If small business can handle it, the job shouldn't be done by government.
How's your adrenaline on this peaceful summer day? Try this for blasting it into action.
Some time ago, a news item appeared about federal government competition with private industry. It reported that 400,000 federal employees are working at more than 11,000 "commercial or industrial activities." These include such categories as audio-visual services, automated data processing, and the maintenance of buildings. The cost to the taxpayers for government employees to do these jobs is about $20 billion a year.
Some $5 billion of this amount could be saved in the next five years, according to the director of the Office of Management and Budget (OMB), if some of these commercial activities were shifted to the private sector. And as many as 154,000 federal jobs could be abolished if the President and Congress got tough on this issue together.
That may be hard to do. For example, the House Armed Services Committee has proposed a "moratorium" for one year on any new contracting-out by the Department of Defense to the private sector. In doing this it reinstated 17,000 civilian jobs previously cut by the budget director -- nonmilitary jobs paid for by the department.
The committee took these actions to "punish" the OMB for cutting those same 17,000 civilian jobs from the defense budget. It seems that the cost of doing several hundred Defense Department civilian chores using federal employees was compared with the cost of contracting out those jobs to private industry. In about 60% of the comparisons, the in-house cost was at least 10% higher.
The budget director saw a chance to save a little money by simply chopping 60% of the Defense Department's 29,000 civilian slots, an estimated savings of at least $40 million a year.
He gave the Defense Department managers and base commanders an ultimatum: Either contract out 60% of your commercial activities or lose those 17,000 jobs elsewhere in the department.
When the Armed Services Committee restored the jobs, it defended itself against the charge of wastefulness. Its report said that by buying these goods and services outside the government, OMB would have spent almost the same amount of money as the jobs cost.
The country is facing a deficit of $104 billion (the House Democrats' goal) to $182 billion (the estimated deficit if no agreement can be reached between the Administration and Congress). But the House Armed Services Committee doesn't think that the 10% savings is worth bothering about.
All this may move you to take pen in hand and dash off a few courteous and constructive, if pointed, words to your representatives and senators. By all means do it -- and don't forget to send a carbon to the budget director. He's supposed to be coming up with a tough new directive on how to bring federal competition with private industry under control. Not surprisingly, the budget director receives 10 outraged letters criticizing him for this expected effort for every letter he receives supporting him. Don't forget, perhaps 1 million government workers are in unions, and if there is one labor action they understand, it is threatening letters to politicians and administrators.
This stubbornly defended government competition is a direct challenge to the desire of many of us for the biggest small business sector possible. To us, the issue of federal government competition wins the big Red Herring Award hands down for the longest-running political slapstick and pratfall comedy in Washington. Big talk, small actions. It is true we have won a few rounds. From 1970 to 1980, the number of federal employees decreased from 1.4 to 1.3 per 100 Americans. As a matter of fact, 1981 was probably the first time in 50 years that the total number of public workers -- state, federal, and local -- did not increase. But it is hardly time to throw our hats in the air. Bear in mind that the number of state and local government workers per 100 Americans rose from 2.7 in 1950 to 5.9 in 1980.
Government competition with private industry is certainly not a new issue. It is not even an old issue; it is a permanent issue in a self-governing republic. It is where the citizenry draws the line between the proper realm of government and forbidden government intrusion.
Over the past 27 years, Presidential directives have eroded what was initially a clear preference for the private sector in government procurement. In 1955, Bureau of the Budget Bulletin 55-4, theoretically binding on agencies answerable to the President, said:
It is the general policy of the Administration that the Federal Government will not start or carry on any commercial activity to provide a service or product for its own use if such product or service can be procured from private enterprise through ordinary business channels.
The circular explained that private sector and government accounting methods were not alike -- the government, for example, doesn't pay taxes, and it computes overhead, depreciation, and fringe benefits differently. Therefore, most cost comparisons between the two sectors are unrealistic. Government should never perform a commercial activity itself, the bulletin continued, except when goods or services cannot be bought in the private market at a reasonable price.
Bulletins in 1957, 1960, 1966, and 1979 further whittled that principle. The first three added loopholes. The last switched a preference for the private sector to acceptance of the federal government as a direct competitor if it could perform a commercial activity more cheaply. It also shifted to a preference for nonfederal sources. This aggravates an historic problem -- treating universities and nonprofit institutions the same as taxpaying private-sector organizations -- by also treating state and local governments the same as private businesses.
The government now gives equal preference to buying from nonprofit, non-taxpaying institutions and from state and local government agencies. Indirect government competition from untaxed, subsidized nonprofit entities is thus an accepted policy.
