Does Government Really Have the Watchful Eyes to Privatize?

Certain things in life are predictable. A kid tilts the gumball machine when the candy does not roll out. A soda machine is kicked when the pop gets stuck. A baseball manager is fired when a team fails to make the playoffs. And, oh yes, don’t forget this one: politicians threaten to give away government functions when they do not work right. In recent days, with word of veterans waiting in line to get health care services, the big boys on Capitol Hill were once again doing their own form of “soda machine kicking” with calls for the privatization of Veterans Administration Health care services.

The rational for outcries to privatize are traced to the purported justification that the private sector is more efficient and works better than government. Really? Do the names Tyco, WorldCom, Enron, and, more recently, General Motors mean anything? What about the hospital chains like Hospital Corporation of America or the drug companies like Pfizer, GlaxoSmithKline, Abbott, and Amgen that over the years engaged in conduct that drew the ire of the Department of Justice?

Setting aside the list of bad actors that could fill a few notebooks, maybe there is something to be said about the idea that the private sector does it better. But is that really true when the private sector contracts with the government, or is a government contract merely a license to steal? Consider this: once government services are contracted out and long term civil service employees are displaced with contractors, there is – as Eddie Murphy might say – “no going back.” And some contractors have such a grip on their relationship with government agencies, it is virtually impossible for the government to keep them in line through any form of adult supervision. Take the case of Lockheed Martin Corporation. It has approximately $37 billion in government contracts currently. In other words, at the same time the United States Department of Justice is pursing Lockheed for violations of the False Claims Act, it is rewarding it with hundreds of millions of dollars in government contracts.

No doubt it is unrealistic to advocate for the elimination of all government contracts. It is, however, reasonable to explore their extent and focus on means to hold contractors accountable. So let’s focus on their extent. Most Americans do not know that government contractors have been hired by agencies to provide guidance on the drafting of regulations that have the force and effect of law. Presumably when this occurs the government is monitoring these contractors for potential conflicts of interest. But sometimes things fall through the cracks, like when the Nuclear Regulatory Commission retained SAIC to work on a rule governing the “free release” into commerce of recycled radioactive metal. It turns out that the NRC did not realize that its trusted advisor stood to benefit from these rules because it had subcontract to aide in the recycling of radioactive nickel from Tennessee’s Oak Ridge K-25 nuclear weapons site. Nor do most Americans realize that the Centers for Medicare Service, a part of the Department of Health and Human Services, actually contracts with insurance companies to dole out government health care dollars. And as to prescription drugs, those insurance companies rely on private “compendia” publishers for guidance on whether the use of drugs for non-FDA-approved purposes is reasonable. Turns out that the compendia publishers rely on committees with doctors who are on the gravy train of the drug companies who stand to benefit from non-FDA-approved use of their drugs.

With all my grousing someone reading this might say “tell it to the judge.” But did I mention that our Supreme Court is pushing to privatize the judicial system through compulsory arbitration. The rent-a-judge movement is no minor anecdote. Arbitrators are not required to adhere to judicial precedent and their opinions — if they even write one — are not subject to review for non-adherence to law.

The privatization of America is a threat to anyone who is not the beneficiary of a government contract. I suppose, of course, that even government contractors have some worry; if they are actually placed in prison for misdeeds they may find themselves under the thoughtful oversight of a private prison company.

All of this goes to the point that on June 20 — at its annual convention in Washington — the American Constitution Society will convene a panel on the “Privatization of America.” It is the first of what will be many much needed dialogues about this subject.