As lawmakers take up austerity measures and the Defense Department and other agencies grapple with difficult budget choices, some contracting companies that derive their income entirely from the federal government have grown increasingly fat.
Last year, 59 major publicly traded government contractors earned a combined $36 billion in profits nearly entirely from taxpayers. That was up from $35 billion in 2011 and $33 billion in 2010, The Washington Times found in a review of financial disclosure records.
Each of the companies reported deriving at least 80 percent of its revenue from federal contracts at least once in recent years, and critics say they could have charged less to the government and still been viable.
Indeed, while contractors say the profit margin when dealing with the government is typically lower than that when dealing with private clients, there are also economies of scale, and the government is a client that is more massive and steady than most private clients.
Scott Amey, general counsel at the Project on Government Oversight, said “you can’t blame federal contractors for seizing business opportunities,” but that “outsourcing has caused an overreliance on contractors, and defense industry consolidation has stifled competition, which places contractors in a very powerful position.”