Tuesday, January 6, 2009

Public-Private Agreements - A Call for the Legislature to Take Action

Increasingly we are seeing government contract out public services to be provided by private companies. On these pages, I've previously discussed privatization and suggested several factors that should be considered before turning over a public service to the private sector. (I've pasted those below.) In particular, I believe my Republican Party has often charged ahead privatizing services, while forgetting that the purpose of privatization is to instill market competition in the provision of government services. When there is only one vendor bidding on a contract and then you give that vendor a long term contract, your creating not a competitive market environment but a government-sanctioned monopoly.

Having said that, the Indiana General Assembly needs to take a close look at how these companies that get privatization contracts operate. Many of these contractors continue to insist they have the right to operate in secret even though they are receiving taxpayer money and providing a public service. In 1997, the Indiana legislature said otherwise and made these private companies that receive privatization contracts subject to Indiana's Open Records Law as if the company were a public agency. See IC 5-23-7-1.

Don't think for a second that these companies willingly comply with Indiana's Open Records Law. Most fight any attempt to obtain records so the public can scrutinize their performance under the contract. For example, Diana Vice recounts on her blog her ongoing fight with the Wilson Education Center to obtain records.

Some government contractors take it to the next level filing SLAPP lawsuits against private citizens who dare criticize their compliance with the privatization contract or Indiana law. The idea of a SLAPP lawsuit is not to win the lawsuit on the merits, but to shut up the critic by running up his or her legal expenses so high that the critic can no longer continue to speak out.

While there are some safeguards in Indiana law that allow a litigant to ultimately get attorney's fees if the he or she succeeds in the Open Records lawsuit or in defending against a SLAPP lawsuit, those sanctions have failed to discourage deep-pocketed companies from targeting earnest-minded taxpayers who dare ask questions about the companies' compliance with Indiana law and the privatization contract it signed. Just ask Diana Vice about Tremco and Wilson Education Center.

The legislature can put teeth into these legal protections by passing a law requiring that privatization contracts include provisions punishing those private companies that fail to comply with the Open Records Law and punish with extremely harsh sanctions (such as termination of the contract) those companies that are found to have filed SLAPP lawsuits against private citizens who dare criticize the private company for the public service it provides.

See also: Legislative Recommendation: Time for Indiana General Assembly to Slap Down SLAPP lawsuits (November 8, 2008)



1) Are there several vendors who are capable of and interested in providing the service?
--If there is only one or two vendors that can provide the service, then you're not instilling market competition into the delivery of the service. You're exposing taxpayers to a monopoly mandated by government.

2) Is the contract for a service that will be bid out?
---A contract that will be subject to bidding rules is less likely to be one where the vendor gets the service because of political contacts or campaign contributions.

3) Is the vendor going to be given a long term contract?
---When you give a vendor a long term contract, then the vendor doesn't have to worry about market competition if they don't provide the service well. The whole idea of privatization is defeated.

4) Is this a service that is going to be provided out in the open, so the public can judge the quality of the service provided by the vendor?
---Garbage collection everyone sees. The running of a maximum security prison is done behind closed doors. The public knows if the company picking up the garbage is doing a good job. The public knows little about how well the prison is being run.

5) Are the individuals who are receiving the service which might be privatized, people who are politically powerless or unpopular?
---Classic example is correctional privatization. A sizable portion of the population doesn't care if private correctional companies cut corners on medicine or medical treatment of inmates. So even though the company may not be living up to their obligations under the privatization contract, that contract often is not enforced by public officials who do not have to worry about the powerless constituency receiving the service. By the way, I would say another example of people without much political power are welfare recipients. Witness the recent FSSA privatization effort here in Indiana.

6) Is the company providing the service going to be properly supervised and held accountable if the vendor doesn't live up to the contract?
---Too often services get privatized and government does not do adequate monitoring of compliance with terms of the contract. The tendency for government is to just pass blame along to the private company. It doesn't work like that though...government is still legally responsible for the provision of the service, even if it's contracted out to a private vendor.

7) Is the company bidding on the privatization contract willing to subject itself itself to the open records law and disclosure requirements public agencies providing that service would have to follow?
---Although providing a public service paid for with taxpayer dollars, many companies insist on operating in secrecy. They claim the secrecy is to protect itself from having the company's secrets stolen. Don't buy that nonsense. The real reason for the scrutiny is that the companies do not want to provide information that could be used to show they are not doing a good job.

8) Did the company or its top employees make large campaign contributions to elected officials and candidates who were in a position to influence the privatization decision?
---Privatization has unfortunately become a vehicle by which elected officials and candidates can generate large campaign contributions from companies interested in currying favor. Even after the decision is made, the money train continues because the companies want to keep the elected officials happy and avoid the scrutiny and criticism of their performance.

9) Is the company hiring local politicians in an attempt influence the privatization decision or reduce the criticism of their performance under an existing privatization contract?
---It's the oldest game in privatization. A private company which offers a service hires the elected official who was responsible for the government providing that service to the public. The person isn't being hired for his or her expertise. The person is being hired for political influence.


Leslie Sourwine said...

According to our research many private companies and special interest groups partner together with this group, American Legislative Exchange Council. The research reveals that there are legislators in every state in its membership. What ALEC does is write model legislation and try to get it passed. Corrections Corporation of America who claims that they do not lobby for tough sentencing laws was one of the biggest monetary contributors to this organization. This page lists several interesting titles in the area of criminal justice.

Once the page loads it is impossible to click the links to read the proposed acts because you have to be a member to view that information. One legislator from Wisconsin made a comment that he has taken model legislation from these ALEC meetings back to his home state, changed some of the wording and then passed it off as his own!

This website, http://www.motherjones.com/news/outfront/2002/09/ma_95_01.html
a watchdog group reports this important message, “In another instance of profitable policymaking, ALEC drafted a model "truth in sentencing" bill that restricts parole eligibility for prisoners, keeping inmates locked up longer. One of the members of the task force that drafted the bill was Corrections Corporation of America, the nation's largest private prison company, which stands to cash in on longer sentences. By the late 1990s, similar sentencing measures had passed in 40 states. "There was never any mention that ALEC or anybody else had any involvement in this," Walter Dickey, the former head of Wisconsin's prison system, told reporters after his state passed a version of the measure. “These people, members of ALEC have already met with President Elect Obama. All of us in America should be very alarmed about this meeting because many of the laws this organization has helped to pass has not been beneficial to society. The change we need in America does not include more big business and lobbyists putting money into the pockets of our politicians to get their agenda passed.

Moving on to Corrections Corporation of American’s private jail in Marion County Indiana Jail II we take a look at the complaints The Police Complaint Center has received over the past year. In addition to medical care problems being the primary complaint we’ve received we’ve also received complaints of retaliation by jail employees for inmate’s contact with our organization as well as inmate attempts to defend themselves in court or file complaints for police abuse and misconduct. Inmates allege that while they are on gone to court employees take their mail specifically their legal mail and other documents needed for their defense. One case in particular is the DUI complainant who filed a Habeas in Federal Court. The court sent at least 3 letters to this man that he didn’t receive until after it was brought up in a court hearing. He then received all 3 federal court letters in one envelope. Unfortunately though with the continuing intimidations techniques by jail employees a shakedown was done in his cell block and once again all his legal information, discovery documents were destroyed. I know Paul that you still doubt that there is a conspiracy between the police, prosecutors, judges and jail employees to keep these guys incarcerated longer but I am holding fast to my beliefs. The jail employees should not be concerned with the inmate legal affairs and it is a violation of civil rights to attempt to deny them access to the courts. Further legal mail according to law must be delivered in a timely manner unopened or opened in the presence of the inmate without the employee reading it. The DUI case is not the only complaint we’ve received concerning the inmates right to the justice system. Quoting you from one of your other posts, this complainant who is/was representing himself was not receiving the prosecutions legal motions. The prosecution was placing those very important legal documents in the box of the public defenders office knowing full well this man was representing himself, in essence denying the defendant an opportunity to respond to the motions before his court hearing. In short, our investigation has shown from evidence collected and witness statements received that this man was targeted by select IMPD officers. Officers stole his money at each arrest; he was beaten and put into jail where he was kept for more than a year. He’s had 30 some pre-trial hearings, his speedy trial rights on all the charges have long been violated, he’s been subjected to a mental examination (he passed with flying colors), his mother has been harassed by court employees to the point the woman at times hid in the staircase at the court house fearful of being arrested, he’s was denied medical care at the jail, put into segregation on bogus charges, beaten by another inmate, the camera tape with the incident was destroyed and his legal documents repeatedly destroyed. He has been abused by all areas of government that is responsible for administering justice. It’s appears as though the areas are working together with one objective in mind and that is to keep this man in jail, force a plea from him and further keep him incarcerated in prison. The official court file that is used in many cases to show the history of the case contents have changed from one viewing to the next. Your judicial over sight committee received a complaint from us against the judge presiding over this case, the Sheriff and the Public Safely Committee received complaints against the officers, the Mayor received a letter from the defendants mother last January when he first took office, Brizzi received a complaint and yet none have taken the time to look into this case and put a stop to the persecution. I conclude with a very strong opinion that there is a conspiracy to deny this man and others, their freedom. To date this man is still being intimidated by the judge presiding over his case and the prosecutions office. Every person involved in this case should be forced to open their personal financial records and have their actions scrutinized to prove that there is no kickback for denying justice to the taxpayers who are being arrested and held in jail for months before taking them to trial.
Leslie Sourwine
The Police Complaint Center

Anonymous said...

Paul said, "When there is only one vendor bidding on a contract and then you give that vendor a long term contract, your creating not a competitive market environment but a government-sanctioned monopoly."

Excellent fundamental principle. And this is exactly why government (as a monopoly) has no business regulating the free markets.

A good historical example of how government prevents the free market from working equitably and effectively while destroying companies both financially and morally is the case of the railroad building competition in the later 19th century.

There was no greater contrast in quality, cost, working conditions, etc. of the railroads than between the companies that took subsidies with their accompanying regulation and the only railroad builder, James J. Hill of the Great Northern, who refused government subsidies and thus was allowed to work without regulations. His was the ONLY company not to go bankrupt.

You can read this fascinating account along with examples in other industries in The Myth of the Robber Barons: A New Look at the Rise of Big Business in America by Burton W. Folsom, Jr.


Anonymous said...

"I believe my Republican Party has often charged ahead privatizing services, while forgetting that the purpose of privatization is to instill market competition in the provision of government services. When there is only one vendor bidding on a contract and then you give that vendor a long term contract, your creating not a competitive market environment but a government-sanctioned monopoly."

Of course. I've been saying this on FrugalHoosiers for well over a year.

The Republicans are a very anti free market party, however, and they enthusiastically reject such ideas.

Leslie Sourwine said...


With states facing budget problems many state governments are leaning towards privatizing the care of the state's roads and bridges. Taxpayers must insist that these important projects be kept in the hands of the state. A private company is interested only in making a profit, not the safety of the taxpayers who use their product. Take a look at the history of private companies. Their greed knows no bounds when it comes to making a profit even if the corners they cut result in death.

Another news article on the problems associated with private prisons.

Corrections Corporation of America is not the only private corporation that cuts corners that result in the death of the people the state and county pay them to house. The Geo Group another private corrections corporation uses the same philosophy as Corrections Corporation of American in their quest to make a profit. The Geo prison in Indiana has found the perfect solution to keeping their prison full to maintain that precious profit. They are taking away good time from prisoners who are requesting protective custody from gangs inside the White Castle Prison. Also,they transfer inmates to public prisons to avoid providing medical. When our organization put pressure on the warden to provide knee surgery to an inmate who was injured inside the prison they gave him back all his good time and released him without providing the surgery. Another man who may have tesicular cancer was transfered to a state run prison after his family members pressured the warden to provide medical care. See this complaint at www.inmateabuse.tv

Indiana and Marion County taxpayers need to demand that Governor Mitch Daniels and Mayor Ballard run these private incarceration corporations out of the state of Indiana and Marion County. These companies are not focused on rehabilitation. Without repeat offenders their profits would dry up.

Leslie Sourwine
The Police Complaint Cente