Contracting as an economic engine

The federal government spends more than$450 billion a year on the purchase of goodsand services. As a result, it has properlydrawn increasing attention from a Congressintent on ensuring the money is spentresponsibly, the government gets value forthe money it spends and contractors ethicallydeliver what they promise. As theGovernment Accountability Office recentlyreported with regard to major weapons systemscontracts, the biggest stumbling blocksto the first goal are stark workforce limitationsand otherinternal governmentalchallenges.In terms of the second,equallyimportant goal,report after report has concluded that, in thevast majority of cases, contractors performboth well and ethically.Unfortunately, the broader economicvalue generated through the government'sincreased partnership with the private sectorgenerates little attention, while those occasionalabuses dominate the headlines. The$450 billion spent annually on goods andservices directly produces and supports hundredsof thousands of jobs across the nation.The total economic impact of those expendituresis well into the millions of jobs. In fact,while some have cited a claim by New YorkUniversity's Paul Light that there are 8 millioncontractors working in support of thegovernment as a reason to oppose contracting,Light's researchers acknowledge that hisfigure includes jobs directly supporting thegovernment and the broader, ancillaryemployment and economic impact generatedby the government's direct expenditures. It is thus a reason to celebrate the economicvalue of contracting.Rep. Kirsten Gillibrand (D-N.Y.) madethis connection when she hosted a seminarin March for more than 200 companies inher upstate district, which receives morethan $1 billion in federal contracts. A numberof other members of Congress are alsoworking to make their constituents aware ofthe opportunities ? and challenges ? governmentcontracting presents. After all, themoney might be appropriated inWashington, but the work under those contractsis performed in virtually every stateand congressional district.The government contracting industry isunlike any other in the country. Indeed, fewindustries are so highly regulated andsubject to so many audit and otherunique oversight regimes. To a largeextent, this is understandable because thebills are paid using taxpayer dollars.But none of that obviates the importanceof recognizing the enormous,positive economic impact this industrycreates. It is a basic tenet of economicsthat private-sector development generatesmore overall value and sustainable growththan does government itself. Moreover,the government pays no corporate income,sales, real estate orother taxes.The mere existenceof or potentialfor economicgrowth is not initself a reason to advocate for expanding federalcontracting. There is a balance thatmust be achieved. But the economics are animportant factor that must be considered.Properly executed, federal contracting is awin for the government and for local andregional economies. With all the talk aboutour nation's economic struggles and the worriesabout jobs, this is an engine that can,and does, help significantly. That is somethingwell worth bearing in mind.