No-bid contracts: Insight to outsourcing oversights
It is no secret that the current COVID-19 pandemic has turned the world upside down. Among one of the greatest concerns of this new global reality is rising unemployment rates. In Connecticut, the dramatic increase in unemployment has left the state’s Department of Labor overburdened with requests for unemployment benefits. In response, Gov. Ned Lamont invoked his emergency powers in late September to contract with two private companies, Protiviti and Maximus, to help manage the increased number of requests. This effort was ultimately financed by the CARES Act.
As of mid-September, the state department recorded that they distributed $301 million to over 146,000 people seeking aid in just three days. This was a significant improvement from early September when the waiting list for unemployment pay hearings reached an all-time high of 10 weeks long. These new reports underline the benefits of outsourcing public services to the private sector; flexibility, responsiveness, innovation, and a large pool of adaptable and talented workers encapsulate arguments for increased privatization in the government realm.
Supporters of outsourcing believe market ideals, like competition and profit incentives, can be applied to the public sector to increase efficiency. While this may be true for simple commodity tasks like basic goods and services, custom-task contracts that require specialized skills and expertise extend to sensitive functions that were once thought to be the exclusive responsibility of the government. Although it appears the initial effects of utilizing outside contractors have helped alleviate the immense workload placed on the Department of Labor, there are many reasons to be concerned.
Besides the lack of democratic decision-making and past security breaches with Maximus in Connecticut and other states, each company engaged in a no-bid contract. No-bid contracts are often a point of contention among those who critique the government’s increasing reliance on private contractors.
The lack of transparency associated with the no-bid contract process, and the role of the contractors themselves, renders the impacts of these companies —whether advantageous or adverse— unclear. The use of private contractors to manage unemployment benefits reveals the challenge, and often failure, of properly applying market ideology to the public sector, leaving critical work done by outside employees unchecked and out of reach from the public and government alike.
Not only did the decision to work with Maximus and Protiviti bypass the state’s Contracting Standards Board, which was designed to promote a more thoughtful and democratic evaluation of private contracts, it also undermines the tenets of market ideology and accountability. Market logic assumes that a competitive process is necessary to identify the most effective contracts, however the state’s recent contracts, awarded under no-bid circumstances, completely disregard this ideal.
Without comparing all of their options or considering Maximus’ history with the state, it is unclear if Protiviti and Maximus are the most cost-effective and best fit for the needs of Connecticut residents. The public sector cannot mimic market ideology when the government is involved; the two spheres are inherently opposed and contradictory to one another. Like this situation demonstrates, it is difficult, if not impossible, to apply and exercise market regulations if they are not given the proper stage to unfold.
Without a legal obligation to provide information to the public about how these companies are engaging in the public sector and their general whereabouts, their effectiveness cannot be distinguished. More importantly, the public does not have access to information that directly affects them, such as how their information is stored or the exact role these companies assumed.
Other instances of the mismanagement of national crises and scandals, such as Hurricane Katrina and locally, the Maximus security breach during the Rowland administration, illustrate the detrimental consequences that occur when contractors are left unsupervised and unchecked. Even something as low stake as handling unemployment requests cannot escape fraud, abuse of power, and ironically, wasted funds.
While the success of utilizing these two private companies is apparent with the accelerated rate of processing requests, it is not a sustainable option. When the CARES Act expires on December 31, both contracts will be terminated early. Though this reduces the cost of the contracts from about $7.4 million to $4 million, with the unemployment rate remaining high in Connecticut, it is unknown how the Department of Labor will respond to the heightened number of requests when Maximus and Protiviti leave. This concern is only heightened by the fact that constituents are unaware of the mechanisms utilized by each company to produce such high processing rates of unemployment benefit requests.
As the effects of the coronavirus continue to persist months after the initial outbreak, it is imperative that Connecticut’s Department of Labor prepares itself for higher-than-usual unemployment benefits requests for a prolonged period of time. We must recognize the choice to utilize these private companies as what it truly is: a Band-Aid fix for a long-term problem. Even before the pandemic, Connecticut maintained the second longest wait time for an unemployment pay appeals hearing in the nation. Outsourcing to private companies for a few months will not change that reality.
Camille Valentincic is a junior at Trinity College from Lake Forest, IL. She is double majoring in French and Public Policy and Law, with concentrations in education and urban policy.
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