[nonameiguess]

The greatest reason they need to use contractors in general, not just "consultants," is that hiring a civil servant is opening a position forever. The federal government certainly can downsize, as we're seeing now, but they rarely do, and they don't hire people for six-month contracts. They hire them permanently, and would then need to go through a layoff process to reduce staff.

So if they have a project that needs 100 people to do and is expected to take two years, they have two choices. Hire 100 people, hoping you can find something else for them to do in two years, or you can offer a two-year contract to a private company, letting them deal with the problem of figuring out what to do with the 100 people once the project is completed.

The contraints of the GS pay scale aren't real constraints. The federal government already has special bonuses paid to medical doctors to make their pay commensurate with rates in private industry, in spite of the fact that those rates are way the hell higher than anything on the GS scale. They could easily do the same for engineering labor. What they can't easily do is hire people for six months guaranteed with only conditional renewals after that, because very few people would agree to that unless you're paying them far more than they'd get in normal industry.