Privatizing? Maybe Not All Bad.

Very interesting story a couple of days ago about Lockheed getting the contract for providing flight services that were the territory of the FAA. Almost $2 billion over ten years, not exactly chump-change.

There’s a knee-jerk reaction on most of our parts about privatizing governmental services. Either we’re for or against, but the track record has been mixed. Most Brits think Margaret Thatcher ruined the service industries in England and much of what Reagan spun off turned to spun straw instead of spun gold.

But President Bush’s competitive sourcing initiative has a different focus. Encouraging federal agencies to determine whether some of their more commercialized activities could be better and more cheaply bought in the private sector, the initiative allows the agency to bid on the services in-house as well as taking outside proposals.

Hard to find fault with that. An agency bidding on work it has traditionally done brings fresh thinking to the process; in all likelihood weeds out the unnecessary and lops off some of the bureaucratic fat that might have accumulated over the years. Congress has shown itself incapable of reducing almost anything and who would know better than the agency itself the refinements that might lower costs? It has an elegance about it, this initiative, a sort of reinventing government feel. I like it. Further, I am a fan of the many-small-experiments theory of bureaucratic change. This process fits that definition beautifully and is the antithesis of ‘top down’ management.

Thus far, during 2003 and 2004, agency employees have been able to ‘win’ nine out of ten contracts and that’s heartening as well.  No wholesale firings, no anti-bureaucratic mobs running the halls of agencyland, cutting without knowing anything else but the desire to cut. You can bet that the 90% who survived this process have come away from the experiment knowing more about their jobs and how to do them efficiently. The classic Japanese management circle, encouraged by the classic American bidding process.

There will be screw-ups, occasional unfairnesses and a scandal or two along the way, no doubt. The unions will be unhappy as unions are always unhappy. But it seems a very positive move and long overdue.

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