Saturday, Nov. 4, 2006 | There’s one buzzword that accompanies the mayor’s Proposition C nearly everywhere it goes: competition.
The measure would open up city services to competition from the private sector with the goal of streamlining governmental operations and trimming costs. Opponents of the measure are also playing the competition card – specifically, the leg-up that hefty political contributors could have on getting those new, prized public contracts.
Supporters of Mayor Jerry Sanders’ privatization measure argue that they’ve got all the safeguards built in to guard against cronyism and corruption, namely an independent review board and quarterly audits. But two recent contract dustups involving donors to Sanders’ 2005 mayoral campaign have sharpened opponents’ barbs, with the anti-Proposition C crowd warning the measure would kick-start a new model of the old school political machine.
Earlier this week, opponents seized on the news that the very first contract of the managed-competition era had gone to a company whose officials donated money to Sanders’ election campaign. The contract, for the training of city and union officials on the finer points of managed competition, had only one bidder – BAE Systems Analytical Solutions Inc. The solicitation for the contract bid specifically required bidders to offer training on BAE’s software or an equivalent.
And last month the Ethics Commission levied a $3,000 fine against Grubb & Ellis and a top executive for campaign money laundering in connection with contributions to Sanders’ campaign. A month earlier, the mayor’s real estate department had awarded the company’s affiliate, Grubb & Ellis/BRE Commercial, a $150,000 contract.
Opponents of the measure, largely those from the organized labor community, say the examples foreshadow life after Proposition C if the measure passes.
“We want to see the money taken out of politics, and we’re afraid this could make the situation worse,” said John Hartley, a former city councilman who now leads a local group that advocates for election reform.
The driving force behind the mayor’s proposition has been the city’s pension crisis and, more precisely, the resulting backlash toward the employee unions. The power of employee unions at City Hall has been blamed by many, including Sanders, for the city’s woes.
“Labor unions are the ones who have dictated what goes on at City Hall,” Sanders said to the attendees of a Catfish Club debate earlier this month.
The president of the influential firefighters union stands as the central figure charged in separate state and federal criminal cases and the burdens of unfunded employee benefits threaten to drag down city budgets for years. Claiming that pension agreements between city officials, union representatives and pension officials violated the state’s conflict-of-interest law, City Attorney Mike Aguirre is currently in court attempting to have the benefits rolled back.
Supporters of the mayor’s initiative say the measure itself is a solution to a culture of corruption that already exists. But to be sure, Carl DeMaio, president of the conservative Performance Institute, said he’s going to “dog the process.”
“I have no problem standing up and outing a fat cat business as much as a fat cat union boss. We want to make sure this is out in the public and when things are out in the public it’s hard to monkey with the system,” he said.
The mayor says the initiative comes with all the safeguards to prevent any tomfoolery. An independent review board, appointed by the mayor, will oversee the contracts, which themselves will be subject to regular audits.
If the measure passes, the mayor will appoint – subject to the council’s confirmation – three employees and four members of public to sit on the independent review board. Members of the panel will be barred from overseeing any competitions that involve private companies they work for or have an ownership stake in. Companies tied to the board members are prohibited from competing. Only competitions involving two or more companies – in an effort to prevent sole-source contracts – will be held.
If the board makes a recommendation to outsource a city service, the mayor and council can only approve or reject the contract; they cannot decide to select a different vendor they find friendly.
Although not part of the proposal before voters, Sanders said he will have one criterion for approving an outsourcing recommendation by the board: Will it save the city at least 10 percent? If yes, Sanders will approve the contract. If not, he will not accept the company’s bid, he said.
“There’s no tinkering around with it. It’s very straightforward,” the mayor said in an interview Friday.
After being awarded a control, the winning company would be reviewed for its performance and costs every year. The city’s overall managed competition program would undergo an outside audit every five years.
But opponents say the measure could go farther. They warn, for example, that if the mayor opens up trash pickup to competition from the private sector, one of the small group of waste disposal firms whose officials contributed to the Sanders campaign in 2005 would be first in line to receive contracts.
The mayor says he has no plans to outsource garbage pickup services, as they may be protected by the People’s Ordinance of 1919 – which forbids the city from charging for trash collection.
Still, skeptics point to safeguards other governments have employed to forbid the recipients of contracts from donating money to politicians for specific periods before and after contract negotiations.
In San Francisco, a company that bids on a contract – as well as its officers, owners and the subcontractors it will use for the city job – cannot give to a political campaign from the time that negotiations start to six months after the job has been awarded. The state of Hawaii prohibits a contracting company from donating to campaigns during the entirety of its agreement.
“People doing business with the city should not have influence over the decision-makers,” said Murtaza Baxamusa, an economist with the Center on Policy Initiatives, a liberal-leaning think tank.
Sanders argued that labor unions, which expend a significant amount of support for their allies during election seasons, should be held to the same standard.
If companies are going to compete with union workers for contractors, then a ban on businesses and their officials for giving to campaign should also apply to labor unions, which often don’t give directly to candidates but spend independently on their behalf, the mayor said.
“I never seen a councilman say ‘I received $200,000 from a labor group in the city, I’m not going to vote on this labor issue,’” Sanders said.