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Latest Federal privatization results

Adrian Moore
January 18, 2004, 5:59am

According to an article in Government Executive today, the results of two federal job competitions were announced. The Energy department held a competition for provision of financial services that was won by the existing employees. The 181 employees won by agreeing to eliminate 63 positions and restructuring, including consolidating 15 accounting centers down to two. The competition cost $2.2 million and savings should be $31 million over five years. It's funny that one of the challenges Energy faces is that "contractors can include the resumes of key personnel in their proposals, but federal personnel rules prohibit in-house teams from submitting resumes." The thing is, civil service rules are so rigid in making promotions based on time rather than merit that even in a competition, the merit of federal employees cannot be considered. Ridiculous. Meanwhile, at the US Forest Service, Serco Management Services Inc. defeated federal workers in a competition to provide vehicle fleet maintenance in the Forest Services California section. This is noteworthy because Forest Service employees have tended to win most competitions, retaining 2,187 of 2,474 jobs put up for bid so far. Government wide, the win rate tends to be about 50%. One other red flag popped out at me. The article mentions that the Forest Service will retain some defeated employees to help administer the contract. While you need competent and knowledgeable people to administer contracts, experience has shown that defeated employees often hold a grudge and work to undermine the contractor and prove that the outsourcing was a mistake. Hey, it was their friends who got replaced. Best practice analysis by Reason and others has consistently found using former employees as contract monitors can be an invitation to trouble.

Adrian Moore is Vice President, Policy


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