Granted, the timing of the Bush administration’s announcement that it would like to privatize up to 850,000 federal jobs was not ideal. Just five days later the administration also congratulated itself for meeting the deadline for the hiring of about 44,000 additional federal employees to screen baggage at the nation’s airports. Sisyphus lives and probably works at the General Services Administration.
That bit of cognitive dissonance aside, the administration’s vow to place nearly half of the federal civilian jobs up for competition with private-sector contractors is gutsy. Labor leaders predictably howled that this is yet another display of Republican hostility toward the proletariat and favoritism for private industry. Missing from that analysis, of course, is the fact that shrinking government directly benefits rank-and-file Americans who pay for it through taxes.
The administration’s plan, which can be implemented without congressional approval, is an extension of a trend going back as far as 1955. A recent landmark was the signing by President Bill Clinton in 1998 of the Federal Activities Inventory Reform Act, which requires all executive agencies to submit to Congress a listing of activities not inherently “governmental”–painting walls, cooking food, mowing grass–and other like services that presumably could be farmed out to private contractors.
The Department of Defense alone identified 241,332 civilian full-time jobs that fall under the designation of “commercial activities” and could be performed by private contractors. Even some corporations have spun off support activities, such as accounts receivable, not directly related to their core missions. The logic behind such division of labor is that specialized contractors can perform such functions more efficiently and economically.
That’s because private contractors–pressed by the need to be efficient to survive and make money–are more likely to stay on top of the latest management and operational techniques, and weed out less-productive employees. According to the Cato Institute, a libertarian think-tank, turnover in government is one-fourth of that in private industry. The cost savings of privatization could be as high as 20 percent, a Department of Defense study estimated.
Privatization of federal services will proceed gradually, perhaps 10 percent of the targeted 850,000 jobs turning over to private contractors yearly, according to one estimate.
That might be optimistic. In Illinois, an attempt by Gov. Ryan to shift to private food services at the state prisons got mired in litigation by labor unions. No more major privatization efforts were attempted during his tenure.
Privatization can breed problems if it’s done poorly. Contracting hanky-panky can erode the expected savings. In 1990, investigators found that the Air Force had paid $1,868.15 each for toilet seats for the C-5B cargo plane, among other outrageous rip-offs. Then again, in 1999–just to pick a year–investigators found that three federal employees had embezzled $9.6 million from the government.
Corruption can come in all forms and from all directions. It should not be an excuse to keep the federal bureaucracy nice and fat when many of its functions could be performed more cheaply and efficiently by the private sector.
So the government ought to keep its fraud inspectors on hand.
Then again, a private auditing firm–paid incentives according to the amount of fraud it uncovers–just might be a more efficient solution.
