Just about three years ago, Secretary of Labor Chao was crowing that the Department of Labor was the first government agency to have gotten all green on their No Federal Agency Left Behind report cards - and that the way DOL had clawed its way to the top was by privatizing DOL employee’s jobs.
But as it turns out . . . the picture in DOL privatization land is not especially rosy . . . when the truth comes out . . . as it often does when the Government Accountability Office starts checking into things.
crossposted from unbossed
To digress a bit and dump on the DOL, this is not sole irony. In fact ironies just about doesn’t get any better than life at the U.S. Department of Labor under Labor Secretary Elaine Chao, wife of Senate Republican Leader Mitch McConnell.
You see, it used to be the case that the DOL was an agency whose mission was to protect workers and improve their lot. The range of government agencies under the DOL is breathtaking.
And except for Chao’s baby, the Center for Faith-Based & Community Initiatives (CFBCI), they are critical for important worker wellbeing, including jobs, health and safety, pay, and more. But all agencies under Chao have become at best do nothing for workers and at worst have actively undermined worker welfare.
I say this with sorrow, not just for the workers who are supposed to be protected, but also for the brave federal employees who care about the mission of their agencies and have hung on through a terrible period. Without them, we would see real collapse.
Kim Bobo of Interfaith Worker Justice sums up the situation well here.
Chao has continued to pursue her task of undermining worker welfare to the bitter end, including the promulgation of stealth regulations to undermine worker rights. In fact, you can find a compendium of unbossed pieces on the Chao DOL here.
The Big LIE about Privatization
For years, we have been fed a line that privatization actually saves money. But when you check into the facts behind the claims, you find only that there are claims behind the claims, at best.
When the cherry blossoms bloom each spring, the Office of Management and Budget (OMB), which assists the President in preparing the federal budget and oversees and coordinates the Administration's procurement policies, releases a sunny report on the large amounts of money taxpayers have saved as a result of the government’s privatization initiatives. Only a careful reader would notice that all the purported savings are not fact; they are projections. And those projections stretch credibility while ignoring costs associated with privatization.
. . .
OMB silently acknowledged the validity of criticism of its cost and benefit accounting in its FY2007 report: "OMB recently asked agencies to establish validation plans on a reasonable sampling of competitions to ensure that cost savings and performance improvements are being realized as promised." This pressure may explain why billions in savings claimed for FY2006 became mere millions claimed for FY 2007.
OMB’s numbers consistently fail to include the costs of privatization in the equation.
That report goes on to list a number of costs of privatization that OMB consistently does not include in assessing the costs of privatization, assuming any real assessment were done. Which is a big assumption.
What DOL Privatization Has Really Meant
GAO has issued report after report on failures of contracting out work, some massive, some just awful. As part of unbossed, leave no crook, thief or miscreant behind, we have tried to include summaries of these reports on a regular basis.
On Friday, the GAO released a report in which it took up the challenge of assessing costs of privatization, and the subject of its examination was Chao’s green-sticker DOL. The report is just a great read that shows GAO at its best.
Here are some excerpts to give you a flavor of the report.
[W]ithout a better system to track deficiencies and improvements departmentwide and identify the costs associated with competitive sourcing, it will be difficult to assess whether competitive sourcing truly provides the best deal for the taxpayer. To accurately determine which management tool is most cost-effective in performing a certain activity, agencies need a full accounting of the costs and performance.
The report goes on to list specific ways in which DOL’s claims of savings are "oversold".
DOL’s savings reports for competitive sourcing, while adhering to OMB guidance, exclude a number of substantial costs and also are unreliable. OMB’s guidance directs agencies to exclude certain costs associated with the competitions, such as some staff costs and costs incurred before the competition’s announcement. These costs can be substantial. In addition, DOL’s savings reports are unreliable for a number of reasons. For example, we found cases of inflated savings reports due to calculation errors, the use of projections rather than actual costs, and the use of baseline costs that were inaccurate and misrepresented actual savings.
GAO notes that these problems are not limited to the DOL. They are endemic to the system.
Previous GAO reports have cited problems at other federal agencies — DOD and USDA’s Forest Service, in particular — because they did not develop comprehensive estimates for the costs associated with competitive sourcing. This report identifies similar problems at DOL. To enhance the transparency surrounding their estimates of savings from competitive sourcing, federal agencies need to track all costs — including planning costs, transition costs, postcompetition monitoring, and the labor costs of all staff who participate in competitions.
We found that DOL does not ensure that identified deficiencies and recommendations are tracked and followed up on at a departmentwide level. Without such departmentwide tracking, DOL is hindered in identifying and monitoring agencywide competitive sourcing performance trends, reliably determining whether all deficiencies or recommendations for improvement have been addressed, or determining whether the new organization is working more efficiently. Moreover, if DOL continues to conduct more competitions that involve multiple DOL offices, the ability to track competitions departmentwide will become increasingly important.
We also found that in a sample of three of DOL’s savings reports to Congress, all three contained errors that overstated the savings achieved through competitive sourcing, two of which were significant. Without reliable savings assessments, policymakers do not have the information that they need to determine the effectiveness of competitive sourcing.
In the case of the DOL, it turns out that after some work has been privatized, contractors have been unable to perform all the work, so government workers have had to continue to do work that was supposed to be done by the contractor. The cost of the public employees' labor on work that has been "contracted out" is not included in assessing costs and benefits.
That certainly is a cost that needs to be included. Both those salaries and the cost of contracting out work and dislocating the workers who actually could do the job.
One thing that is really sad in this report is the toll privatization has taken on DOL workers. This toll is one that affects the quality of work they can do and has meant that many have left rather than stay at an agency where they are subjected to such abuse. Their loss is our loss.
In considering the impact on DOL workers, it is important to know that most of the time the government workers won the competition. All this cost in dollars and people has been essentially an exercise of running in place.
Furthermore, In other words, groups who are supposed to be protected by the government have been harmed under the Chao DOL.
DOL’s competitions rarely resulted in lost jobs or salary reductions for DOL workers, but many experienced changes to their jobs, and those we interviewed who were involved in the process reported negative impacts on morale. In the 28 competitions DOL held during fiscal years 2004 through 2007, a total of 314 employees experienced formal changes to their jobs (that is, changes reflected in personnel actions). Of these employees, 248 were reassigned to different positions within DOL at the same federal grade and salary level, and 15 were promoted to a higher federal grade level. Another 16 were demoted to a lower federal grade level, but these employees generally retained the same salary they had before the competition due to grade or salary protection provisions. Of the remaining workers who left DOL, 29 left voluntarily through retirement or with a monetary separation incentive. Only 6 employees were laid off from the federal workforce.
Among those 314 workers who experienced a personnel action of some type, 47 percent were African-American (including all those who were either demoted or laid off), 60 percent were women, and 89 percent were 40 years old or older — significantly higher proportions than their representation in the general DOL workforce overall.
DOL management stated that they made their best efforts to treat well those employees whose jobs were competed. For example, they offered reassignments, voluntary early retirement options, separation incentives, and other services for career transition. Nevertheless, in our interviews with DOL employees who assisted with competition activities or whose positions were affected by the competitions — though not a representative sample — we found that employees who were satisfied, as well as those who were dissatisfied, with the competitive sourcing process reported negative impacts on morale for themselves and others.
The report finds that the impact on morale is seen as having long lasting negative effects on agency productivity and on the ability to recruit qualified new workers.
The report is Department of Labor: Better Cost Assessments and Departmentwide Performance Tracking Are Needed to Effectively Manage Competitive Sourcing Program GAO-09-14, November 21, 2008