I don’t believe that conservatives or libertarians should feel that they have any ideological stake in the contracting out of government services. When the private sector is competent to do something that the federal government is now doing, then the government should simply get out of the field and let the private sector do it. I would hand over mail delivery to the private sector, for example. When only the government can do something–provide for the national defense, for example–then the mechanisms it uses to achieve that goal should be determined by a range of practical considerations. In some cases, putting a job out to private-sector bidders may get the job done better and cheaper than having government employees do it themselves. But contracting out can have its downsides, too: It could, in some cases, create a powerful interest group that works against the public interest.
All this by way of saying that I think that Thomas Frank is right to point to some of the possible downsides of contracting out some military services (although his breathless style is not enough to convince me that things are as bad as he says they are). But I don’t think he is scoring any points against anything that ought to be part of free-market philosophy, and I don’t think that his ideological hostility to contracting out makes any more sense than ideological devotion to it.