Florida Gov. Crist Vetoes Anti-Privatization Bill

Florida Gov. Charlie Crist has vetoed a poison pill bill that would have significantly increased the political risk associated with state contracting and privatization:

Gov. Charlie Crist vetoed a state contracting bill Wednesday evening, claiming the bill would inject “unnecessary uncertainty” over the process of hiring private vendors through state agencies. The bill, SB 2694, was sponsored by Senate Ways and Means Chairman J.D. Alexander, R-Lake Wales, a critic of rampant contracting woes that resulting from the state’s attempts to privatize various government services, largely under then-Gov. Jeb Bush.

It would have generally given the Legislature more say-so in contracts that involve buying equipment worth more than $500,000, or contracts with escalating costs. But Crist said in his veto letter released late Wednesday that “I am concerned that this bill imposes additional contracting requirements on state agencies and those who do business with the state at a time when we should be doing everything we can to streamline bureaucracy and stimulate economic growth.”

He added the bill “hinders the ability of the executive and judicial branches to implement state policy by requiring prior legislative approval of certain contracts” which may “adversely affect the ability of agencies to negotiate contracts.”

That last piece is critical to understand. Whether you’re talking about privately financed toll roads or private sector service delivery contracts, any state requirement for legislative approval of individual contracts will automatically increase the political risks faced by the private sector. This makes sense—private vendors spend thousands, even millions (in the case of a typical toll road contract, for example), developing proposals and engaging in competitive processes. To know that you can jump through all of the hoops to win the bid and then still face a 50-50 shot that the contract will go forward. Ideally, the risk of project approval would decline as the competition nears completion, not taper down to a high plateau.

And from a government-centric standpoint, legislative approval of contracts works at cross purposes to the day-to-day management and administration work performed by agency directors and staff. It becomes hard for them to make decisions and accomplish their goals when the political process sits waiting in the corner to potentially undermine them anywhere along their path to the goal line.

Gov. Crist made the right decision here. Over the last decade, Florida has been a national leader in privatization, undertaking some 130+ privatization initiatives saving hundreds of millions in direct dollars and avoiding billions in future costs. Prior to 2001 (early in former Gov. Jeb Bush’s first term), Florida agencies reported a total of 16 outsourcing contracts; by 2008, that number had spiked to 551 state contracts totalling over $8 billion (source: Florida Council on Efficient Government, 2008 Annual Report). Further, the state’s privatization best practices center—the Council on Efficient Government—has been and continues to improve procurement practices and disemminate best practices and lessons learned throughout state government. Now that Florida seems to have developed the most robust and transparent privatization process out there among the states (and are continuing to refine it), legislation along these lines seems unnecessary and more based on political aims rather than substantive policy.

Read Gov. Crist’s veto letter here.