The Daily News recently ran a series of articles outing “no-bid” contracts at New York City’s Department of Education. As someone who spent nearly 20 years as a “provisional” public employee, I’m not surprised.
Whether the government is hiring public employees or companies, it faces what I call the “dilemma of discretion.” Allow public sector managers to hire and fire who they please, and the government runs the risk of having their brother-in-law – or the brother-in-law of a politico who is in a position to threaten them – hired. But bind that manager with all kinds of rules, such as a requirement to accept the lowest “responsible” bidder, to hire those who score highest on a civil service test, and to only fire an employee or contractor after a complicated series of steps, and you create a legalistic playground for those who seek to get paid to do a job without actually doing it. Thus the tendency of those trying to improve public services, as well as those trying to steal, to hire provisionals or “consultants,” which New York’s public agencies are stuffed with, and to enter into no-bid contracts.
The dilemma dates back to the imposition of civil service tests and bidding procedures in the progressive era. Prior to that managers had full discretion, as long as they did the bidding of the corrupt politicians who appointed them, and public services were generally poor and expensive compared with their private sector counterparts. Fortunately, there were relatively few such services as the time. Crusading reformers, who included conservatives who wanted government to cost less, and liberals who wanted it to actually accomplish more, pushed the new management systems through over the fierce opposition of existing political interests supported by existing producers of public services. Ironically, the same sorts of interests today defend their prerogatives under those very interests.
From the outset, the reformers faced the problem of the subjective tradeoff between cost and quality, and they solved it differently for hiring and contracting. For hiring, the civil service system keeps the cost (ie. the wage) constant, and hires the most qualified employee based on their civil service test score.
The problem is that the tests at best measure the ability to do a good job, not the willingness to do a good job, and the public sector has attracted too many employees who are only willing to do the least they have to. And since the same civil service rules make it virtually impossible to fire anyone, they don’t have to do very much. The way the public sector is managed also takes motivated employees and turns them into people for whom it is just a job, or “not my job,” after a few years of demoralization. These days, civil service tests are seldom given for man titles, and management uses any means it can – alternative certification for teachers, provisional hires, resumes in lieu of tests – to get around the rules.
For contracting, the progressive-era rules seek to keep the quality constant – through detailed specifications – and take the lowest prices, the lowest bid. That may work for a commodity such as number two fuel oil, but it doesn’t work for a management consultant. If the city knew enough to write the detailed specifications, the consultant wouldn’t be required. So it supposedly did what a private company would do – selected the firm it wanted to do the work, and tried to get the best possible price.
I say supposedly because, under the dilemma of discretion, a no-bid contract does open the door to other possibilities. Fans of privatization ought to be aware that companies can pay off politicians, work the legal process, and avoid doing their job as easily as the members of public employee unions. The existing rules provide them with all kinds of “rights.” When their performance is bad enough that they are finally “disbarred” as responsible bidders, they often reorganize into a new firm, re-establishing their “right” to contracts. Not everyone seeking to get around the rules is seeking graft, though perhaps some are. The mere fact that the lowest bidder was not selected doesn’t mean anything. The lowest bidder often end up charging extra to actually do the work, or not doing it at all.
The civil service system and bidding rules, by making personnel and contractors non-voluntary, eliminating reciprocity in the employment and contracting situation. Once a test is passed or a contract is won, the employee or contractor owes as little as he can get away with. Management often seeks to do as little as possible for the employees in turn. The result is ongoing, petty conflict over rules, a poisonous work atmosphere, and low productivity and quality – the government is a lousy place to work, and many firms refuse to do business with it. They don’t call it “going postal” for nothing.
Based on my experience in government, the progressive-era solutions to the dilemma of discretion – the civil service system and low bidders — no longer work, and decent public services can only be provided by working around them. But we don’t want to go back to Tammany Hall either. I’ll provide my solution to the dilemma in October.