Edward Snowden and the disaster of privatization

July 11, 2013

In May, computer analyst Edward Snowden flew to China, handed over volumes of National Security Agency surveillance data to a reporter, and launched a heated national conversation about our nation’s surveillance state. Underscoring that conversation was the fact that Snowden was a private contractor, given access to a vast store of information despite having virtually no track record with the NSA or the private firm with which he was employed.

Snowden’s leaks exposed a widespread lack of oversight of the contractors working at every level of our government; outsourcing can be nearly as damaging at the state and local levels as it is for federal contracts. The same lack of transparency, accountability and oversight threatening our national security threatens public services provided each day across the country. Cash-strapped mayors and governors are handing over control of critical public services and assets to for-profit corporations and Wall Street investment banks that promise to handle them better, faster and cheaper. Too often, such deals entirely undermine transparency, accountability, shared prosperity and competition — the very underpinnings of democracy.

In fact, the fine print in these outsourcing deals often gives corporations the power to make public decisions for decades to come. It also often guarantees profits even when getting them conflicts with what was a bedrock value of America: public service provided for the public good.

In Chicago, a Morgan Stanley-backed consortium took control of 36,000 public parking meters in a 75-year lease. Taxpayers must reimburse the private company when spaces are closed for street fairs or emergency weather conditions. The contract also prohibits the city from operating or permitting operation of a competing public parking facility. Even more outrageous, the city cannot make improvements to streets that contain parking meters, such as adding bicycle lanes or expanding the sidewalk.

In Denver, the private, foreign consortium that operates the Northwest Parkway can prevent any public road improvements near their toll road because they “might hurt the parkway financially” by providing an alternative route for drivers. Taxpayers are stuck with that contract for 99 years.

In 2012, Corrections Corporation of America (CCA), the largest private prison company in the country, sent a letter to 48 states offering to buy public prisons in exchange for a promise to keep the prisons 90 percent filled for 20 years. While the letter was a public relations fiasco for CCA, it turns out that many existing private prison contracts actually include “occupancy guarantees” of 90 percent and even 100 percent. Governments must keep prison beds filled or taxpayers have to pay the prison company for empty beds.

Preventing horror stories like the above is precisely why my organization, In the Public Interest, developed the Taxpayer Empowerment Agenda — a series of state and local proposals to restore transparency, accountability, shared prosperity and competition. These common sense reforms are as basic as requiring any company paid with tax dollars to open its books and meetings to the public (just as public agencies do); requiring companies that receive public contracts to pay a living wage with reasonable benefits; and banning language that promises profits even if public services are no longer needed.

These reforms couldn’t come fast enough. As veteran newsman Ted Koppel recently said on National Public Radio, “We are privatizing ourselves into one disaster after another. We’ve privatized a lot of what our military is doing. We’ve privatized a lot of what our intelligence agencies are doing. We’ve privatized our very prison system in many parts of the country. We’re privatizing the health system within those prisons. And it’s not working well.”

Indeed, whether it’s outsourced security or schools, it’s not working well at all. And it’s time for taxpayers to reclaim control.

PHOTO: Private civilian contractor Richard Castro, who teaches U.S. soldiers on use of surveillance equipment, works with his laptop inside a transit tent at U.S. military’s Combat Outpost Terra Nova, in Kandahar province, southern Afghanistan October 16, 2012. REUTERS/Erik De Castro 


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Outsourced schools? You really want to compare public schools with private schools? Even in the cities, the “best” public schools cannot hold a candle to even the inner city parochial schools when it comes to reading and math.

While I agree that some services should remain under the control of government, you did not make a single statement that many services provided by government would be delivered more efficiently by the private sector. That’s why a lot of cities under financial duress have out-sourced services to private companies. It’s cheaper, done better and with fewer work rules.

Posted by COindependent | Report as abusive

Isn’t it more patriotic and proactive for Snowden to reveal the giant holes misuse of our data than for this to continue and put us in more danger with Chinese contractors openly giving this to their government every day. No one seems to be concerned that this same contractor has employees doing the work in China.

Posted by Butch_from_PA | Report as abusive

Public vs. Private? They’re drinking buddies stumbling from pillar to post and are accustomed to citizen slaves picking up their bar tab. To argue a distinction between the lushes is a delusional sport by slaves of the state, such as the sober author.

Posted by JP007 | Report as abusive

Comments thus far miss the point: There are tasks that gov’t is good at, and others that should be kept tightly controlled. The litmus test to determine which is which has not been properly defined. We need to recognize that such a test is needed, and what the criteria are. I believe the guiding principal should be: Does injecting the profit motive corrupt the motivations of the sub’s management? With prisons, evidence continues to grow that the answer is yes. With healthcare coverage, a mixed bag, with abuses on both sides. With parking meters and roads, increasingly sub’ing looks like a bad idea.

Contracts need to be written such that performance goals are tied to revenue and profitability.

Posted by BKfromPHL | Report as abusive

It’s basically the same, with different names. It’s the Public Interest that’s been lost because of greed.

Posted by CyclingPeace | Report as abusive

How did you get a job writing for Reuters? Privatization is undermining accountability, shared prosperity and competition? How the hell did you come up with that? This issue with Snowden has nothing to do with the privatization of anything. He is the product of an out of control government. The privatization is due to the fact the government cannot fill all the roles it has assigned itself. Control the government and you control the problem.

Posted by wonderinghow | Report as abusive

Contracting is not privatization. You guys don’t know what privatization is.

Posted by AynRKey | Report as abusive

@private schools…. moron. If the same standards were to be applied and half the money that is siphoned off to “private consortiums” for “public” education were actually paid to public schools (teachers and facilities), the public education system would not be in the mess it’s in now.

Thanks to privatization and vouchers, only rich kids get a decent education. Where’s the “public good” in that?

Posted by Wry | Report as abusive

Reuters: If you are not going to bother to review posts in a timely manner, why bother opening a topic for comments?

Posted by Wry | Report as abusive

The difference between the government and private contractors is that the government was specifically designed to be answerable to the public. You go to any large corporation and try to figure out who’s responsible. You’ll be running in circles for a week. And anyone who thinks that corporations are more inherently efficient than government clearly has never WORKED for a large corporation. They could teach government about obfuscation, bureaucracy, and CYA attitudes.

Posted by Saje3D | Report as abusive

Some things are not meant to make a profit.Some activities have to be above the call of the holy buck. Take health care , prisons. Two extreme examples of how the quest for the buck leaves nothing but hardship and misery in it’s wake. How many people died and are dying because of the sacro-saint money grab the hospitals and insurance providers are doing ? How many people in jail are treated worse than dogs in a pound because the jail’s is meant to make a profit and not insure them a minimum of decency and care ?
The illness striking the nation is called greed
It’s one of the 7 deadly sins.
To those that are engaged in such activities , doctors , administrators , shareholders , managers , you cannot call yourselves good Christians. You’re not .
You draw checks on the misery of your fellow humans .

Take fundamental activities out of the private hands.
Healthcare ,defense ,security ,government   it will be better for everyone.

Look at what they enjoy north of the border and everywhere else in the world. Greed is the only reason you cannot have your cake and eat it too : someone else is eating your cake .

Posted by FuzzyTheBear | Report as abusive

Mythbuster: Contractors to the NSA don’t get any less oversight than employees and typically more. (Most security experts consider internal threats the most dangerous and often ignored.)

However, the main issue of this article with respect to outsourcing of government services is still valid. It is foolish to assume that private companies can provide government services better. The reality is often the opposite, despite all the made-up statistics by those who bang the drum of “big government”. For example, we could cut the cost of healthcare in this country substantially by EXPANDING Medicare through lowering the age of eligibility. Sorry, all you liars, but the healthcare industry knows this well.

This comes from someone in the outsourcing business for almost two decades.

Posted by ptiffany | Report as abusive

Thank you, FuzzyTheBear and ptiffany. Fuzzy, my Canadian and Swiss friends shake their heads over the attitudes towards government healthcare here, and I marvel at my fellow Americans’ gullibility to the talking hotheads of TV Opinion-news. Ptiffany, I wish Reuters would interview someone such as yourself who has personally worked in outsourcing for decades!

Posted by SunAndRain | Report as abusive

I’d like to know where in the private sector does anyone do a 75 or 99 year deal??!!???

Posted by JamesPerly | Report as abusive

The examples given by the article are outrageous and certainly no where repeated in the rest of the Western World.
Public vs Private schools comparison always forget to mention that the public schools are robbed blind of resources. No wonder they aren’t as good.
It’s a really simple system: Convince the people that THEY know better how to spend their cash than experts and they will spend it on YOUR private school. The gullibility of the American people is astounding.
Let’s not forget that the majority of progressive commenters here are probably not Americans.

Posted by DaSteelGenera1 | Report as abusive

With respect to the Snowden example, I would point out that Alrich Ames and Robert Hanssen were both long time employees in the federal government. People actually got killed because of their actions.

As to the rest, I totally agree with poster JamesPerly. The common thread is government leaders/employees making dunderhead, or more likely, cronyism business decisions to the detriment of future flexibility – 75 and 99 year leases are absurd! I am unaware of any private sector to private sector agreements that last that long.

Posted by Squeamish | Report as abusive

Government is organized to provide for our citizentaxpayer. The object of a public employee is to serve the public who pays their wages. If there are problems they can be identified and solved by reporting the problems to elected officials. Yes, this is a simplistic description, but this is a message board not a thesis.

None of that is true when the functions of government are turned over to a profit making entity. When the employee providing service to the citizen/taxpayer has no connection to the served, but to employers who are only interested in profit there will be less services and accountability.

Why anyone would sign away government services for generations has to be stupid or corrupt.

Posted by Cnileolman | Report as abusive

Many of the respondents REALLY miss the point. I think this article is very needed. Points are:
1.Some services/institutions ARE NOT FOR PROFIT!! Period.
For-profit education and for-profit medicine brought us where we are. I am not saying that they must be 100% public but there should minimal publicly available level [which US has in a sorry state]. If you think that all should be privatized, then why the hell do we have government here ?
2. Article raised super-important question of the outsorcing deals transparency.Purpose of outsourcing is ‘we dont want to deal w/problem, lets other deal with it for money”, which is OK, but down the road it become INVARIABLY “we are not responsible-outsourcer is”. Its like a captain of the ship drives it on the reef and then saying ‘its not me – its a navigator/mashinist/cook — whoever – not me”. In maritime law its an absurd, and that’s how it should be with outsourcing. And ALL outsourcing contracts that public institution does MUST BE votable [and not mere commented] by public! Taxpayers should say ‘yes’ or ‘no’ for the contracts that spend their money. If this deals were not concluded behind the closed door the contracts mentioned in the article [CRIMINAL by their content] would’ve never see the light of day.

Posted by solusrex | Report as abusive