By Steve Kelman

Blog archive

Contracting out strikes out again among my students

For a number of years in my introductory management and leadership course for first-year master's students in our public policy program, I have taught a class on the make-buy decision for government: When should the government produce a product or service in-house, and when should it contract it out?

The class is based on a case involving a decision by the Massachusetts Department of Social Services to contract out delivery of child protective services for Latino immigrants to a Latino community organization. However, we also discuss a number of other situations. The class includes an Internet poll the students complete before class about whether government should "generally" contract out prisons, benefit determinations for welfare recipients, operation of data centers for the college student loan program, operation of campsites at national parks, or cost-benefit analysis studies used in preparing an environmental regulation.

Because of the Internet poll, which has had the same questions over the years, I can see how student attitudes toward these issues have changed over time. Around two or three years ago, I noticed student support for contracting out starting to dip. In earlier years, about a quarter of students favored contracting out prisons and benefit determinations, with about 60 percent opposed and the remainder not sure. About two-thirds favored contracting out the data centers and the cost-benefit analysis, with less than 20 percent opposed and the remainder not sure.

In recent years, these numbers have gradually but continually trended away from supporting contracting. This year's figures showed the lowest support for contracting out yet. Only 4 percent favored contracting prisons. For the first time (except for one of my two sections last year), a majority – 50 percent -- opposed contracting out campsites, with 40 percent in favor and 10 undecided. And support for contracting out the data centers and the regulatory analysis dipped below 55 percent.

During the class discussion, students did not say many nice things said about contracting. Virtually nobody mentioned the idea that it might produce cost savings or better quality through competition. A student opposed to contracting out data centers stated that the government should be able to do this more cheaply because it didn't have to make a profit (the student's economics professor should take note). Although a few students argued that nothing was "inherently governmental" besides lawmaking and the military, most were concerned about contractors being authorized to use force or make policy decisions. One student said he would trust the government to keep his private data private more than he would trust a private company. Many students expressed, in one way or another, the idea that contractors would try to expand their work or damage the customer's interests whenever they could.

Yes, to be sure, these students are in a public policy program. But by no means all of them are headed to work for the government. Actually, a lot will end up at consulting firms that sell to the government. They are mostly liberal, but not generally dogmatic -- these are the same students who, as I reported recently in this blog, wanted to fire or discipline a TSA civil servant who had allowed a security breach at Logan Airport. And, to the extent they are going to work for government, they represent the ideas that many in a new generation of government employees hold. Mostly, I am guessing, their views reflect media coverage of government contracting.

I am using this blog post to report what I observed, not to express my own opinion. I think a minimal conclusion that this pattern of responses suggests is that, if one believes that the decision to contract often makes sense, at least potentially, for government, we need to make sure that this potential is realized in reality to secure the appropriate place for contracting in the government of the future.

Posted on Nov 10, 2011 at 12:09 PM


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