THE PRIVATE SECTOR DOESN'T DO IT BETTER
ONE of the most popular means of cutting public budgets
is by contracting out or selling part of a public
service to a private company. This has been peddled to
the American people by saying over and over that public
operations are inherently inefficient and more costly
than private corporations. The privatization frenzy has
been fueled by these old, familiar chants: "The private
sector is more efficient than the public sector." "The
private sector can get the work done more cheaply."
"Government is full of corruption and waste."
"Government workers are lazy."
While no one can deny the existence of red tape in
government agencies, none of these arguments bear up
under scrutiny. The U.S. government's own General
Accounting Office (GAO) has repeatedly found that
privatization is not what it's cracked up to be. But
because the lobbying from the Chamber of Commerce,
business community, and military contractors is so
strong, and because they all put big bucks into both
Democratic and Republican political campaigns, the
members of Congress ignore the evidence and continue to
push for privatization.
Privatization has escalated to the point where the U.S.
is spending $120 billion a year on private
contractors-more than its $108 billion payroll for
regular employees. And now Congress is considering
legislation that would open up a wide new swath of
government jobs to privatization. This is part of a
bill called the "Freedom from Government Competition
Act" (HR 716/S314).
These outright attacks on the jobs of public sector
workers must be stopped. It takes all of us to fight
back-so fight back with the facts:
It's No Money-Saver
Private industry gets the job done more cheaply,
right? The City of Albany, New York, decided it
could save money and improve service if it
contracted out the maintenance work on its city
vehicles. But according to an analysis by the Economic
Policy Institute, it didn't work out that way. The
study concluded that Albany actually ended up paying 20
percent more to get its vehicles serviced than it would
have had it paid its own workers to do the job. The
"scam" used by contractors is to low-ball a bid but then
to write the contract in such a way that they can add in
all kinds of costs. Within a year or two, the contracted
out work can cost as much as three times more than it
would cost to do the job in-house.
Paying for Profit and Perks
Contractors have higher administrative costs and have
to squeeze a decent profit out of the job too. So
every year U.S. taxpayers are making direct payouts to
ensure the profitability of some of the world's biggest
corporations. And then there are those little perks-
the GAO reviewed bills submitted by eight federal
contractors and found that six of the eight contractors
charged the government in excess of $25,000 for booze.
Others asked taxpayers to cover their sports tickets,
boat rentals, running shoes, cable television, and golf
outings.
Lots of Fraud
The record of government contractors is a litany of
botched jobs, fraud, cost overruns and mismanagement.
When the GAO looked at companies that contract with
Medicare to provide medical services, it found that
"instances of scams, abuses, and fraud abound." And
"to maximize profits, providers continue to exploit
loopholes and billing control weaknesses," the GAO
reported.
The Department of Energy, which diverts more of its
budget to private contractors than any other agency, has
a wretched record. GAO found that "extensive latitude"
to DOE contractors is losing us $15 billion a year.
An Attack on Organized Labor
One reason privatization has so much appeal for
corporate-supported politicians is that it is a
direct assault on organized labor. Less than 10
percent of private sector workers are unionized,
while over 37 percent of public workers have unions.
Good government jobs-permanent, unionized, with
benefits-are the economic bedrock of many communities.
By contracting this work out to nonunion private
companies, we are only undermining ourselves.
OCAW Research and Education Department
What Can You Do?
==> Use this information to education about privatization and
contracting out. Stand firmly opposed to these attacks on
good paying union jobs. Demand that our public dollars
STOP going to private companies.
==> Support public service unions in your community.
==> Work to end corporate welfare and for a more equitable tax
system so that government can be put back to work for all
of us.