Publications

Fighting Contracting Out: Lessons Learned (1996)

AFSCME has long led the opposition to the vocal, well-financed pro-privatization movement. In the words of Professor E.S. Savas, a leading advocate of contracting out, "the biggest barrier to privatization of existing public services is the opposition of public-employee unions." AFSCME's years of building this "barrier" have yielded strategies to carry out this fight at various stages of the contracting out process.

The Contracting Out Process and Tactics for Fighting Back


Stage of Contracting Out Process

Types of Action to be Taken

Work is being performed "in-house" by public employees

Ensure that contracting out
won't be considered

Warning signs that contracting out
is being considered

Begin campaign against contracting out

A general proposal in favor of
contracting out is forwarded

Critique the proposal and develop
alternative ideas

Bids for contacted work are solicited

Collect company/industry information,
analyze RFP and/or develop
bidding tactics

Work is contracted out to
a private company

Develop plan to bring work back to public
sector or organize contractor employees


The Contracting Out Process


Although circumstances and rule-making procedures vary from place to place, contracting out often proceeds from an idea to a proposal to an established policy in predictable stages:

  1. work is being performed in-house by public employees;
  2. warning signs that contracting out is being considered appear;
  3. a general proposal in favor of contracting out is forwarded;
  4. the private service provider is selected, usually through a competitive bidding process;
  5. the service is contracted out.

At each stage of the process, there are certain general strategies to prevent contracting out.

Stage 1: The Work is Being Performed "In-House"


Due to the widespread and persistent nature of the pro-privatization movement, public employee unionists should be ever-vigilant. Even when a privatization proposal has been soundly defeated in the past, it is likely to resurface again and again in subsequent years. Private companies continue to aggressively market their services, politicians continue to seek ways of cutting costs, and countless ideologues continue to fuel the debate with pro-privatization propaganda. Given the endless nature of the assault on public services, it is never to early to take action.

At Stage 1, where a service is being delivered by public employees, the union's job is to ensure that contracting out will not be considered in the first place. The union's goals at this stage are fourfold:

  1. to project a positive image for government services;
  2. enhance the members' pride in public service;
  3. establish and maintain legal or contractual obstacles to contracting out; and
  4. educate union members and local activists about contracting out and how to fight back.

Most importantly, decision-makers and the general public need to be "inoculated" against pro-privatization propaganda. Activities that support these goals include:

  • lobbying for policies and legislation that impede or prevent contracting out, such as "living wage" ordinances civil service protections or procurement standards;
  • monitoring pro-privatization initiatives within the executive or legislative branches of government, or the deliberations of government-appointed "commissions" that examine the delivery of government services;
  • bargaining for contract language that inhibits contracting out:
  • enhancing the image of public employees through positive communications;
  • pursuing labor-management partnerships to address long-run cost concerns and improve the effectiveness of public services.

Stage 2: Warning Signs


Usually, privatization initiatives do not come "out of the blue." Typically a variety of warning signs tip union members that plans are afoot. If the union is aware of warning signs, then the union is in a better position to respond quickly and effectively to stop contracting out before there is a tangible proposal. Typical warning signs include:

  • vendors visiting worksites;
  • an "efficiency study" being done by a private company;
  • replacement of employees who resign or retire by temporary workers;
  • increased anti-government or pro-privatization rhetoric in political campaigns or by incumbent officials;
  • recurrent discussions of "restructuring" or "reinventing" government;
  • hostility in bargaining or labor/management relationships;
  • frequent complaints about problems of high cost or poor quality of services by public officials or top management; and
  • legislative initiatives that support or promote privatization.

In many cases the warning signs are not subtle. However, in some cases decision-makers will try to keep their plans under wraps to avoid public debate. One tactic is the "stealth initiative," where groups of council members or commissioners meet in caucuses, with group sizes being just small enough to avoid having to hold a public meeting. They might discuss a privatization initiative, study the targeted service, write a request-for-proposal, and/or meet with prospective vendors. When all of the elements of the plan are in place, the initiative is introduced at a public meeting, with the intention of passing it at the very same meeting. This tactic is designed to limit public debate and give those who are opposed to contracting out little, if any, time to respond.

Stage 3: A General Proposal is Made


At some point after the warning signs become evident, somebody will make a general proposal in favor of contracting out a particular service. The amount of time between making the general proposal and the beginning of the contractor selection process varies considerably.

The union's goals at Stage 3 are to defeat the proposal before the contractor selection process begins, and prevent more proposals in the future. Activities that support these goals include:

  • distributing anti-privatization materials to policy-makers and their staff, community groups, and other interested parties;
  • seeking out allies, building coalitions, and strengthening existing coalitions with others who have a stake in the services that would be contracted out;
  • lobbying the decision-makers to whom the proposal is directed and packing legislative sessions with union members and sympathizers;
  • exploring the possibility of legal action under the union contract, civil service regulations, or other relevant regulations;
  • formulating a "counter-proposal" that forwards an alternative course of action for addressing problems of cost and/or efficiency; and
  • engaging in a media campaign in favor of public services and against contracting out through advertisements, letters to the editor, newspaper stories, and other means.

Key to all these activities is educating all union members -- not just the ones who would be affected by the current initiative -- about the dangers they face, and mobilizing them to participate in the effort.

Stage 4: The Contractor Selection Process


The process of selecting the service provider usually involves the issuance of a "request-for-proposal" (RFP), which is a description of the work to be done and guidelines for submitting a bid for the work. The RFP is advertised and interested companies use it to guide them in submitting bids for the work. Typically, interested parties submit sealed bids that are opened at a pre-determined time. The lowest responsible bidder usually gets the work. Sometimes a privatization proposal might not involve bidding at all, instead it could be a proposal to contract with a particular company.

The union can use the contractor selection process as a forum to fight privatization, with two goals: first, attack the bidding process and the companies vying to take over the work; second, develop an alternative plan to keep the work in-house. Here are some activities that support these goals:

  • Analysis of the RFP and/or contractor proposals. Often, the work that is being bid out or proposed is not the same as the tasks currently being performed by the public employees doing the work. Not adequately accounting for omitted tasks can lead to hidden charges for extra work, so cost comparisons are not accurate. This is important where decision-makers claim that significant cost savings can be realized through contracting out.
  • Company and industry research. Once bidders are known, information on their past performance and company history may be obtained in order to challenge their fitness for performing the work in question. Some industries are replete with horror stories involving contractor neglect and abuse. Corporate research can also reveal a company's experience with unions, which can be used to assess whether a labor/management relationship is possible, should the service be privatized.
  • Submitting an in-house bid. In some cases, employees and managers work together to submit a bid to compete with the contractors' bids. Some AFSCME affiliates have been successful in keeping work in-house through this last-ditch effort.

Stage 5: The Work is Contracted Out


If all efforts fail, the work will be contracted out to a private company or, in some cases, a non-profit organization. It is not unusual for a service contract to require preferential hiring of displaced public employees. In some cases, AFSCME affiliates have "followed the work" into the private sector by securing representation rights for the contractor's employees, either through successorship provisions or a representation election. Where public employees are not covered by collective bargaining legislation, privatization would give these employees new rights under the National Labor Relations Act.

Even if the union does not represent the contractor employees, there may be ways to use the privatization experience to help future efforts. There may be glitches in implementing a contract, a decline in the quality of the service, or unanticipated costs after a contractor has taken over. The situation should be monitored closely, so that problems can be reported to public officials, the media and other interested parties. Simultaneously, the union could also be working on plans to "contract in" the work should the contractor not work out.

Where to Go for More Information


Beyond this general overview of the types of activities involved in fighting privatization, details on particular strategies and issues can be found in numerous AFSCME publications. The list includes:

  • "The Great American Sell-Out." AFSCME's manual on fighting contracting out (Department of Research and Collective Bargaining Services).
  • "Government for Sale." An educational pamphlet containing arguments against privatization and some horror stories (Department of Research and Collective Bargaining Services).
  • "So What's Wrong With Contracting Out?" A fact-sheet containing anti-contracting out arguments and examples suitable for use as a hand-out or for talking points (Department of Research and Collective Bargaining Services).
  • "What's Your Bid? AFSCME's Guide to Public-Private Competition." This booklet provides guidance on how to approach competitive bidding (Department of Research and Collective Bargaining Services).
  • "The Privatization/Contracting Out Debate." A collection of anti-privatization articles (Department of Research and Collective Bargaining Services).
  • "Contracting Problems." A series of fact sheets summarizing media reports on horror stories involving specific companies (Department of Research and Collective Bargaining Services).
  • "At What Cost to the Public? -- The Inherent Risk in Contracting Out Public Services." A summary of some media accounts of contracting out horror stories (Public Affairs Department).
  • "Not in the Public Interest: Five Faulty Assumptions Behind Contracting Out Government Services." A response to several myths about privatization (Public Affairs Department).
  • "Privatization: Safety Net for Sale?" Materials on contracting out social services (Public Policy Department).

Research on specific companies, assistance in analyzing RFPs or bids, or general help in fighting privatization is available from the Department of Research and Collective Bargaining Services at 202/429-1215.

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