Government privatization is not a panacea

Sept. 14, 2011

A study released this week by the Project on Government Oversight suggests that it costs taxpayers more when the government uses private contractors. In one case POGO discovered that the contractor billed five times more than the compensation that would have been paid to federal employees for the same work.

Analyzing billing rates of over 35 occupational classifications showed that in 33 of those classifications using federal employees was less costly. One of the key findings showed that in all 35 classifications the contractor billing rates were higher than what’s considered standard in the private sector.

The report by the POGO pretty much blows up the argument by Republicans and right-wing extremists that most government should be privatized because workers are overpaid with far too generous benefits.


Repblicans for years have beleived that privatization saves money, but offer few studies to prove their contention. 


Because of corporate profits and annual corporate payments to investors, the worker is often the 'biggest loser" in a corporation. Congress noticed that Medicare Part D--Bush's private medicare alternative--was costing more to administer than government run traditional Medicare. 


Traditional Medicare had 3-5 per cent overhead and Medicare part D, 12-15 per cent. At one time in this country msot power companies were publicly owned. Many of these companies were privatized and runaway rate increases followed. 


Most private utilities are regulated by public utility or service commissions. In Florida, the power companies were asking for the PINS of Blackberries to bypass the servers of the Florida Public Service Commission (PSC). 

This could allow the utility to communicate directly with the commission members outside of public view and without leaving a paper trail.

Florida’s two biggest power providers, Progress Energy and Florida Power & Light, are in an annual PSC reviews of the “nuclear cost recovery” fees assessed on Progress’ 1.6 million customers, including 60,000 in Marion County, and FP&L’s 4.5 million clients.

The monthly fees are allowed under a 2006 gift to the state’s power producers from the Legislature. 

The fees were fund these costly future projects as they go along. Critics contend the nuclear pants a will never be built and that Progress energy and FPL customer are being bilked. 

Apparently, deals like this is what Rick Scott had in mind when he thought Florida should be more business friendly. 


The government also continues needs to do a better job at reaching the fair market value instead of letting itself be bilked for excessive costs by contractors.  The organization is pushing Congress to adopt better transparency standards. Curtailing government sole source bids shows also reduce some of this overcharging.


source: http://www.tampabay.com/blogs/the-buzz-florida-politics/2009/09/aides-to-utility-regulators-gave-blackberry-codes-to-lobbyists.html

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