Union takes privatization pitfalls to the public

On Sept. 2, 2004, Montana governor Judy Martz presented Corrections Corporation of America (CCA), which runs a private prison in the state, with an “outstanding business of the year” award. On the same day, four Montana inmates escaped from a transport van, owned and operated by CCA subsidiary TransCor America.

The break out—and the parent company’s award—made headlines. So did the news, almost a year earlier, that the state was considering contracting prisoner transportation with TransCor. That headline: “Montana considering company that transported North Dakota inmate who escaped.”

Headlines about government contracting debacles are rare—unless the fiasco posed a threat to public safety.

Locals are doing their part, however, to change that because lack of media coverage about privatization leaves taxpayers uninformed about the scope of consequences when private companies are entrusted to do the work of government.

Wis. Locals Protest ‘Privatized Elections’

More than 200 union members and concerned citizens participated in a Nov. 30 rally in Madison, Wis., to protest the state’s new $13 million contract with Accenture LLC to create a statewide voter registration list.

“Privatizing elections is very dangerous,” says rally participant Barbara Smith, an energy analyst with the state energy office and a member of the Wisconsin Professional Employees Council (WPEC), an affiliate of AFT Public Employees. “It is a matter of public trust. Elections are at the core of our democracy. Public agencies and public employees are accountable. If something goes wrong, we need to be able to get to the bottom of it.”

A variety of factors compete for the outrage over the state’s contract with Accenture LLC as far as Smith is concerned. Accenture, the parent company, lost its voter list contract with Florida this past summer. The parent company also is headquartered in Bermuda—a move corporations formerly based in the United States make to dodge taxes. In addition, Smith says, state employees could do the work. “We are getting federal money to do [the project], but the state is not willing to hire new state employees because the governor made a campaign promise to shrink the size of government,” she says.

The late November rally was sponsored by the State Alliance for Value in Government Services or The SAVINGS Project, which is a coalition formed by AFT-Wisconsin locals to increase public awareness of the pitfalls of government privatization.

Smith says The SAVINGS Project’s immediate goal is to cancel the Accenture LLC contract and get all aspects of the election system back under public control of public agencies. In the long term, the group wants to end outsourcing of government services.

Accenture’s Record In Connecticut

Accenture, which made almost $14 billion in fiscal year 2004, bills itself as “a global management consulting, technology services and outsourcing company.” On its Web site, the company boasts “client successes.” Visitors to the Web site won’t see the company’s software project with Connect-icut, called CORE-CT, on the list, however.

The software is used for every economic transaction the state makes, from purchasing to payroll, says Mike Winkler, president of the Administrative and Residual Employees Union (A&R), an affiliate of AFT Public Employees. “There are problems that occurred on day one in 2003 that just haven’t been solved. CORE-CT requires a lot more key strokes, a lot more screens—a lot more work.”

In other words, the system is not more efficient and between layoffs and retirements, there are almost 8,000 fewer state employees to do the work. Winkler, a member of the AFT Public Employees program and policy council, says the state has spent in the neighborhood of $100 million on CORE-CT so far—and the system is still in development. 

The faulty software, used by an estimated 1,500 A&R members alone, isn’t only causing problems for the employees who work with it, it is hitting many who receive payments from the state in the pocketbook. There are problems with payroll, particularly for employees who work shifts, and more than eight hours a day, says Winkler.

Not only does the miscalculation affect worker pay, it affects leave balances. “A significant number of state employees are going to have their time audited from day one,” says Winkler. “It is going to be years before some employees’ leave balances are correct.”

The software also lacks capacity to automatically adjust to union contract provisions for the state’s 13-plus collective bargaining agreements.  A&R was told that the software was going to program compensatory time as expiring in six months. “We laughed,” says Winkler. “Under our contract, it doesn’t expire—and they back-tracked.”

State employees “had pretty much been maintaining the prior system and I’m sure they could have designed a better system,” says Winkler. “State employees are really the ones who want the system to work because they are the ones who are going to be using it. They want it to work as well as possible. They have no profit motive to cloud their judgment. They really should be entrusted with the job.”

Task Force Reports on Shadow Government

Under the guise of flexibility, efficiency, specialized needs, saving taxpayer money and, ironically, lack of manpower, decision makers are relinquishing responsibility for public services to the private sector. From information technology to prisons to road projects to human services programs, federal, state and local government officials are undercutting the most important element of government services—accountability to taxpayers.

When the AFT Public Employees program and policy council established the civil service reform task force over a year ago to identify public policies that are negatively affecting union members on the job, the task force quickly zeroed in on privatization, which has become such a widespread phenomenon that it has earned its own moniker: shadow government. (The group’s report is available at www.aft.org/pubemps/index.htm.)

Governing magazine reports that states and localities alone spend more than $400 billion on contracting each year. But that is just an estimate. Due to lack of legislative oversight and accounting, the actual amount of contracting out at all levels of government—local, state and federal—is virtually impossible to pinpoint. So is the number of private sector employees doing the work. The Washington, D.C.-based Brookings Institution’s Center for Public Service estimates that the federal government’s shadow workforce grew by 727,000 private sector workers from 1999 to 2002. During that same period, the federal civil service registered a decline of almost 50,000 jobs.

Once, shadow government consisted of quasi-government entities, such as public authorities. Today, the term encompasses quasi-government entities, both nonprofit and for-profit private sector companies in the United States and abroad.

Accenture could well be the poster child for shadow government.  “Not only has the company moved its headquarters overseas to avoid paying taxes, it outsources U.S. jobs—and it is getting a $10 billion contract [from the federal government] to protect homeland security when it doesn’t want to pay taxes to protect the homeland,” says Jeff Waggoner, a research assistant with the New York State Public Employees Federation (PEF), an affiliate of AFT Public Employees.

Member Activism Key to Keeping Work In-House

It is not enough for union leaders to challenge elected officials to address contracting out.  After all, privatization of public services is often more about politics, perceptions and payoffs to political contributors than it is about smart public policy.

“We are only as good as the information we get,” says Steve Connolly, a fiscal/policy analyst for PEF. “We need members to forward tips to us.”

Connecticut, New York and Wisconsin are among the states where AFT Public Employees locals are working with state lawmakers to enact legislation aimed at curbing contracting out.

PEF is supplementing its legislative action with a statewide advertising campaign and an aggressive member education effort.

There are clear indicators that expose plans to contract out public employee jobs, according to the task force, which identified early warning signs in its report, Exposing Shadow Government: Protecting Quality Government Services. Among them: the use of more temporary or part-time workers; a “restructuring” of existing services; and the development of an employee attrition plan that includes retirement incentives, hiring freezes—and no strategy for refilling positions.

Meanwhile, local unions of AFT Public Employees are doing their part to increase the number of headlines about government contracting failures beyond the boundaries of public safety and into the realm of taxpayer interest—the bottom line: money, quality and accountability.

After the TransCor debacle in Montana, MEA-MFT president Eric Feaver sent a letter to the editor of newspapers in the state. “TransCor was responsible for the escape, but they were not held responsible for evacuating schools, alerting businesses and citizens, tracking down the prisoners and bringing them back into custody,” wrote Feaver. “It was public employees, law enforcement staff from a variety of agencies, who kept the citizens of Helena safe, captured the prisoners and kept the situation from turning into a tragedy.”