Government as General Contractor/ Chief Auditor?

[BigLawMonies]

Wanted to get the forum's opinion on an idea designed to capture market efficiencies lost in government bureaucracy while maintaining the services expected of government agencies.

Why do we not extend the contracting model gov't uses for things like building gov't offices/military purchases to other government services? The basic idea is that the government turns legislative mandates over to private actors based on competitive bids to achieve outcomes envisioned by the legislature and interpreted by the executive.

Advantages of this model:

1. Contracting for outcomes enables innovation absent in our over-regulated and calcified gov't agencies.

2. Creates an incentive for efficiency by the pressure of downward bidding; competition amongst contractors --> pressure for cost savings to the taxpayer

(opposite of leeching gov't agencies dedicated to keeping their budgets and their jobs no matter how useless, redundant, inefficient, etc).

3. Government employees would basically just audit...but you could even contract out frontline auditing and just audit the auditors through rivalrous reducdancy. A strong auditing system would be even more accountable against fraud than the p.o.s. agencies we have like the SSA.

see http://www.reason.com/news/show/122464.html

4. Mandatory cost-benefit analysis, transparency, and competitive bidding decreases corruption...


Can you guys help me out with more advantages of this model and maybe raise objections?

Some examples of changes under this model:

1. Privatization of the school system, vouchers for school choice, reimbursement of voucher conditioned on achievement of mandated outcomes (can be made detailed and holistic, not just test scores).

2. close county hospitals and contract out indigent care.

3. change medicare and state health insurance from fee for procedure to fee for outcome valuated on median cost for patient's presentation.

4. instead of Social Security we have mandatory contributions to various alternative retirement saving schemes that are minimally risk adverse

etc.

What do you think?

[ConstantineX]

Have you read this article in the NY Times?
Pitfalls of Government Contracting

[BigLawMonies]

Thanks for pointing me to the article.

I should have pointed out that I am more thinking about contracting services other than protection services. Also I am thinking about more advanced auditing procedures than used today - good auditing practices will be a major focus of a government that relies more on contracting out for services.

The article itself seems pretty vague; sometimes contracting is good, sometimes bad depending on "the environment"

The author however does not really set any parameters for measuring the suitability of different "environments" of contracting in general, except for that claim that it replaces political checks with market transactions.

Well GOOD I trust market transactions more than bureaucratic executive agencies for quality and efficiency.

The problems in the article seem pretty specific to military contracting - deployment of quasi-military abroad with little oversight and subject to complete discretionary authority by the President. I think the issue is more lack of strong auditing than something inherently wrong with the contract system.


Further it seems that the problem in Iraq with contractors is the fundamental confusion of our policy there, and the article itself identifies the lack of outcomes-oriented standards about relations with Iraqi civil society. Also i dont know how much worse blackwater is than abu grahib regular army [censored], and the article itself mentions that government services can fail to stop genocide...

Overall it just seems that the article is pretty vague and its generalizations don't really seem to me to have a point, i guess is what i am saying.

[ConstantineX]

All of what you say is true. Contracting to the private sector generally brings efficiency. But efficiency in the public sphere is not as important as accountability. When bad things happen, the offending parties have to held accountable in forum for all to see - which is different from private companies, where it's possible to shield the mistakes that happen. Moreover even though retain most of the benefits of being private, when they are deigned government functions they become only quasi-private and are able to use government power maliciously. That visible power with the lack of accountability makes contracting less clear cut than it appears superficially.

[Borodog]

There is nothing worse than doing evil things, except doing them more efficiently.

[Ineedaride2]

As a contractor, I think one of the biggest problems is accessibility. I run a reputable, competitive service in my area of expertise, yet I would never be able to bid my services out to the federal government due to location and size. For many tasks which the fed would hire contractors, they are only interested in:

1) Companies that are large enough to handle the HUGE projects which are necessary for a HUGE entity like our federal government

2) Companies who are spread throughout the nation, as they are able to handle many different locations, thereby gaining a reputation as a "go-to" company for the people who administer the bids. Plus, larger companies have more accessibility to Washington.

Both of these prohibitions would be largely negated if the states handed out contracts. The projects would likely be on a much smaller scale, the location problem would largely be negated, and more contractors would have an opportunity to bid out there services. This lowers price, improves quality and enables growth of competition.

IMO, things start to breakdown some at the local levels, because outside of metropolitan areas, many local governments are too inept to really improve things by downscaling complexity of projects. However, the significance of projects at the local level would drastically reduce the effects of incompetent contractors when compared to incompetence/fraud at the federal levels.

The bottom line is, the bigger it is, the less competition there is, and the more screw-ups and overbids there tend to be. In some cases this can't be helped, but I believe it could be improved a lot.

[Borodog]

Not to mention that the contractors become a special interest that are the major force behing driving new projects. Military industrial complex FTL.