Sunday, July 24, 2011

Revised SEBAC Malloy Agreement Reinforces Anti-Privatization Measures

The revised agreement between the office of Governor Dannel Malloy and SEBAC, a group of union leaders commissioned by state workers to negotiate contracts with the chief executive, is studded with anti-privatization provisions.

Under a section called “Savings And Transformation,” we are told that the parties to the agreement, the state of Connecticut as represented by the bargaining agents of the governor and the union leaders of SEBAC, a coalition of state unions, “have explored and will continue to explore and, where appropriate, implement strategies to:

“… d. Discourage the use of outside contractors and consultants when internal capacity exists or can reasonably be developed; and

“e. Make best efforts to ensure that vendors and service providers doing business with the state do so at reasonable rates of return and under terms that reflects the shared sacrifice being asked from all sectors of Connecticut society.”
Both d and e are anti-privatization clauses, one calling upon Mr. Malloy to refrain from using outside contractors and consultants, a possibility often employed to good purpose by cost conscious governors both to lower the cost of services and to save money paid out in benefits and pensions. Provision e is an anti-competitive measure in which the governor agrees that outside vendors must charge the state “a reasonable rate of return,” the reasonable rate to be determined, according to the agreement, by “a Joint Labor Management Information Technology Committee” that of course cannot include representatives from contractual bidders considering doing business with the state.

The committee, to be “established as soon as possible” and “headed by the Chief Information Officer of the State,” will among other things, consider “utilizing new technologies and reducing licensing procurement and consulting costs.” The CIO is authorized by statue to approve or disapprove of hardware or software supplied by outside contractors who submit bids for the state’s information technology business.

The committee, according to the agreement reached between the governor and union leaders, will be established “no later than September 1, 2011,” after which the committee will begin to explore the issues mentioned above. The committee will have no authority to consider issues that “impact on matters of collective bargaining.”

The agreement stipulates that “The governor will issue an Executive Order or similar appropriate directive to state agencies that will implement subparagraph (e) above, no later than June 1, 2011.”

The handful of legislators in the General Assembly who seem concerned with the cost of state government may want to put this portion of the SEBAC agreement under their microscopes and examine more closely the consequences involved.

It is not clear from the language of the agreement whether Mr. Malloy has consented to implement these points or only to “explore implementation,” although section e stipulates that the governor has agreed to issue an executive order implementing a portion of the agreement by June 1, 2011.

It does seem clear from the provisions that the state’s ability to cut costs by utilizing outside vendors for products and services may be hampered if Mr. Malloy should agree to implement provisions d and e, measures that would impede the possibility of privatization on those occasion when the governor might want to resort to privatization both to reduce costs and as a bargaining chip to be deployed against unreasonable union demands for salary and benefit increases.

The stated mission of the Department of Information Technology is to “provide quality information technology services and solutions to customers, effectively aligning business and technology objectives through collaboration, in order to provide the most cost-effective solutions that facilitate and improve the conduct of business for our state residents, businesses, visitors and government entities.”

That mission cannot be properly advanced by a provision in the agreement between Mr. Malloy and state unions that creates a Joint Labor Management Information Technology Committee specifically charged with “discouraging the use of outside contractors and consultants” at a time when nearly everyone in the state would welcome competitive measures that reduce the cost of government and improve its efficiency.

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