Myths and Realities of Contracting Out

The following was presented to the Cook County Budget Committee by Local 73 Vice President Betty Boles.

The mythology of contracting is that contractors will provide better services at lower prices. In reality, contracted services often cost more and provide inferior results. Contracting invites corrupt private dealings, undermines our collective capacity to provide public goods, and elevates private profits over the common good.

Commissioners You’ve been told: Contracting out saves money.

The Fact is this: Contracting often raises costs, or simply hides them.

  • Bids may look low because contractors don’t provide benefits like employee health or retirement benefits, then the community ends up covering employee health costs through public programs.
  • Contractors may present costs that appear low during the bidding, and then seek supplemental payments once performance begins and the real costs become clear – ultimately surpassing the original in-house costs or the estimates that won them the contract.
  • Managing the contracting process and monitoring performance costs money. A fair comparison to in-house costs must include administration and monitoring costs, in addition to the amount paid to the contractor.
  • Contracting creates a middleman between the government that pays for the service and the staff who actually perform the service. Honest contracting often raises costs, doesn’t cut them, as public funds go to middlemen salaries, administrative overhead and company profits.
  • Contractors sometimes simply charge more than a comparable service in the public sector.
  • Contractors may use cheaper practices that are environmentally unsound, often bypassing government regulations or a full assessment of environmental impact. A contract cleaning service, for example, may lower costs by using cheaper but dangerously toxic soap.

Commissioners You’ve been told: Private companies do a better job than the public sector.

The Fact is this: Service often declines after contracting, and public assets may be degraded through poor maintenance.

  • Contracting out often reduces transparency and public access to information, as well as accountability for results and avenues for recourse if the public is harmed.
  • Contractor staffs often lack whistleblower protection that allows government staff to report problems.
  • Outsourcing reduces public input on decisions affecting the public interest.

Commissioners you’ve been told: Outsourcing shrinks government.

The Fact is this: Outsourcing doesn’t necessarily shrink government. It just pays someone else to do the same work.

  • Contracts are sometimes used to dodge hiring freezes or other limitations placed on government workers.

Commissioners you’ve been told: Contracting gives governmental entities more administrative flexibility.

The Fact is this: “Flexibility” often means simply the freedom to lower standards.

  • “Flexibility” often means lower wages, benefits, and labor standards – with higher workplace hazards, workplace inequality and obstacles to redress.
  • “Flexibility” sometimes means ducking accountability or passing it on to someone else – often a private company that’s harder to hold to account than a public official.

Commissioners you’ve been told: If anything goes wrong, the government can easily fire the contractor or adjust the contract.

The Fact is this: Reversing contracts can involve huge costs and service interruptions.

  • Contractors can become entrenched interests that are difficult to dislodge.
  • Contracting can reduce core public capacity, as institutional knowledge is lost, skilled workers leave, capital assets are sold, and promising recruits choose other options.
  • Contractors who look inexpensive at first often hike costs later, when the contract is secure.

Commissioners you’ve been told: Contract providers are selected on the merits, not on political or financial connections.

The Fact is this: Contracting opens doors to unscrupulous behavior by politicians and businesses.

  • The history of government contracting involves regrettably high corruption, conflicts of interest, insider dealings, kickbacks, price-fixing, bid-fixing, fraud, misconduct, and revolving doors between government and contractors.

Commissioners you’ve been told: Public sector workers are inefficient.

The Fact is this: Most public sector workers work hard, know what they’re doing, and are paid less than comparable to workers in the private sector. With the current staff you have now…you know who you’ve got. Will you know who the contracted employees are or will you care to know?

What our members provide:

  • A valuable service to Cook County government which touches every elected official, other employees as well as the general public. They no longer provide services to inmates or detainees since they were transferred from Sheriff Darts to Facility Management
  • Provide a safe and healthy environment
  • As Jim put it on yesterday without the custodians who work in facilities management departments cannot fulfill their mission and/or provide those same services to the tax payers who deserve it. They are accountable, cost efficient, and achieve results.  Yes the tax payers are the true winners here and our custodians are tax payers as well.
  • It would not have been possible for Facilities management to receive a Star for performance management if it were not for the hard work of the custodians. On would agree it is disrespectful to applaud the efforts of the custodians for all of the hard work they have done, then turn around and outsource them. This is being double minded.

Sick Hours

  • It was mentioned on yesterday the custodians take off quite a bit and that there were about 82 instances where employees were disciplined. While we may agree to disagree it appears as though the department only focused on 3% of the workforce and does not take into account the 97% of those who come to work.

Policies

  • Didn’t you implement policies without first engaging the union? Wasn’t this the reason the Union filed a charge against the department. Wasn’t the reason for the meeting in the first place with Ms. Boles and the stewards was because you rammed a policy, and shift changes down employees throats without input from the Union?
  • I challenge the Department of facilities to be transparent and prove how there would be a cost savings of 3 million the first year of a contract,
  • I challenge to prove that you treat custodians differently than other employee groups

The County should not pass the faculties management budget on its face, it should not allow privatization period. Didn’t the County learn a lesson years ago when it previously faced this same scenario?

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