You can waste money in the public sector. You can waste money via privatization. As I mentioned a couple of days ago, putting public projects out to bid for private contractors is not a cure-all, nor a guaranteed money-saver, nor a guarantee of better quality. Our decades of experience with the fattened military-industrial complex ought to tell you that.
Public or private, results are going to depend on management and oversight. And if you bid out the work, that means you need to have expertise in contract structuring as well. Once the contract is signed, you’re pretty much locked in. The state is particularly vulnerable when there are only one or two contractors that can actually do the work, or if the state has limited insight into the contractor’s track record (hah) of similar work.
One gets the strong impression that in many respects, the MBTA control board is still flying blind:
The MBTA’S Fiscal and Management Control Board reacted with alarm earlier this week to reports of quality assurance problems on a $459 million contract with an Italian firm to install a federally mandated system to prevent commuter rail train collisions. Joe Aiello, the chairman of the board, called the reports “really disturbing” and fellow board member Brian Lang said he was sick and tired of hearing about contractors “running amok.” He even asked MBTA staff to start keeping track of how much time and resources are spent fixing “screw-ups” by private contractors.
Problems have also surfaced with a contractor given a 4.5-year, $38.5 million contract in July 2016 to consolidate three call centers for the MBTA’s paratransit service. Two of the call centers have been combined by Global Contract Services, but consolidation of the third has been delayed twice because of fears that customer service, which suffered when the merger process first began, would deteriorate further. It now appears millions of dollars in expected savings from the call center consolidation are unlikely to materialize and it’s unclear when the process will get back on track.
… The mere fact that the T had to hire a consultant, Accenture, to assess Global’s operations illustrates how badly the contracting process had gone off track. Accenture’s $171,000 report, presented privately to T officials on August 11, indicated Global was woefully unprepared for the job it was hired to do.
I’ll add, as I always do, that we have a state auditor who has done practically nothing on T contracts. Like banks to Jesse James, that’s where the money is, and I have to wonder about the lack of action from Suzanne Bump’s office. Is it lack of expertise, human capital, or interest that keeps the state’s auditor away from the T?
You really have to ask yourself if this is better than simply hiring people as state employees, with direct control and accountability by people with some political exposure. We should keep this in mind as we hear about the T’s attempts to partially-privatize bus maintenance operations. It’s all about accountability, public or private. If you couldn’t run an in-house operation efficiently, I don’t know why one would farm out the operation to a private contractor and necessarily expect better results.