Saturday, March 31, 2012

VA Investigating Reverse-Auction Bids

According to this article on the Government Contractor website, the Veterans Administration began in internal investigation into the use of reverse auctions for outsourcing and privatization, which seems to have led to repeated abuses and lack of oversight by the Administration.  While advocates and politicians tout privatization and outsourcing as cost-saving measures, the savings often do not materialize, partly because of the government's chronic incompetence or inefficiency in procurement of services from outside firms, and partly because of the logistical problems with the government providing adequate oversight for the privatization and outsourcing process.  Here is my favorite quote from the article:


Frye's memo alleges that contracting officers, when conducting reverse auctions, had handed over too much of the rein to FedBid, the company that hosts the reverse auctions for the VA, without proper oversight by "cognizant contracting officers."  "We simply did not think through all of the unintended consequences of reverse auctions when we recently made the decision to allow their use," Frye also wrote.  
In a reverse auction, companies bid to sell their products to the government and the price goes down with more competition for an agency's bid. 

The Wikipedia article on reverse auctions is not a bad place to start for quick background on this method of procurement, although the article is not critical enough.



-Dru Stevenson

Saturday, March 17, 2012

Progress Being Made in Reforming Federal Privatization Practices

In an important new article by Daniel I. Gordon in the Government Contractor, entitled Reflections on the Federal Procurement Landscape, we get an insider's view of the serious problems with federal procurement of services (outsourcing/privatization), and the progress being made to curb the abuses and bring reform.  Here is the abstract: 

This paper, published in the Government Contractor, presents the reflections on the author's service as the Administrator for Federal Procurement Policy from 2009 through 2011. The author identifies his three goals for his tenure as Administrator: strengthening the federal acquisition workforce, driving fiscal responsibility in federal acquisition, and rebalancing the relationship with contractors. The author points to reversal of several negative trends, in particular, decline in the size of the federal acquisition workforce during the years 1992-2009, unsustainable annual increases in procurement spending during those years, and an unhealthy overreliance on contractors in performance of key government functions. In each of those key areas, the author reports on the progress made - increasing the size of the federal acquisition workforce, buying less and buying smarter (particularly through the strategic sourcing initiative), and a better balance in relations with contractors, with more clarity about the proper role of contractors and improved oversight, as well as efforts to increase communication with vendors.

Friday, March 16, 2012

Florida's Plan to Privatize Medicaid

This article in The Florida Independent mentions several aspects of Florida's plan to privatize Medicaid already rejected by the federal government.  What do you think will happen to the plan in the coming months?  One perspective can be read in this editorial.

Tuesday, March 13, 2012

New from Laura Dickinson: Outsourcing Covert Activities

GW Law School Professor Laura Dickinson (see previous post here) has a great new article on SSRN about the widespread privatization of covert ops overseas, and the problems that arise from this practice - Outsourcing Covert Activities.  Highly recommended.  Here is the abstract:

Over the past decade, the United States has radically shifted the way it projects its power overseas. Instead of using full-time employees of foreign affairs agencies to implement its policies, the government now deploys a wide range of contractors and grantees, hired by both for-profit and nonprofit entities. Thus, while traditionally we relied on diplomats, spies, and soldiers to protect and promote our interests abroad, increasingly we have turned to hired guns. Contrast the first Gulf War to later conflicts in Iraq and Afghanistan. During the Gulf War the ratio of contractors to troops was 1 to 100; now, with approximately 260,000 contractors working for the State Department, Department of Defense (DoD), and the U.S. Agency for International Development (USAID) in Iraq and Afghanistan, that ratio has often exceeded 1 to 1. To be sure, U.S. history is rich with examples of contractors; the privateers of the Revolutionary period are a case in point. But our current turn to privatized labor does reflect a new trend, spurred by the post-Cold War decline of the standing military and the elimination of the draft, supported by the public’s faith (not always backed up by data) that the private sector can perform work more efficiently than government employees, and fueled by the exigencies of the war on terror in the aftermath of the attacks of September 11, 2001. Many of these modern contractors perform logistics functions, such as delivering meals to troops or cleaning latrines on the battlefield. Others guard diplomats, convoys, and military bases. But contractors have also gathered intelligence, interrogated detainees, and engaged in tactical maneuvers, sometimes under circumstances involving hostile fire.

Sunday, March 11, 2012

New SSRN Article - Unions and Privatization: Opening the 'Black Box'

This new manuscript posted on SSRN by Patrice Jalette and Robert Hebdon seems to provide a valuable contribution to the literature on how government employee unions respond to outsourcing initiatives (which are common union-busting tactics).  Here is the absstract:


Using a survey of Canadian city managers during the period 2002 –2003 modeled on the U.S. International Cities and Counties Management Association surveys, the authors examine a range of union responses to proposals to privatize city services. When confronted with possible member losses, unions adopted a number of strategies: a) they reacted not at all or they supported the proposal; b) they engaged in collective action; c) they attempted arbitration and litigation; d) they negotiated to reduce adverse effects; or e) they suggested alternatives to privatization. Though unionized cities attracted a greater number of new privatization proposals, unions effectively rejected them, the most successful strategy being to suggest alternatives. Conversely, initiating strikes and other industrial actions were not as effective. Cities in which multiple strategies were adopted had lower long-term privatization rates. These results support a pragmatic view of union-management relations illustrating how unions and city managers found mutually acceptable alternatives to privatization or adjustment policies.