So What Privitization doesn't work that doesn't mean we shouldn't keep pushing for more of it. From the AFL-CIO blog

Private Contractors Are Double the Cost of Federal Workers

by Mike Hall, Sep 13, 2011

In the past year, congressional Republicans and right-wing extremists have ramped up their long-standing campaign against federal workers, claiming their pay is too high and their benefits too generous compared to private-sector workers. A new study shows how wrong they are.
According to the Project on Government Oversight (POGO), the federal government pays more than twice as much to private contractors than it would cost federal workers to perform the same work. The government spends some $320 billion a year for services by private contractors.
Groups opposing federal workers cooked the books and used incomplete information—comparing just salaries and not including benefits and other costs—in their studies comparing costs. But POGO General Counsel Scott Amey told The New York Times:

We compared the full compensation paid to federal government and private-sector employees to the billable rates in federal service contracts. Across the board you see that it cost government more to pay for contractors.

The report notes that for “decades there have been increasing political pressures to reduce the size of the federal government.”

In response the government has awarded service contracts, resulting in an expanding “shadow government” that costs hundreds of billions of dollars annually. The focus on comparing federal and private-sector salaries needs to shift because they have nothing to do with what the government actually pays for services. Instead, the focus properly belongs on analyzing the full costs of paying contractors to perform federal services.

Given the nation’s ongoing economic problems, this analysis has become even more relevant—approximately one-quarter of all discretionary spending now goes to service contractors.

AFSCME President Gerald McEntee says the study confirms “privatizing services leads to cost overruns and in most cases a lower quality of services.”

The only ones benefiting from privatization are the private companies and the campaign coffers of the politicians who push for privatization. Study after study shows that privatization does not deliver the savings for taxpayers promised by its proponents.

Click here for the full report.