The Shortcomings of Contracting Out
- Contracting out costs more than advocates claim because indirect and hidden costs of service delivery are often ignored. Such costs include contract monitoring and administration, conversion costs, charges for "extra" work, and the contractor's use of public equipment and facilities.
- When profit is the prime motivation in service delivery, there is an incentive to cut corners by skimping on the quality and quantity of work performed. Quality suffers when contract specifications are vague or poorly defined. School district employees routinely perform tasks that fall outside their official job descriptions but are vital to a high quality education for children. Such tasks usually are not included in contract specifications, and school officials no longer have the flexibility to get them accomplished.
- It is difficult for contractors, who tend to provide inferior wages and benefits, to attract and retain qualified employees. As a result, not only is service quality adversely affected, but children are exposed to unnecessary and destabilizing staff turnover.
- There is an adverse economic impact on communities when school districts contract out, particularly with companies located in other parts of the country or overseas. The community's employment base is eroded when good jobs are replaced with poor jobs. In addition, resources are drained from the local economy as profits are transferred to companies outside the community.
- Dependence on contractors increases as in-house capacity is reduced or eliminated. School districts that contract out school bus services and sell their buses are particularly vulnerable. This loss of leverage can lead to price gouging by contractors in future contract negotiations. Such situations are made worse by contractors that "low-ball" their bids (offer an attractive price on the first bid to win the contract and then raise prices in renewals).
- Public accountability is diminished because complaints from parents and students cannot be directly addressed by the school district. In addition, private companies cannot be held to the same public scrutiny as school districts, which are required to operate in an open arena. These conditions create opportunities for corruption, such as bid-rigging, bribery and kickbacks.