It is fashionable in the electoral world of spin to present privatization in a reformist sort of way. Managed competition, competitive sourcing and competitive procurement are all euphemisms to drowning government in a bathtub. Unfortunately no matter how much you spin this one, you end up at the same point, dizzy and duped.

The Competitive Sourcing initiative was initiated by the Bush administration in spring 2001, with the claim that “subjecting in-house operations to competition consistently generates cost savings — anywhere from 10-40 percent on average. … Historically, savings have far outweighed costs associated with competition.” The White House also claimed that competitive sourcing was “a fair and effective tool for improving the delivery of services to our citizens.”

Similar claims are continuing to be made in San Diego.

The White House ignored critics that the program was doomed to fail because of poor track record in service contracting. Professor Steven Schooner of George Washington University wrote:

The Government simply lacks sufficient qualified acquisition, contract management, and quality control personnel to handle the outsourcing burden. Because the Government is ill-positioned to successfully out-source in a manner that generates higher quality services, lower prices, greater efficiency, or, ultimately, better government, an aggressive outsourcing policy will further expose long-standing problems in service contracting, including poor planning, inadequately defined requirements, insufficient price evaluation, and lax oversight of contractor performance.

The Government Accountability Office has now found that the administration has overstated the savings from some competitions by undercounting the costs of running them.

Collectively, they cost $225 million, or about $4,800 per job, according to White House figures. And there is little evidence of service quality or performance. This led to the Washington Post reporting last week that the Bush administration’s signature competitive sourcing program has failed on several fronts, and demoralized the entire workforce.

The poster-child of competitive sourcing failures is the U.S. Army’s Walter Reed hospital. According to a letter written by Garrison Commander Peter Garibaldi leaked to the Army Times, push to privatize DoD services is not new:

“But the push to privatize support services there accelerated under President Bush’s ‘competitive sourcing’ initiative, which was launched in 2002.”

The hospital went through a long process of competing civilians position. Despite findings that it was cheaper to do the work in-house, IAP Worldwide Service (run by a former Halliburton executive), was awarded a $120 million contract to run portions of the hospital’s services called facilities management. Immediately after, the 300 public workers doing facilities management were reduced to 50 privately employees. This move, according to army commanders left the facilities unmanned leading to the scandal that made national news:

When the wounded combat engineer stands in his shower and looks up, he can see the bathtub on the floor above through a rotted hole. The entire building, constructed between the world wars, often smells like greasy carry-out. Signs of neglect are everywhere: mouse droppings, belly-up cockroaches, stained carpets, cheap mattresses.

The similarities between San Diego and Walter Reed are ominous. The city of San Diego is using the same failed federal policies (like the federal A-76 Circular) as a basis of our local managed competition program to make city workers compete for their jobs against private contractors.

We do not know how much the managed competition program is going to cost. We do not even know how much we spend on private contractors today. We lack quality control procedures to make our unknown list of current private contractors perform well. We lack accountability measures like audits to ensure that taxpayer dollars given to private contractors are not wasted. We demonstrate the same symptoms of poor monitoring, enforcement and cost-controls that led to federal contractor misconduct. And regarding the moral of our employees, to borrow Major General George Wightman’s phrase, the managed competition program has been a “huge destabilizing force” on our city’s workforce.

Drown it in a bathtub, Walter Reed style?

The city will be borrowing directly from the privatization program at Walter Reed. It is using the same federal Circular A-76, the same methods of identifying services, and even some of the same actors in Walter Reed.

The city has selected the Grant Thornton LLP, a management company that advised on Walter Reed privatization, to manage its managed competition program. Not surprisingly, a year after its initial bid, the cost of the contract has already gone up 135 percent.

Newly released city documents show that the program manager for Grant Thornton LLP, Ramon Contreras III, touts Walter Reed among his accomplishments:

US Army Walter Reed – Provided advice and guidance on competitive sourcing methodology to include COMPARE. Walter Reed competed fleet maintenance grounds maintenance, street pavement, custodial services, traffic signal maintenance, environmental engineering, landfill operations, logistics, recreation operations and management and transportation activities encompassing over 500 FTE.

Our candidates need to assure us that they are not turning America’s Finest City into another Walter Reed fiasco.


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