THE BLOG

Cities and States Should Learn From Edward Snowden

07/12/2013 11:59 am ET | Updated Sep 11, 2013

A low-level computer analyst, Edward Snowden, an employee of federal contractor Booz Allen Hamilton, successfully and launched a national conversation about government surveillance. He also exposed what happens when important government functions are outsourced to for-profit companies.

Not only did the federal government outsource surveillance, but they also outsourced the background checks of employees for granting security clearance. In both cases, federal offices didn't' have the staff to monitor and manage the contractors.

Cash-strapped mayors and governors are privatizing critical public services and assets to for-profit corporations that promise to taxpayer savings.

Unfortunately for taxpayers, not only has outsourcing these services and privatizing public infrastructure to for-profit companies failed to keep this promise, but too often it undermines transparency, and public accountability.

In fact, the fine print in these contracts often gives government contractors the power to make public decisions and guarantees profits even when it conflicts with public purpose. For example:

  • A Morgan Stanley-backed consortium signed a 75-year lease with the city of Chicago for 36,000 public parking meters and a number of city-owned parking lots. Taxpayers are now obligated to reimburse the company when they want to close a street, and are prohibited from building “competing parking lots.

  • In Denver, the 99-year contract with the foreign consortium to operates the Northwest Parkway prevents public road improvements near their toll road because they "might hurt the parkway financially" by providing an alternative route for drivers.
  • In 2012, for-profit prison company, Corrections Corporation of America (CCA), offered to buy public prisons from state across the country in exchange for a promise to keep the prisons 90 percent filled for 20 years. Governments would have to keep prison beds filled or for taxpayers to pay the prison even if crime rates drop and fewer beds are needed.
  • Too often outsourcing public services has put further pressure on the middle class and the local economy as wages and benefits fall while corporate profits rise. For example, according to a recent study outsourced food service workers in New Jersey public schools had their wages cut by $4 to $6 per hour. Most of the sub-contracted workers received few, if any, benefits leaving them uninsured or enrolled in state public health insurance programs.

    Taxpayers across the country are making it known that they won't stand for having the public interest privatized. In places like Texas, New Jersey, and California, corporate efforts to undermine transparency, accountability, shared prosperity and competition are being thwarted by responsible legislators. In Fresno, voters this month rejected an effort backed by Mayor Ashley Swearengin to outsource trash service for the city's 500,000 residents to a private company (and cut pay for its workers),

    Lawmakers are starting to make common sense contracting reform proposals such as requiring any company paid with tax dollars to open its books and meetings to the public (just as public agencies do), requiring companies that receive public contracts to pay a living wage with reasonable benefits, and banning language that promises profits even if public services are no longer needed.

    Alderman Roderick Sawyer of Chicago's Sixth Ward has introduced the "Privatization Accountability and Transparency Ordinance to protect taxpayers from future parking contract disasters. "[The parking meter contract] was a bad deal and has tied the hands of taxpayers ever since," said Sawyer.

    In New Jersey, legislation to ensure that public services won't be privatized unless it will result in actual savings for taxpayers has passed both chambers of the legislature and is waiting for a signature -- or veto -- by Governor Chris Christie.

    Outsourcing without these kinds of common sense reforms threatens the public's ability to hold government accountable. In a recent statement, Katherine McFate, president of the Center for Effective Government, summed up the challenge to democracy: "You can't vote the president of the private water company out of office if the service is bad and the bills get outrageous."