Privatization Needs Care and Foresight : It Must Save the County Money to Be Worth Doing

Privatization should be part of the long-term solution to Orange County’s bankruptcy, but we have suggested that the county should not count its coins until the cash register starts ringing. There are other things to think about too.

For example, county contracts should be rebid regularly. Maybe the county will be well served by continuing with the same providers, maybe not. But each case needs to be examined, and the county will need to be consistent and oversee privatized contracts once they are let out.

For example, as The Times reported last week, a 1992 county analysis showed that county workers could operate the Data Service Center at a savings of about $1 million a year, even though the county renegotiated the contract with Martin Marietta. Why? County documents show that the county was concerned that a switch would be disruptive to day-to-day computer operations.

That’s a bit like being unwilling to move the family to a more economical house for fear that there would be some disruption in family routines during the move. Nobody said boxing things, switching the phone over and getting the lights turned on would be uneventful.

Martin Marietta says customer satisfaction has increased since 1992. But tell that to a would-be competitor, Software Maintenance Specialists, which says it could save the county $3.5 million a year. Here is an example of how the justification for privatization at all must be kept in mind at all times. It’s about saving money.

Then there is the case of the contract to rent, maintain and repair heavy equipment at the Frank R. Bowerman landfill which, a 1992 cost comparison indicates, the General Services Agency accomplishes for less at two other landfills. That realization did lead to putting on hold plans to expand the private contract, but the contract that existed was renewed. If government can do it cheaper, what’s the argument for going private at all?

Moreover, there is reason to take seriously the argument that the influence of lobbyists will grow. Political reform watchdog Shirley L. Grindle, who has worked diligently for campaign finance reform in Orange County, warns that the awarding of contracts opens the door to what she calls “the greatest lobbyist employment act ever.”

If there is one thing the public should know from past experience in Orange County, it is that if the potential for a loophole exists in the relationship between special interests and public officials, somebody will find it. Beware the law of unintended consequences by reforming government to save money.

Also, there is the matter of district prerogative. The county staff reviews qualifications of architectural or engineering firms bidding on a project and rates them. Good enough so far. But where that process should result in actual decisions about who gets a contract, it is only a way station in Orange County’s process. The staff goes on to remove the ranking and sends the top three contenders to county supervisors who make the decision. It usually comes from the person whose district contains the project. This is supposed to ensure accountability. But important countywide decisions should not be made by deferring to individual supervisors.

Privatization needs oversight, regular rebidding and assessment of the bottom line. The county needs to be careful that it does not make foolish or unwise decisions in the rush to change the way it does business in the aftermath of the bankruptcy. It certainly should not be making ones that don’t save money.