The Coastal Post - November, 1997

Defeat Competition Killer Bill

BY WILLIAM EGGERS AND ADRIAN MOORE

Imagine that you have in your pocket a bag of magic dust. If you were to sprinkle this on the roads of California, they'd never need repair again. We'd never have to fill another pothole, paint another stripe, or fix another guardrail. What would happen if you used this magic dust? Well, taxpayers would save money. Drivers would have great roads. And we'd need a lot fewer public employees working in road repair.

If you ran the California Department of Transportation, would you use the magic dust? We hope you would, because your first and highest duty would be to taxpayers and citizens, those who pay for and receive public services-not to those who provide the service.

It seems, however, that some state employees think their jobs should take precedence over the interests of taxpayers. The union representing engineers who work for state government has spent over $2 million to create and promote an initiative that would make it nearly impossible for state agencies to contract for engineering, architectural and similar services. And if you are thinking,"Who cares?" keep in mind that this measure would impact almost every public works project in the state, including school, highway, transit, flood control, and bridge projects.

The Government Cost Savings and Taxpayer Protection Amendment is called the Competition Killer initiative by its opponents. Two key provisions in the initiative would make it all but impossible for the private sector to compete for state engineering and architecture contracts. First, the initiative creates a rigged bidding system, where overhead and capital costs, such as rent and utility bills, would not be counted in public employee bids, though they are included in private sector bids for contracts. In some circumstances the public employee bids may not even include employee salaries and benefits. Never mind that one key to a fair competition between private and public sector bidders-a full accounting of all relevant costs.

Second, the initiative directs the State Controller to analyze all engineering and architecture contract proposals, and to stop anywhere it is judged that public employees can perform the work for less cost than the contract. And with the rigged bidding system the initiative imposes, public costs would almost always appear lower.

California law is already among the most restrictive in the nation concerning contracting out state services. A service can only be contracted out if it can't be done by public employees or if the contract will save the state money. The last thing California needs is another layer of restrictions.

Contracting out is not magic. But in many cases competitive contracting can accomplish a needed task better, faster, and cheaper than a public monopoly. Voluminous research conducted by the Reason Foundation and others has found strong evidence that contracting out can generate savings of 20-50 percent, often with improved quality. It is a mistake to tie the hands of public managers by telling them they cannot use a private firm to perform public services.

When the 1994 Northridge earthquake resulted in the collapse of two bridges on the Santa Monica Freeway, it was estimated that it would take anywhere up to nine months to repair the overpasses. However, by streamlining the contracting process and offering substantial performance incentives to the contractor, the bridges were fixed in only two months.

The shortened time schedule saved the greater Los Angeles economy an estimated $74 million. If the public engineer's union initiative had been the law of the land when the earthquake occurred, we might still be waiting for the overpasses to be fixed.

Last year the state empowered local governments to pursue contracting out for infrastructure projects. It is only logical that state agencies should have similar freedom. Governor Pete Wilson has called for legislation amending the state constitution to permit more contracting out at the state level. This would go a long ways towards giving state agencies the ability to deliver the best and most cost effective service to the taxpayers. The Competition Killer initiative would take the state in exactly the opposite direction, creating more barriers to contracting out, and more burdens for the state's taxpayers.

If this initiative is enacted, the state will have to hire thousands of new employees to do the engineering and design work that is currently contracted out. Many vital projects, schools, roads, bridges, etc., will be slowed by months or years, waiting for the state controller to review contract bids. That is why dozens of school districts and local government agencies are opposing the initiative.

If the Competition Killer becomes law, California taxpayers will be the real losers. The only winners will be the public employee unions bankrolling it.

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