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Tuesday, December 27, 2011

The Fallacy of Privatization: My Life As A Consultant

In the past few decades, the argument for privatization of practically every service normally run by public entities, such as cities, counties, states and even the federal government has been pushed by the Republican party.  The claim that private enterprises could do a better job for less expense has been a compelling one.  So compelling was this argument, that when presented to the public, there were few to question its logic, while the arguments of those few who did oppose things such as charter schools, privately run prisons and the construction of municipal facilities by private contractors fell upon deaf ears and were vocalized by mute politicians.
Having worked in both the public and private sectors, I can honestly say that private contractors neither save more money, nor do they provide a better product in many cases.  Sometimes the shortcomings of contractors are only apparent in their failure to stay within a contracts budget.  At other times however, the failure are related to the very service they provide or the final product they produce.  And then there are those times when neither of these criteria is fulfilled

Now, I must disclose that I can only speak to the issue of privatization as it relates to construction, because this is the field in which I have spent the majority of my career.  I am a graduate of the University of Miami, where I received my Bachelor’s degree in electrical engineering.  Since that time I have been a project engineer (or a field inspector) for projects ranging from and involving waste water facility improvements to the addition of a new concourse and terminal at Miami International Airport.  Overall my experience has been in both commercial and industrial construction, where I not only oversaw the quality of work for electrical installations, but work related to other disciplines of construction, such as structural and civil. Basically, I have covered most aspects of construction in my sixteen plus years of construction consultation.

I started out working as a public sector employee, but quickly moved over to the private side of my industry, due to the vast difference in pay scale between these two options.  And what I’ve come to realize is that private construction contractors are no better than public construction divisions.  As a matter of fact, I have come to my own conclusion that public sector construction divisions are actually better for whatever public entity they serve.  The main reason for my assessment is that public construction services have a greater stake in whatever project they are working on than do private contractors:  If public construction divisions don’t get something right they are still around to rectify this problems, FOR AS LONG AS THE STRUCTURE EXISTS or the piece of equipment is needed.  Private companies, on the other hand, guarantee their equipment and their work for a finite amount of time, 5 years and 1 year respectively under most of the contracts on which I’ve worked.

As for craftsmanship, I have long since given up hope that the contractors I work with will provide the level of service they agreed upon in their contract.  They have better lawyers, less respect for the client, while clients seem to have less will to enforce their own specifications these days.  I personally have been on jobs where project managers have tried to encourage me to falsify documentation in order to keep the project moving forward.  I have been on other projects where I was personally involved in the negotiation of change orders (requests of extra money for work that is outside the scope of the contract) where the dollar figure that those who were closest to the project estimated to be approximately $227 thousand dollars (and this amount was pushing the envelope in my opinion), but the final settlement was one million dollars which was decided upon behind a closed door meeting that did not include the project management team.  I also know of projects where contractors were kicked off jobs for failure to perform, only to be brought back onto the job to finish the construction; effectively getting paid twice for the same work.  This list goes on and on.  And of all of the disturbing things I’ve seen as a consultant, the thing that is most discouraging to me about my chosen profession is that, when interviewing at a new firm, once they’ve asked all of their questions, I have to ask this one important one:  “If I find deficient work and bring it to everyone’s attention, will you (project manager) back me up in my claim?”  Inevitably, and understandably, the answer is “Yes”, but in theory only.  In most of my personal experiences, however, when the time comes for action, the boisterous and prideful claims of “standing by their people” fall by the wayside; replaced by the justification that “the job must go on”.  I always find it funny how the phrase “The customer is always right” never comes up in any of the progress meetings I have ever attended.  In one occasion, I was even told to back off when I complained that a contractor was failing to do their job, as per their signed and sealed contract.  Worse than this, I have a colleague who was fired for demanding that a contract provide the quality previously promised during the bidding process.  Replaced by a more complicit individual, my colleague grew disillusioned with our profession and left it altogether.

Though my story only relates to construction, it seems to be relevant in most areas where privatization has been touted as the best way to control costs for those services historically provided by public funding and public agencies.  What I see in construction is cost overruns that seem to go unchecked by the very individuals who should be looking out for the taxpayer’s dollars; construction consultation that fails to control or assure the quality of the work or service being provided and an overall retreat from defending the client’s rights.  The client in these cases being the taxpayers who fund these projects.

As for other industries:  How are charter schools fairing against the public schools that helped create a strong America?  Does it seem that charter schools are run any better or that they are putting out students who are more prepared for life or college?  Or, as I have read, are they simply finding ways to maximize their profits, while adding no increased value to their clients (the students)?
How are the private prisons that profit, not only from the housing of non-violent drug offenders, but make money by cutting illicit deals with corporations that charge inmates exorbitant fees for things such as phone calls and outsource work for jobs once held by public employees.  Should these prisons be profiting from the misery of immigrants who only seek to make a living here as opposed to their country of origin, where this is impossible?  In the case of Mexico, the North American Free Trade Agreement (NAFTA) made it impossible for Mexican corn farmers to compete with American corn farmers whose crops could be sold for less than the cost to grow them, due to government subsidies.  Should these people be demonized for something that unfair trade practices forced them into and why aren’t the companies that hire these workers ever prosecuted?  Off topic .  Sorry.  My point is that one group of unfortunate people trying to eke out an existence should not be a means for corporations to further enrich themselves and that is exactly what private prison corporations like CCA and the GEO Group have done and continue to do, with our government’s blessing.

In the end, does it serve America’s best interest to privatize everything, especially when the Theorhertoric (made up word, I call dibs on the copyright) doesn’t correlate with the practical application of such privatization.  Corporations are motivated solely by profit and it feels as if the soul of our country is being compromised through privatization by the many corporations that worship at the altar of the Bottom Line.

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