Shackling the Executive, Again

Connecticut law to "reform" contracting flawed

It was a good week for taxpayers in Connecticut. Governor Jodi M. Rell has vetoed a flawed contracting “reform” bill that was passed by the General Assembly in response to the public corruption scandals that landed former Gov. John Rowland in federal prison and drew guilty pleas from his former co-chief of staff Peter Ellef and contractor William Tomasso last month.

The legislation – like a similar bill that Rell vetoed last summer – would have handcuffed the governor, undermining her ability to improve how state services are delivered to the public.

At issue is a provision that would require state agencies to pretend that a private contractor’s labor costs would be the same as the state’s when analyzing whether or not to contract out services. The provision was supported by Democrats and opposed by most Republicans.

While other parts of the bill address the Rowland-era problems by bringing more professionalism and transparency to the contracting process, this one simply stacks the deck against good private contractors – and Connecticut taxpayers.

In order to effectively and efficiently manage the state, the executive needs the ability to use some of the same basic tools available to managers in the private sector. This includes the ability to evaluate and select the people who will perform functions through a fair and competitive process. It is not fair, competitive, nor reform-minded to rig the evaluation process in favor of one party (public employees in the government agency) over another (a private organization and its employees).

By creating a monopoly-setting for government employees, the state would be free from external pressure to improve performance or keep costs in check. It is not that state employees do not work hard and perform well; it’s that monopolies are inherently less efficient than competition, and absent the threat of contracting, performance can slip.

In his latest book, The Price of Government, David Osborne, a senior advisor to Vice President Al Gore’s National Performance Review, notes that “the fastest way to save money and increase value is to force public institutions to compete.”

A case from the federal government best illustrates this. In 2004, President Bush received the bill from the Government Printing Office (GPO) for printing the federal budget. Not satisfied with the price, Bush threatened to contract-out the service. Practically overnight the GPO retooled their proposal and was able to lower its price by 23 percent. Ultimately, the GPO won the right to keep the work. Once the threat of competition existed, the GPO found opportunities to save. And that’s money it could have saved taxpayers any time it chose, but never did until its customer decided to shop. By artificially restricting the Governor’s ability to even threaten competition, the state would lose a valuable tool to restrain costs and improve services.

Unions are behind the anti-contracting legislation. Instead of fighting competition, union officials should embrace it. It gives public employees an opportunity to demonstrate results and prove to taxpayers that they’re providing quality, cost-efficient services. And, if they do so, they become more secure in the long-term. With time, competition will prove itself, and as officials become more familiar with the process, it will be easier to subject even more services to competition.

The benefits of competition are well documented in both the private and public sectors. In other states, leaders of both parties have embraced the power of competition to find savings, improve services, and balance budgets. Pennsylvania Governor Ed Rendell (D) and Florida Governor Jeb Bush (R) have both successfully used competition to improve services and lower costs in their respective states. Additionally, it was former Democratic Vice President Al Gore’s reinventing government initiative that argued for more competition in the federal government.

The General Assembly should correct the anti-competition provisions and allow Rell and future governors to carry out their duty to make government transparent, efficient, performance-based and work better for taxpayers.

Geoffrey F. Segal is the director of government reform at Reason Foundation.