Drudge Retort: The Other Side of the News
Wednesday, May 28, 2014

Dave Johnson, AlterNet: For decades we've been subjected to constant propaganda that government is inefficient, bureaucratic and expensive. We're told that the answer is to "privatize," or "outsource" government functions to private businesses and they will do things more efficiently and everyone comes out ahead. As a result we have experienced decades of privatization of government functions. So how has this wave of privatization worked out? Has privatization saved taxpayers money and improved services to citizens? Simple answer: of course not. If a company can make a profit doing something the government had been doing, it means that we're losing out one way or another. It's simple math.

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Government outsourcing, also known as privatization, has been going on for decades, and now governments are reassessing whether turning public property and services over to private companies has really been a good idea. Story after story has appeared detailing horror stories of corruption, incompetence and general scamming by companies interested only in profit. Molly Ball reported recently in The Privatization Backlash in The Atlantic, "In states and cities across the country, lawmakers are expressing new skepticism about privatization, imposing new conditions on government contracting, and demanding more oversight. Laws to rein in contractors have been introduced in 18 states this year, and three -- Maryland, Oregon and Nebraska -- have passed legislation, according to In the Public Interest, a group that advocates what it calls 'responsible contracting.'"

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Comical. Government can't provide oversight on people it employs by contracting a company, but somehow government would be able to provide oversight on people it employs by contracting them directly?

How about we just admit the government kind of sucks at oversight no matter who or how they employ them?

#1 | Posted by sitzkrieg at 2014-05-28 07:53 AM | Reply | Flag: | Newsworthy 1

If that is all you took from the article, I suggest you re-read the article.

#2 | Posted by 726 at 2014-05-28 08:04 AM | Reply | Flag: | Newsworthy 1

The first two examples are less about privatization horrors than they are about dimwitted government officials signing outrageous contracts filled with ridiculous riders. I also note that in the second example all of the contracts were outsourced to foreign companies. Nice work, government.

The fourth example was the result of a few corrupt contractors, a few more corrupt GOVERNMENT officials (a conspiracy requires a dancing partner - I notice the article failed to point that out) and an egregious lack of corporate oversight. The bad guys were jailed, the money returned, their boss was fired...well, except for the government officials' boss, of course, because Mike Bloomberg can't possibly be expected to take time out of his day to check on a $600+ million dollar project.

The third example is spot on. There's no excuse for private prisons.

#3 | Posted by MUSTANG at 2014-05-28 08:11 AM | Reply | Flag:

In my experience, managing an outsourced operation is more work than managing direct employees. Contractors are not at all vested in you. They are vested in the bottom line and will do the absolute minimum and train their employees to do the same. In other words unless you spell it out in minute detail they won't do it.

#4 | Posted by GalaxiePete at 2014-05-28 09:37 AM | Reply | Flag: | Newsworthy 2

If that is all you took from the article, I suggest you re-read the article.

#2 | POSTED BY 726 AT 2014-05-28 08:04 AM | FLAG:

I also drank in the raw incompetence of the government when it comes to contracting. Sad considering how many lawyers are in government and are supposed to be good negotiators.

#5 | Posted by sitzkrieg at 2014-05-28 09:55 AM | Reply | Flag:

"Contractors are not at all vested in you."

sometimes neither are your employees.

there is a place for sub-contractors. yes, the govt has made some poor decisions in what they have subbed out in the past as have private companies that choose to sub work out they should have performed themselves.

sometimes it's a very efficient and cost effective way to have work performed or services provided and provided good customer service.

"Has privatization saved taxpayers money and improved services to citizens?"

sometimes yes....sometimes no.

#6 | Posted by eberly at 2014-05-28 09:58 AM | Reply | Flag:

I used to sell to the government we would contract with them for computer services. In our case it was a great move for the tax payer. We had 20 people on staff of various specialties. If something went down they could call us we would show up within 1 hour and fix their problem. They didn't have to keep a specialist for every piece of the network on staff themselves, and only paid for the time used fixing things. A lot cheaper than keeping 20 of their own specialist on staff when 9 times out of 10 they would be sitting on their rears.

Privatization can go either way and things really need to be evaluated before just being thrown to contractors.

#7 | Posted by TaoWarrior at 2014-05-28 10:01 AM | Reply | Flag:

Sorry Eb I guess there is an echo in here.

#8 | Posted by TaoWarrior at 2014-05-28 10:02 AM | Reply | Flag:

Privatization can go either way and things really need to be evaluated before just being thrown to contractors.

#7 | POSTED BY TAOWARRIOR AT 2014-05-28 10:01 AM | REPLY | FLAG

Surely there are, and your example is a good one. Private businesses subcontract out equipment maintenance for the same reason.

#9 | Posted by 726 at 2014-05-28 10:07 AM | Reply | Flag:

#8

LOL

#10 | Posted by eberly at 2014-05-28 10:20 AM | Reply | Flag:

News flash, the majority of people, whether they work for the government or a private business, are selfish and greedy. They will do the least amount of work and charge you the most they can get away with. They will break and bend the rules as much as they can until they get caught.
Corruption and avarice are basic human nature.
That is why it is better to let the government directly do the things it needs to do. The less links in the chain means less opportunity for waste.

#11 | Posted by TFDNihilist at 2014-05-28 10:37 AM | Reply | Flag: | Newsworthy 3

"Corruption and avarice are basic human nature.
That is why it is better to let the government directly do the things it needs to do."

so, the same thing applies to private business?

my company should start bringing everything back in house, because "corruption and avarice are basic human nature"???

#12 | Posted by eberly at 2014-05-28 10:44 AM | Reply | Flag:

This is the kind of stuff that MSM News shows 48 hrs, 60 minutes, etc should be covering instead of the typical 10 year old reality TV rehash of crime stories that waste the airwaves and inform society of nothing.

The reason for the lack of such information is that the consolidated media is in place to run agendas for their corrupt greedy cronies, rather than exposing them. You'll find "ties" between media owners and those profiting such as the bankers.

#13 | Posted by Robson at 2014-05-28 10:47 AM | Reply | Flag: | Newsworthy 1

Those agreements for the toll road and parking meters were outrageous. It's the specific contracts that were put in force that should scare you, rather than the concept of privatization in general.

#14 | Posted by eberly at 2014-05-28 10:57 AM | Reply | Flag:

The good side to "privatize," or "outsource" is they can fire the people. When government does it their employes can't be fired.

#15 | Posted by Sniper at 2014-05-28 11:05 AM | Reply | Flag:

That is why it is better to let the government directly do the things it needs to do. The less links in the chain means less opportunity for waste.

#11 | POSTED BY TFDNIHILIST AT 2014-05-28 10:37 AM | FLAG:

It just takes a few idiots to create waste. An admiral in our Navy forced the installation of a paint locker on a prototype ship that didn't use paint. Why? "Every ship since Davey Jones has a paint locker, this won't be the first without".

Extra links in a chain can be wasteful, but at the same time less links in the chain means 1 person can create a lot more waste with less oversight.

#16 | Posted by sitzkrieg at 2014-05-28 11:47 AM | Reply | Flag:

Privatization is a method by which crooked politicians reward cronies with public assets at taxpayer expense. Politicians gain with bribes/donations, CEOS get rich, while most regular employees lose benefits and compensation.

Some privatization is highly destructive to society. Mostly it is costly to taxpayers. For example private prisons only expands and entrenches behavior that we would prefer to be minimized. It results in more incarceration due to crooked politicians, judges, police and more incarceration.

#17 | Posted by Robson at 2014-05-28 11:56 AM | Reply | Flag: | Newsworthy 1

The good side to "privatize," or "outsource" is they can fire the people. When government does it their employes can't be fired.

#15 | POSTED BY SNIPER

Like most things you say it is not true. The government fires people all the time. But, it is interesting that you think it is "good" to fire people through no fault of their own as opposed to retraining them or transfering them so they can continue to have the dignity of a job that earns them a living wage instead of going on unemployment and welfare and food stamps...etc.

#18 | Posted by donnerboy at 2014-05-28 11:57 AM | Reply | Flag:

It's a two fold problem. On one hand we have a lot of issues of incompetence within our government, many of which were deliberately propagated by elected officials, simply so that they could point to the incompetence and demand private contractors. On the other hand we have an historic level of corruption and cronyism among private contractors, that's really developed into a significant plutocracy.

In a perfect world, private contractors would never be able to perform tasks as effectively or inexpensively as an efficient government. But in a perfect world, there are no profits for said plutocrats.

#19 | Posted by Whatsleft at 2014-05-28 12:00 PM | Reply | Flag: | Newsworthy 1

"On one hand we have a lot of issues of incompetence within our government"

We also have a high level of incompetence within private industry and among private contractors. Probably more due to the fact that they pay far lower wages and attract less qualified people.

#20 | Posted by danni at 2014-05-28 12:24 PM | Reply | Flag: | Newsworthy 1

How about we just admit the government kind of sucks at oversight no matter who or how they employ them?

#1 | Posted by sitzkrieg

Yeah funny how its hard for government to be effective when half the people working inside it don't think it SHOULD be effective. Republicans spend their careers trying to make government NOT work.

How effective would a corporation be if half of its employees were actively trying to sabotage it?

#21 | Posted by SpeakSoftly at 2014-05-28 12:45 PM | Reply | Flag: | Newsworthy 5

In my experience, managing an outsourced operation is more work than managing direct employees. Contractors are not at all vested in you. They are vested in the bottom line and will do the absolute minimum and train their employees to do the same. In other words unless you spell it out in minute detail they won't do it.

#4 | POSTED BY GALAXIEPETE

Know that from firsthand knowledge.

You have to micromanage the hell out of the contractors, hell my old job had to contract out managers from Cognizant because the Cognizant contactors wouldn't take orders from the employee team leads or managers. And Cognizant can get away with it because they are the only "approved" staffing agency for the company. You "can" go outside them, but you still have to go through them first and then you need a director's approval to use another agency.

It's absurd.

#22 | Posted by Lohocla at 2014-05-28 01:01 PM | Reply | Flag:

Government can't provide oversight on people it employs by contracting a company, but somehow government would be able to provide oversight on people it employs by contracting them directly?

How about we just admit the government kind of sucks at oversight no matter who or how they employ them?
#1 | Posted by sitzkrieg


When the first private prison rolled out, an inmate escaped. Turned out this wasn't actually illegal, since he wasn't escaping from state prison. The legislature soon amended the statutes regarding incarceration.

This is just an example of the challenges privatization can bring with regards to oversight.

If you've ever had any work done on your home by a crappy contractor, you should understand the challenges of overseeing a contractor. Surely you know somebody with one of those contractor from hell* stories.

*Can we say that word?

#23 | Posted by snoofy at 2014-05-28 01:44 PM | Reply | Flag:

We also have a high level of incompetence within private industry and among private contractors. Probably more due to the fact that they pay far lower wages and attract less qualified people.

#20 | POSTED BY DANNI

Are you referring specifically to the --------- that Obama hired to build his Obamacare webpage or are you just taking the opportunity to opine about things of which you know naught?

#24 | Posted by MUSTANG at 2014-05-28 01:51 PM | Reply | Flag:

Sad considering how many lawyers are in government and are supposed to be good negotiators.
#5 | Posted by sitzkrieg

This is called "You Get What You Pay For."
Lawyers make scads and oodles more money by sitting on the other side of the table during those negotiations.
But hey, don't take my word for it. "In his first year-end report on the
federal judiciary, U.S. Chief Justice John Roberts on Sunday
called for better court security to prevent violence and higher
salaries to keep a diverse mix of judges on the bench."
www.redorbit.com

#25 | Posted by snoofy at 2014-05-28 01:52 PM | Reply | Flag:

#22 | Posted by Lohocla

Same here. I have managed several contracted resources and I have worked for a major company that offers contract services. And there is a key problem - the contract. People cry about unions and contracts, what do you think you get when you outsource? A contract - but one where company management is 100% vested in protecting profits at your expense.

It didn't matter how invested the actual people doing the work were, management and contracts ALWAYS get in the way. Besides that a person on the inside who is worth keeping is invested in the success of the organization so in my experience they typically do go above and beyond to help deliver that - unless they get shut down by management...

I recently thought about recommending the out sourcing of some software development and frankly it would take 6-8 months just to get an outsourced team up to speed and then how many will come and go? Having been there when it doesn't work as you need it to or fails - who will be there to make the necessary changes?

Given what I have seen happen in major organizations with the insourcing of so many things, it is very apparent that outsourcing often is not a good strategic move.

I am not saying all outsourcing is bad, but it isn't necessarily this grand cost saver so many seem to think it is. Normally I say it isn't. I would think so doubly in government as there is not necessarily continuity from election to election. The smaller the government body the more like they are to be taken advantage of IMHO.

#26 | Posted by GalaxiePete at 2014-05-28 02:00 PM | Reply | Flag: | Newsworthy 1

#7 | Posted by TaoWarrior

I don't doubt you delivered, but your setup was the exception. I used to be a part of an organization like yours and I have tried to work with several IT firms in my area and don't trust any of them.

Have an expert available in an hour? When I outsourced generic type IT functionality I had that kind of guarantee; but in reality it almost never was delivered upon. Not even with remote access. It usually took me less time to figure out the issue than the certified specialist. The glaring example to me is one company supposedly had their backup specialist trying to figure out why our backups were failing for the better part of 2 days, I got fed up and went into the software and figured out the problem in half an hour and the fix in another half hour.

#27 | Posted by GalaxiePete at 2014-05-28 02:06 PM | Reply | Flag:

Don't have a ton to add here... I was a sub-contractor on an IT project, corporate upgrade from 2000 to XP as I recall. We worked to an agreed-upon set of instructions, the product of months of negotiations between client and vendor.

The instructions didn't work; it wasn't anything you couldn't work around but the process was far from idiot-proof. Naturally, every idiot (by which I mean subs such as myself) came up with their own unique work-around. This was particularly a problem because they wanted the upgrade done fast, so we worked three shifts, which meant handing off half-finished not-done-according-to-broken-
instructions work to the next idiot to wreck more.

The instructions were never going to be fixed, though, because changing them would require more months of negotiations. All in all I don't even think the upgrade went that badly, but there was obvious room for improvement. It took about five hours to do one upgrade and we worked eight-hour shifts, simply giving us ten-hour shifts would have alleviated so much confusion...

#28 | Posted by snoofy at 2014-05-28 02:43 PM | Reply | Flag:

Snipe,

Usually, the only people who deserve to be fired are the managers. They are as big a problem in the private sector as the VA. But that's not what happens. More typical you have the seven phases of a project, whether private or public:

1. Wild enthusiasm

2. Disillusionment

3. Confusion

4. Panic

5. Search for the guilty

6. Punishment of the innocent

7. Promotion of non-participants

The big difference is usually how money is disbursed. In the private sector the CEO and his cohorts get everything they can beat out of their employees and their customers. The public sector is typically 10-15% less expensive while taking better care of their employees and customers, because they do not need to make a profit.

#29 | Posted by nutcase at 2014-05-28 02:50 PM | Reply | Flag:

Galaxie a lot of it had to do with how we were laid out. The hour onsite was only during business hours and it was not guaranteed to every customer. Had it been then, no we couldn't have delivered. It was just very large customers who got that and many times smaller customers would have to wait a full day if they had a problem same time as a large customer.

Our guys were superb so it would have been very rare for an in house person to be better than our guys. Although on some of the government systems the in house people were experts on their area and I am sure on specific issues would have been better than our guys, we didn't get called for those problems. I had one client who was awesome at their server set up but if someone had a problem with the desktop he was pretty much derp. I know of several occasions where we ended up sending a linux tech to fix a windows desktop because they were first available and this guy couldn't fix a print spool error. All in all the owner was very dedicated to providing top level service to the clients which made the difference.

In any case paying us for repairs was much cheaper than hiring additional in house staff. I think our biggest customer on the largest use year we had with them paid us about 25k over the course of the year. Good luck hiring a tech of any skill for 25k a year. Let alone the 3 we had to send at one time once for a major issue.

I do not say every situation is the same or that government outsourcing always works, often it is just an excuse to hand over government assets to cronies or an excuse for cronies to insert profits where things were previously done for cost.

#30 | Posted by TaoWarrior at 2014-05-28 02:53 PM | Reply | Flag:

Know what the goal of a company is?

Money.

#31 | Posted by Tor at 2014-05-28 03:43 PM | Reply | Flag:

Surely you know somebody with one of those contractor from hell* stories.

*Can we say that word?

#23 | Posted by snoofy

It may be a dirty word to some who have had to deal with them but its ok to say "contractor" here.

#32 | Posted by donnerboy at 2014-05-28 03:56 PM | Reply | Flag:

#29 | Posted by nutcase

You post reminded me of The Plan

In the beginning, there was the Plan.

And then came the Assumptions.

And the Assumptions were without form.

And the Plan was without substance.

And darkness was upon the face of the Workers.

And they spoke among themselves, saying, "It is a crock of ----, and it
stinks."

And the Workers went unto their Supervisors and said, "It is a pail of
dung, and we can't live with the smell".

And the Supervisors went unto their Managers, saying, "It is a container of
excrement, and it is very strong, such that none may abide by it."

And the Managers went unto their Directors, saying, "It is a vessel of
fertilizer, and none may abide its strength."

And the Directors spoke among themselves, Saying to one another, "It
contains that which aids plant growth, and it is very strong."

And the Directors went to the Vice Presidents, saying unto them, "It
promotes growth, and it is very powerful."

And the Vice Presidents went to the President, saying unto him, "This new plan will actively promote the growth and vigor of the company with very powerful effects."

And the President looked upon the Plan and saw that it was good.

And the Plan became Policy.

And this is how sh** happens...

#33 | Posted by donnerboy at 2014-05-28 04:03 PM | Reply | Flag: | Funny: 2

This article is hilarious considering the recent VA scandal. Does the article mention the VA is so far behind in colonoscopy procedures that it must contract this out to private firms so the backlog is acceptable and someone else can get a bonus..

#34 | Posted by homerj at 2014-05-28 05:00 PM | Reply | Flag:

HomerJ,

VA managers are clearly criminals and there is no excuse for their fraud and indifference towards their patients well being. But, did you know the Rethugs screaming about this scandal and blaming Obama and Shinseki are the same ------ that killed $21 billion in VA funding and 13 other VA bills, that would benefit war veterans? They are sickening.

#35 | Posted by nutcase at 2014-05-28 10:31 PM | Reply | Flag:

The problem with privatization is that it often creates a monopoly and that is always bad for the customer.

Privatization can work if the service to be outsourced is divided across at least two vendors and the worst performing vendor is punted regularly.

The problem with government is they are monopolies in between elections.

#36 | Posted by bored at 2014-05-28 10:38 PM | Reply | Flag:

Like most things you say it is not true. The government fires people all the time.

#18 | Posted by donnerboy

I worked at a national lab for 18 years and NRVER saw anyone that was on the gov payroll get fired. some got transfered. There was a large turnover in the private sector.

Once again you prove you know nothing of what you speak.

#37 | Posted by Sniper at 2014-05-29 11:17 AM | Reply | Flag:

Are you referring specifically to the --------- that Obama hired to build his Obamacare webpage or are you just taking the opportunity to opine about things of which you know naught?

#24 | Posted by MUSTANG

Good one.

#38 | Posted by Sniper at 2014-05-29 11:19 AM | Reply | Flag:

I worked at a national lab for 18 years and NRVER saw anyone that was on the gov payroll get fired. some got transfered. There was a large turnover in the private sector.

Once again you prove you know nothing of what you speak.

#37 | Posted by Sniper

Ahh the old "I never saw it happen in my presence so it doesn't happen" theory!

8-10 thousand are laid off each year for various reasons so I guess that just about debunks your theory.

While getting fired from a government job for poor performance is not as easy as getting fired by a private company that does not respect a worker rights and dignity it does occur. Remember the Government is not in the business of making money so it is more difficult to quantify but it can be done with proper performance rating plans and documentation.

Government employees are protected because as a nation we believe workers do have rights and we have tried to codify them for civil servants to protect them from the whims of whomever is in power today.

Now are those rules antiquated and cumbersome and need to be updated?

Of course... but that is a topic for another discussion (with a more reasonable person).

#39 | Posted by donnerboy at 2014-05-29 02:44 PM | Reply | Flag:

Just another horror story:

If you follow the stock market, you probably think the economy is sizzling. But if bonds are your thing, then you probably think we're still in recession.

Since the end of the recession one-third of all income increases in this country went to just 16,000 households, 95% of it went to the top 1%, and the bottom 90% incomes fell by 15%.

In other words, the Fed knows exactly how QE works, (and who benefits) and it has nothing to do with extending credit to working people. Managers of the system have no intention of fixing what's wrong; cleaning up the banks, writing down the debts, regulating the system, increasing workers buying power (boosting demand) or providing sustained fiscal stimulus until unemployment and growth are back where they should be. Instead, basic macro has been replaced with public relations, that is, a swindle that's spearheaded by faux-liberal icons Krugman and Summers pushing "secular stagnation", just a lame excuse for maintaining the status quo plus a few anemic add-ons, like infrastructure projects.

The American people are now facing a long period of high unemployment and slow growth that will shrink the middle class and change the country in ways we can hardly imagine. It's the policy. (Michael Whitney)

Any more than our Chief Executive, that claim he must enforce the law, completely ignores Humphrey-Hawkins, also the law of the land.

#40 | Posted by nutcase at 2014-05-29 03:01 PM | Reply | Flag:

This story is dubious at best,

Example #1) The first example took place in Chicago, a corrupt city if ever any. The city made a bad deal, probably because some gov. official's pocket got greased along the way to this deal. Corruption breeds corruption.

Example #2-#3) Building roads and prisons should be a government functions, and should never be privatized, particularly the later. I can say though that I-80/90 is a smooth road as I have ever seen.

Example #4) Yes SAIC may have screwed NYC, but 3 people are in jail for up to 20 years and $500 million is coming back to the city. They can find another payroll provider.

This article is based on faulty logic - Privatization when done properly should save money, but the article assumes privatization is the cause of corruption. Corruption is caused by immoral and unethical humans. The article should have ended with the hundreds of stories of government corruption.

When businesses are corrupt and acting illegally the government can intervene, but who intervenes when the government itself is corrupt? I believe in the separation of business and state.

#41 | Posted by danv at 2014-05-29 04:50 PM | Reply | Flag:

In other words, the Fed knows exactly how QE works, (and who benefits) and it has nothing to do with extending credit to working people. Managers of the system have no intention of fixing what's wrong; cleaning up the banks, writing down the debts, regulating the system, increasing workers buying power (boosting demand) or providing sustained fiscal stimulus until unemployment and growth are back where they should be. Instead, basic macro has been replaced with public relations, that is, a swindle that's spearheaded by faux-liberal icons Krugman and Summers pushing "secular stagnation", just a lame excuse for maintaining the status quo plus a few anemic add-ons, like infrastructure projects.

Just wondering nutcase if you have read C.H. Douglas's "Social Credit" and if so what you might think of it as a way to address many of the concerns we see outlined in your post.

I first ran into it 10-12 years ago and as time goes by the more I see it as the only real solution to an economy that needs fewer and fewer workers to produce more and more goods.

#42 | Posted by TaoWarrior at 2014-05-29 10:45 PM | Reply | Flag:

Surely you know somebody with one of those contractor from hell* stories.
*Can we say that word?

#23 | POSTED BY SNOOFY AT 2014-05-28 01:44 PM | FLAG:

Actually... no. I tend to get really good customer service. Maybe I'll get one eventually but it hasn't happened yet.

In politics, I see privatization work positively, and negatively, executed by the same politicians in the same city. The light rail system is a scam to funnel money to developers that donate to the pols. However, the freeway expansion was a shining example of how things can work well. It finished up years ahead of schedule and under budget.

#43 | Posted by sitzkrieg at 2014-05-30 08:32 AM | Reply | Flag:

Tao,

I haven't, but I'll keep it in mind.

#44 | Posted by nutcase at 2014-05-30 08:49 AM | Reply | Flag:

Nutcase you should read about it when you get the chance. Wiki has a quick run down if you just google "social credit" his book by the same name is pretty short and there is a PDF of it online I have the link somewhere which is more detailed and lays out the reasoning behind the system very nicely.

#45 | Posted by TaoWarrior at 2014-05-30 11:09 AM | Reply | Flag:

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