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."
Private contractors have been hired to assist the government since the Revolutionary War, historians say, but only in the past two decades have they come to play such integral and expansive roles.
More than 20,000 employees of private contractors are delivering food, protecting U.S. dignitaries and rebuilding infrastructure in Iraq. Two corporations, Boeing Co. and Science Applications International Corp., are in charge of an effort worth more than $110 billion to modernize military combat systems. Government employees from a number of agencies are being asked to prove they can do their jobs better than workers from the private sector.
The outsourcing push picked up speed under the Clinton administration, when changes were put in place to increase the speed and ease with which government agencies purchased goods and services from contractors. The Defense Department alone spent $209 billion on goods and services last year, up from $153 billion in 2001.
Some say the trend has gone too far.
"The outsourcing train has left the station, but we're not sure what direction we're driving in," said Christopher R. Yukins, associate professor of government contracting law at George Washington University Law School. "The management theory is that one should outsource functions that aren't your core functions in order to improve the efficiency of the government. But we still haven't resolved the debate -- what are our core functions?"
Two contractors, a linguist for Titan Corp. and an interrogator for CACI International Inc., were implicated in an internal Army report on the abuses at Abu Ghraib prison outside Baghdad. Former employees of Halliburton Co. have alleged that the company overcharged the government for meals it provided in Iraq and misspent portions of the $5.6 billion it received in contract awards.
"The concept seems to be almost lost these days that there are some things that must be done by the government and not by somebody with profit motives," said Brian of the Project on Government Oversight.
Having private contractors work with federal budgets is particularly problematic, Brian maintains, because it could give some companies an unfair advantage in future procurements and skew the competitive process.
Companies involved in the budget work say there are sufficient safeguards.
Private-sector employees working with federal budgets "are not allowed to release any program budgets outside of the agency,'' said Thomas Johnson, vice president of the Washington division of Miltec Corp., a Huntsville, Ala., contractor that was cited in the Center for Public Integrity's report. "In the experience I've seen, the government is very careful to protect that information and make sure that it doesn't present a problem." Miltec advertised for a budget and program analyst, Johnson said, although it has removed the ad from its Web site because it was not awarded a contract for the work.
Perot Systems Government Services Inc., the third company identified in the report, has more than 70 employees doing budget-related work for the Defense Department and other federal agencies, according to Jim Ballard, the Alexandria firm's chief operating officer.
Ballard said employees of the company, which is a subsidiary of Perot Systems Corp. of Plano, Tex., are involved in data-gathering, not decision-making.