Washington lawmakers again face a multibillion-dollar budget deficit. One tool available for improving service delivery while addressing the budget deficit is Washington’s competitive contracting law, passed as part of civil service reform and signed by Governor Gary Locke (D) in 2002.
In practice, however, state managers rarely exercise their statutory authority to contract out, meaning an important provision of the 2002 civil service law remains largely unused, according to a recent study by the Washington Policy Center.
Last summer, staff for the Washington Policy Center asked the state Office of Financial Management’s contract division how many private-sector personal service contracts had been requested or approved by agencies under the “Civil Service Competition” provision of the 2002 law.
The answer was zero.
The 2002 law authorized state agencies to open up to competitive bids from the open market public services traditionally provided through an in-house government monopoly. Public employees are encouraged to participate in the bidding process, because the intent of the law is not to benefit private companies but to secure the best service for the public no matter who does the work.
‘Ultimate Sacred Cow’
Lawmakers supporting competitive contracting reform share this belief.
“The ultimate sacred cow continues to graze because the third leg of civil service reform has never been realized or embraced,” said Rep. Gary Alexander (R-Olympia), ranking member on the state’s House Ways and Means Committee. “Contracting for state services or privatizing services and programs altogether has never been seriously considered, despite continued studies that suggest significant cost savings are possible.”
In 2002 the legislature passed the Personnel System Reform Act. Under the law, beginning in July 2005 agency managers could seek competitive bids to lower the cost of delivering services to the public.
In the years since, however, little competitive contracting has occurred.
Unions’ In-House Monopoly
According to the Washington Policy Center’s “How Competitive Contracting Can Help Balance the Budget without Raising Taxes” report, the primary reason is an agency’s contracting-out authority is subject to mandatory collective bargaining.
Not surprisingly, union leaders seeking to maintain an in-house monopoly usually make bargaining away their agency’s contracting-out authority a top negotiating priority. On the whole they have succeeded at preventing state agencies from contracting out.
After last summer’s survey revealed no private-sector personal service contracts had been requested or approved by state agencies under the 2002 law, Washington Policy Center analysts directly surveyed 20 state agencies to determine whether and to what extent managers were using their competitive bidding authority.
Of all the agencies surveyed, only one reported it had used competitive contracting under the 2002 law.
The primary flaw in the 2002 civil service law was making an agency’s contracting out authority subject to collective bargaining, the report concludes. Public-sector unions have a strong financial incentive to induce agency managers to surrender their ability to seek lower prices, because the agency’s work is then reserved for union members, regardless of cost to taxpayers.
Before 2002, state law barred agencies from competitively bidding any public services that traditionally had been provided by state employees, the report notes. The ban stemmed from a 1978 court ruling blocking administrators at Spokane Community College from hiring a private company to clean newly built school buildings and using the savings to augment the college’s education programs.
The ruling backed public-sector union leaders who had filed a lawsuit to prevent college administrators from loosening the in-house monopoly on janitorial work.
Union leaders sought to have the legislature make the ruling binding on all state agencies, colleges, and universities. The legislature soon codified the Spokane decision, establishing a statewide rule that any work historically performed by state workers always had to be performed by them.
College presidents and agency managers were not allowed to consider bids from private companies, even if the same amount and quality of work could be achieved at lower cost to taxpayers.
Jason Mercier ([email protected]) is director of the Center for Government Reform at the Washington Policy Center.
“How Competitive Contracting Can Help Balance the Budget without Raising Taxes,” Washington Policy Center: http://www.heartland.org/budgetandtax-news.org/article/26791