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.