitoring and enforcing contracts, the insurance premiums we pay for contractors, etc. — but put that aside for a moment. According to Bilmes, a number of former generals contacted her to argue that there was an unexplored link between the rise of contracting and the rise of post-traumatic stress syndrome. In Vietnam, the generals said, they were able to manage the stress loads of their soldiers by moving troops who seemed in particular mental distress to so-called “kitchen duty.” They could be sent to repair trucks or work a desk job or cut potatoes. “But now,” Bilmes says, “100 percent of those jobs where they used to put people to relieve strain are done by contractors.” The generals she spoke to thinks this has contributed to the rise in stress-related disorders, and because those disorders are enormously expensive over the course of a person’s life, the actual cost of contracting out these positions isn’t being effectively calculated.

Are the generals right? I have no idea. But this sort of thing is a good example of the way correctly accounting for long-term costs could lead us to make different short-term spending decisions. Stiglitz made a similar point yesterday when he told me that body armor and mine-resistant vehicles are “expensive, but compared to not buying them, they’re cheap.” You’d only know that, however, based on an analysis that included the long-term health-care costs generated by war injuries.