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Government by Contractor: It Saves You Money

Thomas Frank, author of What’s the Matter with Kansas? How Conservatives Won the Heart of America, and more recently, Wrecking Crew: How Conservatives Rule, is, in a word, a cynic. His most recent diatribe is an Op-Ed, “Government by Contractor Is a Disgrace: Many jobs are best left to Federal workers.”

In Wrecking Crew, Mr. Frank’s describes Northern Virginia in a mocking, if not downright contemptuous, manner. “The airport designed by Eero Saarinen; the shopping mall so vast it dwarfs other cities’ downtowns; the finely tuned high-performance cars zooming along an immaculate private highway; the masses of flowers in perfectly edged beds; the gas stations with Colonial Williamsburg cupolas; the men all in ties and starched, buttoned-down shirts; the street names, even, recalling our cherished American values: Freedom, Market, Democracy, Tradition and Signature Drives; Heritage Lane; Founders Way; Enterprise, Prosperity and Executive Park Avenues; and a Chivalry Road that leads, of course, to Valor Court… The richest county in America isn’t in Silicon Valley or some Sugarland preserve of Houston’s oil kings; it is Loudoun County, Va., a fast-growing suburb of Washington, D.C. … The second richest county is Fairfax, Va., the next suburb over from Loudoun; the third, sixth and seventh richest counties are also suburbs of the capital.”
Frank discusses “the tech princes of the nearby Dulles Airport Corridor, a sort of Silicon Valley of the East; more frequently the answer had to do with the defense and homeland security contractors for whom the past decades have been a piñata laden with gold doubloons … everyone who grabbed as the government handed off its essential responsibilities to the private sector over the last few decades, including weapons designers, ‘systems integrators,’ computer servicers, contract winners of every description.”

His Journal piece is even more biased and misinformed. He rails against the federal government’s utilization of private contractors, rather than government employees, to perform work that is commercial in nature. He paints federal employees, as virtuous, hard-working, dedicated and irreplaceable; a description that certainly applies to some civil servants, but hardly an accurate generalization, (remember the federal employees who charged millions of dollars worth of Internet dating services, iPods, expensive clothing, and lingerie to government credit cards?), while casting contractors as worthless, unscrupulous, and unethical. There have been contracting scandals that are unconscionable. However, in his Journal piece, Frank buys into a tired old saw of the government employee unions that some nefarious shadow government of thousands of contractor employees lurks beyond the confines of civil service rules, endangering the Republic, and doing work that is useless, wasteful and results solely in lining the pockets of contractors at the expense of taxpayers and government employees.

The idea of focusing government employees on doing the work of government, and subjecting the commercial work of government to a market-based yellow pages test is a sound, good government principal that should be expanded, not restricted. Here are some facts.

In 1998, Congress passed and President Bill Clinton signed the Federal Activities Inventory Reform Act. The law requires every federal agency to inventory the activities it was performing with federal employees that are commercial in nature (as distinguished from inherently governmental in nature). Under the Clinton Administration’s implementation of the law, more than 850,000 federal employee positions were identified as commercial, out of a total non-uniformed, non-postal federal workforce of 1.7 million.

The Federal Government’s experience so far is that less than half the jobs put out for competition end up going to private contractors. According to the Office of Management and Budget and the Small Business Administration, of the jobs that are privatized, 60 percent go to small businesses and companies owned by women and members of minorities.
Here is the shocking fact that Frank, the American Federation of Government Employees and other statists fail to mention: competitive sourcing rarely results in the termination of federal employees. The Government Accountability Office recently found that in the Department of Labor, about 79 percent of affected employees, (248 of 314), were reassigned to new positions at the same Federal grade and salary level. Only six workers, (about 2 percent), were involuntarily separated, while 15 workers, (almost 5 percent), were promoted; more than twice the number that were involuntarily separated.

Competitive sourcing efforts have saved U.S. taxpayers $7.2 billion. On average, 30 percent is saved through the process, regardless of whether the competed activity stays in-house or gets contracted.

Since the Eisenhower Administration, it has been federal policy that, “In the process of governing, the Government should not compete with its citizens. The competitive enterprise system, characterized by individual freedom and initiative, is the primary source of national economic strength. In recognition of this principle, it has been and continues to be the general policy of the Government to rely on commercial sources to supply the products and services the Government needs…The Federal Government shall rely on commercially available sources to provide commercial products and services … the Government shall not start or carry on any activity to provide a commercial product or service if the product or service can be procured more economically from a commercial source.”

This policy was followed and implemented by every Administration (including Kennedy, Johnson, Carter and Clinton) for some than 50 years until it was repealed by the Bush Administration. That is right; those radical capitalists in the Bush Administration revised OMB Circular A-76 and eliminated the 50-year old statement that the government should not be unfairly competing with the private sector.

In recent years, Democrats such as Ed Rendell as mayor of Philadelphia, Cleveland mayor Michael White and Georgia governor Zell Miller all implemented programs to privatize commercial activities in their governments, with great success. Chicago mayor Richard Daley is known to advise other Democratic mayors to “privatize everything you can.”
From Washington, D.C. to Richmond to Fairfax County, it is advice that should be heeded, not rejected and ridiculed.

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