Stacking the Bidding Deck Against a Revolution
As much as I encourage our readers to come up with brilliant political reactions to instances of our state government’s corrupt insanity, I’m not prepared to be sanguine about the midnight amendment’s (PDF) effects. According to a plain reading of the text, here’s how the in-house group that may potentially be privatized (read, the union shop) must be handled to construct the baseline bid:
- Document the current costs.
- Subtract overhead and other costs that would remain after privatization.
- Prepare a statement of work and quality expectations.
- Prepare a “best practice” cost estimate taking into account any belief of current “employers and their supervisors” that they “could perform the work more efficiently” and including “any innovations” that could be incorporated.
Now here’s the list for potential private contractors:
- Compare private companies with the “best practice” estimate, which is based on an optimistic view of future work, not actual experience and historical data.
- Specifically search for “areas where bidder’s costs appear artificially low.”
- Add the costs of “contracting, including monitoring vendors for accountability.”
- Add any “new program costs.”
- Add the cost of health insurance for all employees (covering families), with a minimum penalty of 10% to salary costs if this information is not included.
Under normal circumstances, the opposition might be content to complain that the union workers can offer up their optimistic estimate of future efficiency, while private companies must be scrutinized for numbers that have the potential for proving “artificially low.” In Rhode Island, however, we are fortunate enough to have even more egregious things to complain about. Compare, for example, item 2 from the first list with items C and D from the second list. If our state government currently has infrastructure to “monitor” the progress of projects, and if these costs will continue with a private vendor, it would seem that the cost would be subtracted from the union bid, but added to the private company bid.
On a political stage — and let’s not ignore that the legislature has (contrary to separation of powers) reserved for itself a right to administrative veto — this comparison might prove so broad as to include any instances in which the administration slightly retools its processes, with the expense being subtracted from the union bid (on the grounds that the cost will continue) but added to the private bid (on the grounds that it’s a new cost). In this vein, consider the following verbatim provision of the new amendment/bill:
To be considered competitive (eligible for a possible contract), vendor bids must come in at least ten percent (10%) below the in-house cost estimate. This “conversion differential” adjusts for transition costs and the costs associated with starting up or closing down during conversion to purchase of service or in event of the need to bring services back in-house.
Remembering (again) that the legislature is reserving “the right to review any final program decision,” one wonders why this “conversion” is necessary if all new costs must be enumerated and added to the private company’s bid. The answer is that the union’s representatives in the legislature wish to stack the deck.
They’ve done the same with health insurance: If one of the ways that a private company would save us — Rhode Island taxpayers — money is by utilizing its employees only partially for our services when they aren’t needed full time, the entire cost of their mandated family health insurance would be added to the bid. For hypothetical instance, some rubber stamper in the company’s legal division, who spends a total of two hours per week scanning relevant documents, costs the private company 1/20th of his salary to provide our public service, but his entire health insurance costs must be included in the bid. If the legislature wants to ensure that all employees are insured, that’s one thing, but why on Earth must a bidder include costs that may not actually translate into the bill they send the state in their bid? As a consumer of their services, I just want to know how much it is going to cost me.
And as a final kicker — as if citizens teeth haven’t been sufficiently bashed in by this bit of oligarchical gerrymandering — Ms. Union Whore Lima has thrown in the following:
Before any final awards are granted, affected parties must have an opportunity to appeal the final decision. Affected parties include recipients, and their families of the affected public program, state employees and their representative organizations and bidders. Appeals shall not apply to questions concerning awards to one contractor in preference to another or the decision to keep the service in-house.
Take a moment to choke on that last sentence. Although I’m reluctant to rely on Ms. Lima’s grasp of the English language, a plain reading of this paragraph allows all state employees to appeal any privatization plan, but nobody in the state has a right to appeal the decision to maintain in-house (read, union) services.
This, dear reader, is the sort of legerdemain that rises to the level of justifying revolution. It is the sort of thing that ought to inspire we who’ve our eyes open to walk from door to door explaining it to our neighbors — in the hopes that they are not all too corrupt, apathetic, or stupid to exact a political price for supporting the legislation.
Reader Mike points out that the language of the bill was changed somewhat for inclusion in the budget (PDF). It is important to note that some of the language is different in significant ways:
- The 10% price advantage given to the unions has been changed such that the savings from privatization must be “substantial.”
- Whereas the in-house “bid” was initially required to “eliminate” overhead and other costs that would remain, it now must “include” them.
- Appeals are still limited to “program recipients, state employees and their representatives,” but the decision to keep a program in-house is no longer barred from appeal.
- The language laying out the General Assembly’s review rights has been softened to decrease the implication that it has a veto.
Although my cynicism about the Rhode Island government is such that I wouldn’t be surprised to see these provisions work their way back into the text before all is said and done, I must admit that the language, as it currently stands, is significantly different. I would, however, note that:
- Judges will likely look to legislative history when trying to figure out what a “substantial” savings might be.
- The General Assembly still gets a review, which would seem mere symbolism if there isn’t an implied right to step in.
- One would assume it unlikely that state employees would appeal the decision that they may keep their jobs, and program recipients can be targeted by ads (of a sort that is already familiar) and campaigns warning them of catastrophic loss should the programs be privatized.
- The initial bill gives a clearer view of what it is that our (quote, unquote) representatives would like the law to accomplish.