Rolling Stone on Iraq Spending

[Breadburner]

Check out some of the money pissed off on earmarks sometime......

[MichaelC]

Nobody is saying to nationalize Halliburton.  Nobody is saying it can't be done through contractors.  

But take transportation, that can be done through independent operators.  The bureaucracy, after the initial hiring could be really small, it possibly be merged in with a current system.    You could pay the drivers more than Halliburton could ever dream of, and do it cheaper.  You wouldn't have to pay for Halliburton's bureaucracy and it's CEO's.    In some cases, you wouldn't have to build an entire system.

But on inefficiency, everyone assumes that gov't is inefficiency to a degree.  And there's the old stories about toilet seats and hammers.   And, it's odd to me that people complain about it too much because some of the people that complain are also the ones that think if it a private company can get away with it, it's ok.  Seems like people both applaud it and are appalled by it at the same time.

My biggest problem with privatization in country, has always been wages.  Yes, some things are contracted and private companies can make lots off of contracts.  But, there is also gov't employment where wages and benefits are better.  And even if used inefficiently, money tends to go where it is designed to go.  No one is paying a CEO, or a golden umbrella, wages aren't completely flat, prisoners aren't being released by accident every other day.  It's a lot of things.  Privatization is not, in itself, any type of answer.  

The money is usually the same from year to year, it's going to be spent.  Someone is going to profit, whether employees or contractors.  Why privatize that system, so it can become an object of pure profit?  Is that the only reason?  I don't know.  With Iraq, the goal should be to rebuild Iraq, not to take as much profits as possible.  Same with the prisons, properly housing prisoners should be the number one goal of that system.  Not profits.

A lot of things are hypothetical.  Some people assume more inefficiencies than others, some people focus on one thing and forget the rest.  I've never had that kind of problem with gov't.

[aoxamaxoa]

quote:Originally posted by Breadburner

Check out some of the money pissed off on earmarks sometime......

Absolutely!

However, that amount pales in light of the abuses by Cheney and his cult.

[iplaw]

quote:Originally posted by Breadburner

Check out some of the money pissed off on earmarks sometime......

http://www.cagw.org/site/PageServer

[Conan71]

Michael C-

Even if the government provides all the labor pool for a construction-related or infrastructure business, they still must buy materials from vendors.  There is a lot of local corruption to deal with Iraq to get raw materials.  Even for finished goods which can be manufactured and shipped from the states, you still are paying CEO's and corporate bureaucracies.  There's no way to take potential waste out of the hands of private industry, unless you nationalize all industry.

Government having the capability to pay more than the private sector for labor or assuming that private contractors are paying less for labor than the gov't would so they can enrichen the top brass is not really accurate.  The government already sets minimum wage and benefit requirements for various skilled, non-skilled, and tech positions for their contractors.  I'd happily post this if I had it on disk, however all I have is hard-copy.

We do about four or five projects every year for the Federal Gov't.  We do work for the Army, VA, GSA, Air Force, USACE, and others.  On each project, there is a five-plus page federal wage determination in the bid award package which goes along with about 28 other pages in the package.

A sampling of some positions with mandated minimum wages (not the federal minimum wage- this scale starts at around $8.00 and some jobs go to over $30.00 per hour): computer programmer, iron worker, stevedore, accounting clerk, pipe fitter, office appliance repairer, millwright, crane operator, concrete finisher, mortician, vending machine attendant, registered nurse, welder, paralegal, etc.  There are about 500 to 600 occupations covered, virtually all of the construction trades are included.

We are required to submit for audit a weekly report of each employee who worked on the project, how many hours they worked, the job classification number that employee's occupation falls under, the wage rate, and benny's included.

In other words, unless there's no such minimum wage requirements on international projects, companies must pay their workers a minimum of what the government tells them they must pay when you are working on a federal project.  I doubt the gov't is going to pay an employee more than what they mandate private companies are required to pay.

I don't know if the requirements are the same for international projects, I'm simply relating my own experience in dealing with the feds.

You are going to have to pay more to uproot talent from the states to go over to a desert **** hole to work and sweat for several months at a time.

The unfortunate reality is that government budgets to account for waste every year.  You are going to have waste whether or not the gov't is in charge of an entire operation or contracting it out.

[MichaelC]

I wasn't talking Iraq specifically when it comes to wages.  You're right, there's a system that determines wages.  But I do wonder how much the City of Tulsa or Tulsa County or the State, whoever, pays Avalon to run that half-way jail downtown.  Avalon gets something from the gov't, their wages aren't very good.  It can't be done better than Avalon?  That's another issue.

And if we paid the same in wages, would we pay less for maintaining the jail if it was gov't run?  Those are hard questions, there's plenty of reasons to believe that it would be no worse than the same if gov't ran that jail.  And reasons to believe it could be run better.

Where Iraq seems to differ from in country is there seems to be less oversight in Iraq.  Buildings not being constructed to code, jobs being overcharged at extraordinary rates.  Rates that, truly can't be explained in a reasonable fashion.  I've not said, that the gov't should control everything.  But oversight is very much necessary, as necessary as contractors.  Contractors can screw the gov't, that's what the hammer and the toilet seat are about.  Without oversight, gov't asks for it.

Nothing against contractors, but not everything should privatized.  Social Security Administration, would it be a good idea to outsource that?   How about, outsourcing it to India?  Is that a good idea?  Not that I really want to get into that, but I've never been under the impression that private companies can always outdo the gov't.  And I've never been under the impression that all gov't services should be outsourced.  To the contrary, some privatized systems probably should be made public again.  Like maybe welfare, where we've outsourced parts of it Lockheed Martin, as if they don't make enough money already.  And again, I'm not really looking to get into that.

The argument for privatization has been light.  I don't see where taking chunks of money out of a system is beneficial to the system, in most cases.

[Conan71]

Michael, thanks for the clarification on the government level you were speaking about.  I think you and I are pretty much on the same page.

When the TCSD took operation of the D.L. Moss from CCA, I figured it was a no-brainer that the county would save money.  CCA has to operate at a profit.  At a bare minimum, it should have cut out 10 to 15% profit which a corporation needs to keep share-holders happy.  The TCSD has no obligation to make a profit and has pressure from tax payers to keep costs within reason.  FAIK, the private corrections officers are paid about what deputies are paid who man the jail- which is pretty much crap wages.

In this career and a previous one, I dealt quite a bit with hospital powerplant engineering departments.  There was a huge surge back in the late '90's by Servicemaster and a couple of others to outsource plant engineering, maintenance, and housekeeping services.  They concentrated generally on smaller hospitals in the size range of say, McAlester or Muskogee, or smaller.  Either they won't go after a St. Francis or St. John's or the management shut them down pretty quick.

Here's the pitch:  Servicemaster has a list of approved "preferred" vendors for consumables, cleaning supplies, chemicals, tools, paper products etc., outside mechanical services, ad nauseum.  They claim they can take your existing labor pool in these departments and operate them more efficiently and be able to come up with a net over-all savings by using supplies from their preferred vendor group. IOW- they usually would hire existing employees and put them on their payroll instead of that person being a hospital employee. They usually hand-pick or import a couple of their own on-site managers for the contract.

The reality is, maintenance costs for many facilities wound up going up, and some positions got wage cuts.  Usually the first year looked good on paper, then the costs would escalate due to things like "supplier price increases."

Needless to say, sharp hospital administrators have caught on in many of those facilities and returned to managing their own departments for about 20 to 25% less.

Sometimes it does make sense to contract out services which are not at the core or within the experience of what a business or government entity is capable of doing efficiently.  Other times, all that winds up happening is the same services are provided but also with a profit added on.

In the case of Lockheed-Martin, it's entirely possible that they have a more efficient data-management and distribution system than the government had and they weren't willing to sell that technology to the gov't, but were more interested in getting into a long-term arrangement with suited both.

[MichaelC]

I've just always found it odd, that a system like Welfare, where theoretically the money is supposed to be pumped down and gov't always tinkers with the budget, is being used for corporate profit.  As opposed to, the gov't gaining the technology.  It's not terribly difficult to update systems, I don't know if Welfare is more expensive now or less expensive now due to Lockheed-Martin, I'm sure LM has will tell you it's cheaper.

It would be an even stranger paradox if we were talking about Social Security.

But, it has always seemed odd that people are so ready to give this up to a corporation which requires profits, instead of updating a system.  While at the same time, they'll complain about welfare and social security and the need for a tax cut and the list goes on.  Are our taxes going to have to be raised just because we choose to outsource?  It's hard to tell, it doesn't seem to be lowering taxes any.

And the gov't is a part of the economy.  It's not all private sector, gov't very much plays a role.  Whether it's helping private business through contracts, or paying wages in a wage bracket that needs the jobs.  I've used this before, but if Tulsa, OKC, and Albuquerque were all three in the running for a massive Welfare Administration Center with 750 jobs, would we be complaining too much about welfare?  Would would tell the Fed just where they could stick their center?  Some maybe, most of us, no.

[cannon_fodder]

Frankly, I do not care what the government claims the money is for.  Once they take it, it will be wasted and filtered to whoever most benefits the Senator that can get them the cash.

One thing China has right, misappropriation of state funds is death.  No more slaps on the wrist, make an example of a few lowlifes by sending them to FPMITA prison and watch the rest scurry like rats.

If there are no real consequences, the pie is just too fat for many people to avoid a slice.

[Conan71]

There's a couple of ways to look at it.

I realize this is a "duh" point to most of us, but: corporations have pressure from share-holders to generate profit.  Profit is either  generated by increasing the cost of the end-product or service to the customer, or by cutting internal and supply-chain costs.

Perhaps Lockheed-Martin generates the profit by operating more efficiently with fewer employees and more automation than what the gov't can do it for.

The federal gov't has no such pressures to generate profit, therefore it has no real motivation to cut waste.  Just raise taxes to cover the costs.  Corporations generally don't go back to share-holders to raise income.

I have personally seen preferential "incubator" programs which benefits minority-owned companies where the federal government has paid at least double to have work performed for them.  

Without naming names or facilities, let's just say it was a piping project in a federal building.  One company which specializes in piping was hired as a sub to perform the work by an "incubator company".  That incubator company had no experience in this field of work.  On what should have been a $55K project had the government worked directly with the piping specialist, they paid over $110K for the incubator company to do nothing more than to provide one person on an eight hour shift to supervise the work of the sub every day.  The sub supplied their own job foreman to supervise the work.  FWIW, the sub had about four men and materials cost in it.

In other words, our federal government paid $55K-plus to have one man stand around for a total of about 80 hours over a two week project.  Granted, they did handle some paperwork, but that was the sum total of what they did for $55K.  Hardly an isolated incident.

I'm personally of the belief that the gov't just doesn't feel accountability to tax-payers like companies feel to their share-holders.

[MichaelC]

quote:Originally posted by Conan71

I'm personally of the belief that the gov't just doesn't feel accountability to tax-payers like companies feel to their share-holders.

Probably not, but share-holder accountability could also be a bad thing.  Inflating prices to make the business more profitable, instead of focusing on the service itself.  Especially when the potential pool of funds seems limitless, all you have to do to make a profit is talk someone into gov't funding.

Construction, and any type of project that's contracted is a little bit different than "operations."  There are different problems there, and different remedies.  It's not all quite the same.  It's the "operational" level that is lacking in Iraq.  It was sold completely to private companies.

It seemed to me that when Moss was private, there were a lot of accidental releases.  I haven't heard of any since it went back to the Sheriff.  Private companies are only focused on service and details to the extent that it profits them.  Otherwise, they could care less.  The gov't seems to be detail oriented, and fairly harsh on themselves about certain important aspects that private companies leave out.

And then there's the cost, I believe you're right that we're getting a better deal with the Sheriff running the show rather than CCA operating Moss.

It seems to be a win all around for anti-privatization, on that deal.

[Conan71]

I believe there have been some accidental releases I've read about since the TCSD took over again and before CCA had it.  I can't cite specific cases, just relying on feeble memory.

I think it was more newsworthy when the Sheriff had his spat with CCA.  It wouldn't surprise me if someone was leaking these accidental releases to the media when CCA was running the Moss.

Where the public does get hosed is on sole-source or no-bid contracts.  On competitive-bid fixed-price contracts, that is the surest way to make sure the taxpayer is getting best value for the money.  I'm also aware that the government does use RFP's and will select the best bidder in the interest of the gov't.  IOW- if the low bidder cannot prove they can do the job based on previous experience or scope of project, it can be in the best long-term interest of the taxpayer for the gov't to pay a little more.

In some cases there is only one company suitable for a particular need of the gov't.

[cannon_fodder]

quote:Originally posted by MichaelC


Probably not, but share-holder accountability could also be a bad thing.  Inflating prices to make the business more profitable, instead of focusing on the service itself.

Such a corporation would fail in a hurry as customer's abandoned it.  The corporation might be rewarded in the short term, but most would hear whispers that the core was rotting.  Soon investors would run away, especially when the rumors came to fruition and the whispered poor service was realized with no repeat customers.

Government, on the other hand, has been delivering poor service AND inflated prices for a generation.  I can't sell my shares nor can I stop consuming from the US government.  [!]

[MichaelC]

Halliburton hasn't crumbled.  They've gotten much stronger off blank checks, near zero accountability, and no oversight.

The word "government" may send some people to the nut-house in a fit of rage, but the argument for privatization of government functions on an operational level is not very strong.  At best, privatization appears to break-even with gov't operated systems.  At worst, privatization cost taxpayers significantly more than the same system operated by gov't.

[Conan71]

There again, the gov't doesn't have the resources nor developed technology that Haliburton has.

Haliburton is nothing more than a convenient red herring in Iraq because of Dick Cheney.  FWIW, Haliburton has done business with the gov't long before the Bush admins and will still do business w/ the gov't long after Dick Cheney is dead.