Contractors' Budget Work Criticized

Outsourcing Poses Conflict, Watchdog Says

In a job posting on its Web site last month, Booz Allen Hamilton Inc., a McLean government contractor, said it was looking for a senior budget analyst -- not to analyze its own budgets, but those of its biggest customer, the Department of Defense.

The person hired for the job would help prepare the president's defense budget and "work with various funding documents and with committing, obligating and expending funds," according to a copy of the ad.

Since the early 1990s, the federal government has turned over an increasing amount of its work to private contractors, with increasing controversy as the outsourcing spreads from information technology and back office support to tasks that have included interrogating prisoners in Iraq.

The privatized work also includes preparation of federal budgets used to pay some of those same companies, according to a report released yesterday by the Center for Public Integrity, a District-based watchdog group. It cited the Booz Allen ad and job postings for two other government contractors for Defense Department budget work. Industry experts say many more private contractors are involved in similar work for various federal agencies and have been for years.

Critics say the use of private companies in preparing budgets sets the conditions for potential abuses and represents a built-in conflict of interest.

"The budget needs to be set by and created by somebody whose loyalties lie with the public interest and not the bottom line," said Danielle Brian, executive director of the Project on Government Oversight.

Booz Allen has been performing budget analysis work for the government for "several years," according to company spokesman George Farrar. The job ad captured by the Center for Public Integrity was removed from the company's Web site and rewritten, he added, because it misconstrued the nature of the work to be performed. Employees hired for such positions will be asked to conduct "cost-benefit analysis, research, documentation, statistical analysis and other types of number-crunching," Farrar said.

The company does not perceive it to be a conflict of interest, Farrar added, because Booz Allen employees "don't make the decisions about what's included in an agency's budget request."

Glenn E. Flood, a spokesman for the Defense Department, said that contractors have had a hand in budget preparation and analysis since the 1980s and that each organization within the Pentagon makes its own decisions about how much to rely on private-sector assistance.

Most of the agency's units require contractors to sign a waiver creating firewalls between employees working on the budget and those bidding on other contracts, Flood said, but "it boils down to ethics, too. A lot of the contractors that the agencies work with are ethical -- it's a matter of trust."