"Privatization" means using private for-profit firms for the provision of public services or to operate (and own) infrastructure. The result is that the line between what is public and what is private has become blurred.
These practices propose to change our view of what responsibilities should to be public. That's why efforts to contract-out government services gain the most devoted support from ideologically minded conservatives, hostile to many of the purposes of government and to unions. They try to create a positive image, instead of the true image, which would allow them to abdicate their responsibility as public managers. By making it sound like more well-paying private sector jobs will be created, they try to pit private sector workers against the public sector workers. The AFLCIO has taken a strong position against government contracting-out, and this strategy of trying to divide workers is failing.
The AFL-CIO opposes all policies that threaten the integity of public employment, and provisions of quality public services including, privatization, contracting-out, workfare, volunteer workers, and prison labor. The AFL-CIO, and its affiliated unions, continues to also oppose the creation of alternative employment structures -- such as temporary workers and inequitably compensated parttime workers -- which serve to erode appropriate wage and benefit standards.
The AFL-CIO supports the call for a new partnership to be forged between the federal government and the states and localities, wherein the federal government must restore its financial commitment to state and local programs and endorse policies that; promote economic growth, maintain high employment and enhance productivity.
Numerous abuses resulting from privatization and vendor contributions have recently come to light: Legislative protection of the public from potential abuses and defining the process, ensures the proper spending of scarce resources. Legislation currently exist in other states, the components of which could go a long way in protecting citizens.
Privatizing state agencies or state services will be considered only when the following criteria have been met:
- Contracting-out will be permitted only on a specific project if it can be performed for 25% less in cost than the present in-house provision of the service.
- These cost must include: all direct costs, including fringe benefits; indirect overhead costs that are only attributable to the service in question and would not exist if the work were not performed by public employees; any continuing or transitional costs directly associated with contracting including unemployment compensation; additional costs of performance of the work by public employees.
- Require full disclosure of contractor bids and access to information. Contractor proposals for service provision requires access to information on staffing, wages, benefits, service quality standards, administrative cost, bars contracting-out unless costs are lower and service quality is maintained.
- The projected savings have been certified by a state administrative agency or board that has cost accounting expertise and the board has received input from all affected parties, including employees of the agency so affected and their union representatives.
- A service contract can only be certified if the economic advantage is not outweighed by the publics' interest in having in-house provision, state affirmative action efforts are not adversely affected and the contract includes control mechanisms to insure the contract terms are upheld.
- Financial disclosure statements from any bidding companies or firms must have been submitted. The disclosure statements must be specific as to; the amount of savings projected, company assets and liabilities, officeholders, and majority stockholders, and the relevant data requested by the reviewing board or agency. The disclosure statement must also include past lawsuits against the company and the outcome of such lawsuit, any pending legal action against the company. Any privatization contractor bidding on work currently performed by public employees or selling supplies and service procured by any state agency must supply the following information which shall be available for public inspection and copying at actual cost.
I. General Company Information
A. Logistics
1.Address - Phone
B. Brief description of company
1. Scope of Business
2. Size of business
3. History of business
4. Listed as public or private?
5. Percentage of unionized workers
6. List of past and present clients
II. Ownership and Control
A. Company holdings
1. List of affiliates
2. List of subsidiaries
3. Pension fund investments
B. Principal players
1. Board of Directors
2. Officers
3. Stockholders (public employee pension plans?)
4. Brief biograhies (Non-profit affiliations)
5. Interlocking directorships
III. Contractor Record Performance
A. Reliability and Compliance
1. Broken promises
2. Contract compliance
3. Cost overruns
4. Under-bidding
5. Creaming
6. Poor quality of service
B. Firms Financial Stability
C. Criminal Activity
1. Anti-trust violations
2. Racketeering
3. Profiteering
4. Connections with organized crime
5. Political corruptions; illegal contributions
D. Environmental Violations
1. EPA violations
2. Water, air, land and noise pollution
3. Toxic waste violations
4. Nuclear waste violations
E. Racial, religious, or sex discrimination
1. EEOC violations
2. Wage differentials
3. Harassment charges
4. Failure to provide service to poor or rural areas
5. Impact or business on poor, minorities, or women as workers or as community members
F. Taxes and Property Holdings
1. Profit to taxes ratio
2. Large deferments or subsidies
3. Real estate conflict of interest
4. Banking relationships
G. Employee Relations
1. Unionization
2. History of strikes
3. Adherence to national labor laws
4. Workplace safety record
H. Other
1. Immoral or other unethical behavior
2. Health code violations
3. Consumer rating
4. Affidavits signed company CEO and Department of Commerce verifying all taxes owed any branch of state, county or local government currently paid in full
- Public employees so affected by the contemplated decision must have been given at least 120 days notice that such a decision is being contemplated in order to afford them the opportunity to submit proposals to retain the work.
- In order to accomplish this, the state will provide training and technical assistance to public employees to compete against private firms or companies.
- Any savings generated from privatization must come from improvements in technology, efficiency of operations, or improved manpower utilization-not from reduced wages or benefits.
- In the event privatization does occur, no current employee will be displaced without first being given an opportunity of employment by the private firm or company at similar wages and benefits, or being given the opportunity to transfer within the government unit at similar wages and benefits.
- Public displacement includes; promotions, involuntary transfers to a new class, transfer to new locations requiring a change in residence and time base reductions.
- No layoff of existing employees due to contracting-out; no reduction in pay for existing employees; the contractor must hire laid-off bargaining unit employees at current wages and benefits before hiring anyone else; all non-management employees retain union protection. Any employee hired by the private firm will be given the opportunity to join the union and any current public employee hired by the private firm will continue to be represented by the union.
- If the employer sells, leases, transfers or assigns any of its functions, or a portion thereof, the employer shall inform the purchaser, lessee, assignee, or successor of the exact terms of this agreement and shall make the sale, lease, transfer or assignment conditional on the successor assuming all the conditions and obligations of this agreement, including but not limited to the retention of all employees. The successor shall be bound by all provisions of the previous employers agreement until its next expiration date, at which time the successor will recognize and negotiate with the union and no other employee organization.
- The operation of corrections facilities, state psychiatric developmental disabled hospitals, involve functions that are inherently government and any government unit shall not contract with a private contractor for provision of services relating to the operation of a these facilities.
- Any government unit must make public, and provide to any involved public employee union, a copy of the R.F.P. (Request For Proposal) used to solicit private bids which contains the following language: Labor costs, including: number of employees, titles, wages and fringe benefits. Do not include vacant positions. Service and supply costs: how much it costs to buy and maintain the supplies required to perform the work, and what quantities of supplies are needed. Capitol costs: equipment, facility and other long-term investments required to perform the work. Overhead costs: supervisors, clerical services, rent, energy and facility costs that will remain, equipment maintenance. Conversion costs: including accrued vacation or sick leave that will have to be paid off. Other costs: training costs, travel, insurance, and so forth.
- All vendors doing business with a governmental agency are prohibited from making political contributions to any state officeholder, who has responsibility for the agency or services provided.
Talking Points on Privatization
Cost. Privatization frequently costs more than providing government services in-house. There are examples from every level of government across the country where public employees could provide services at a lower cost.
Contractors Low-Ball Their Bids. Frequently a contractor will low-ball or underbid to receive a new contract, in anticipation of raising its rates once it has become established.
Costs Increase as Government Loses Ability to Perform Work. Loss of in-house expertise leaves the government dependent on private contractors. This allows the contractors to raise rates; since the government no longer has the capacity to provide the services, they are. forced to pay the higher costs.
Contractors Pad Their Contracts. Contractors who low-ball their bids often make up the difference by adding prerequisites to their bid, such as insisting that only their name brand products be used to perform work, zapping the chance for local merchants to compete and draining profits out of town. Others charge extra for any work that wasn't spelled out directly in the contract.
Private Monopolies Crop Up. True competition for contracts is more often the exception than the rule. In many cases, once a company has acquired all the expertise, training and equipment to do the job, it would cost too much for the government jurisdiction to switch to another contractor and begin again. Knowing it has a lock on the contract, the company can increase its rates or perform sloppy work.
Negative Impact on Communities. Contracting with private companies is nothing more than shifting income from workers and community members to big contractors. The local community loses both from exported profits to out-of-state corporations and reduced wage and benefit standards.
Costs That Don't Show Up on the Balance Sheet. "Hidden Costs" are generally not considered and further increase the actual costs of contracting-out. These include the costs of monitoring the contract agency, and the loss of tax revenues due to a good-paying.job being replaced by a low-paying job.
Undermining the Democratic Character of Public Service. Costs savings should not be the only, or even the main, consideration in contracting-out. Government must also be concerned with equal treatment, due process and accountability. We can not do it cheaper if it violates basic constitutional protections.
Contracting-Out Causes a Loss of Public Accountability. Public entities are required to make their records and decision-making process open to the public. Private contractors are not covered by open meetings acts or by freedom of information acts inconsistent with the public interest. Public services have been instituted to meet social need and not the demands of the marketplace. In many cases, the private sector has shunned these services.
Increased Corruption. Privatization increases the opportunity for corruption. It avoids the protections of the merit system and allows politicians to award contracts to their political cronies.
Isolation of the Disadvantaged. Cutting service to unprofitable areas means stopping services to poor neighborhoods which rely on public services the most. All Americans, not just the rich, have a right to expect their government to provide quality public services. If the postal service were privatized, firms would rush to service profitable areas like Beverly Hills or Manhattan, but who would deliver the mail to unprofitable, poor or rural areas?
Women and Minorities are Hurt. Privatization has a disproportionate impact on women and minorities. The government generally employs a higher percentage of women and minorities, with greater opportunities for advancement. These gains are frequently lost when contracting-out causes layoffs.
Private Companies are Not More Efficient. Although some people argue that private companies are inherently "more efficient," there is no convincing evidence that this is true. The large cost associated with the "efficiency" of contracting at the Pentagon is legendary. Examples of similar "efficiency" in state and local government have also cost taxpayers millions.
Quality of Service Declines. Private managers have no magic wand. Their "savings" come from cutting comers on quality, lower wages and benefits, creative accounting methods, and a host of other questionable practices.
Workplace Standards Are Undermined. The battle against privatization is the same struggle that private sector workers have fought when trying to prevent "out-sourcing" or "feather-bedding" schemes. In all cases, the employer is taking work away from union members and undermining the worker protections and wage and benefit standards in our communities.
Private Contractors Have More Worker Turnover. Because of reduced wage and benefit packages, private contractors have a more transient work force. The result is poor performance.
Improving Public Management with Labor-Management Cooperation. Good government is much more than simply transferring responsibilities to the lowest bidder. Responsive and efficient government depends on creative and innovative public management. Public employees often, with many years of experience and untapped ideas, must become active players in the campaign to improve government. |
