The Morning Report
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Taxpayers should not be the last refuge of irresponsible businesses. Yet, every level of government — from the city of San Diego contracts to post-Katrina and Iraq reconstruction at the federal level — is suffering the consequences of unaccountable and irresponsible contracting practices. Recent reports describe how contractors knowingly overcharged the city more than $2 million for debris removal after the wildfires. This is because of our apologetic approach to interfering in the free market, even when the government is a key player in the market itself. This apologetic nature is reflected in poorly written and un-enforced contracts, our tolerance for poor quality services and claw-backs, and our reluctance to ensure that contractors do not violate the law.
Now is the time to restore confidence in San Diego’s public institutions. Even as our regulatory system is under the microscope nationally, we need to be examining our local regulations to consider whether businesses that contract with the city are engaging in responsible behavior. Taxpayer dollars spent on government contracts should be spent prudently. They should not be spent on businesses that are financially irresponsible and violate the law. In fact, it is of utmost importance for the city to save money by increasing oversight of contracts, and imposing deterrent penalties on irresponsible contractors.
Contracting only works when we can hold contractors responsible for their use of taxpayer dollars and when we can be sure we’re delivering high quality, cost-effective services to the people of San Diego. Every institution that contracts for services — either in government or the private sector — has learned the hard way that contracting out without strong organizational management capacity, skilled staffing and rigorous monitoring fails. Every step is crucial. From making sure the contracts haven’t left out crucial “deliverables” to accurately evaluating whether contractor bids are realistic and adequately resourced, performance audits, and spot checking to uncover overcharging, poor quality and even law-breaking. We cannot expect to save a cent for taxpayers by skimping on enforcing our contracts.
San Diego’s track record on contracting is spotty. For example, in 2005 the City Council passed a living wage law and a contractor standards law, which requires contractors to file annual reports with the city on living wage compliance. Not one contractor has filed such a report. The rules require contractors to post notices to employees about their rights. Most contractors ignore the rule. The law requires contractors to report violations of any state and federal law to the city under penalty of perjury. We have not seen a single contractor self-reporting their violations.
Businesses do what they are supposed to do— they mind their bottom lines. If it is less expensive to behave irresponsibly and get a bailout every time they are in trouble, they will do just that. Expect to hear loud whining and complaining every time you want to set ground rules. Just like a spoiled child, they will demand candy every time you want them to listen to you.
In San Diego, more than $436 million of general funds is spent in “supplies and services.” These are private contractors, goods and consultants. A 10 percent cut in the Supplies and Services budgets will easily tide us over with the current deficit. But it requires leadership to put on the cop hat and go after waste fraud and abuse in government contracting. We will have to renegotiate some deals, bring some in line, and cancel some contracts. Just like a family would call up their mortgage company and renegotiate their loans, cook a meal at home instead of going out, and postpone buying a new car.
Who is minding San Diego’s candy store?