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JUNE 2010 Issue #2
Government oversight is key,
for managing oil spills or public contracts
The BP oil spill disaster is widely blamed on a lack of government oversight, by even the most anti-government zealots. President Obama admitted he was wrong to trust BP to have a crisis plan, and conservatives are demanding federal resources to solve and clean up the problem.
Whether through regulation or contract, governments are responsible when corporate misdeeds and failures have public impact. Expecting and even requiring that the public interest be protected is not enough. It takes strong monitoring and enforcement measures.
 The levee failure during Katrina, the financial market collapse, the Massey mining disaster and the BP catastrophe have been hard lessons in the need for strong governmental oversight of the private sector. Earlier, high-profile examples of contractor fiascos include Blackwater and Halliburton in Iraq and dismal care for veterans at Walter Reed Army Medical Center.
The importance of strong oversight is illustrated in other recent events:
- In Miami, a private contractor is battling the state in court to escape blame for the rape of a 10-year-old boy in an overloaded foster home. The contractor placed the child there, but argues the state is "ultimately responsible for overseeing its providers," and therefore bears the legal and financial liability.
- The New Jersey Commission of Investigation issued a review in April of the state's privatization contracts over three decades and concluded: "Waste and abuse of the public treasury and public property can flourish if no one is minding the store on the public's behalf."
- As it agreed to allow more charter schools last week, the New York legislature imposed strict oversight and regulation on the privately run schools. Conflicts of interest and misuse of funds by some charters had been blamed on "a weak system in New York for policing spending by charter schools."
Whenever public services or properties are turned over to private interests, strong oversight is essential. Democratically-elected governments are accountable to voters and innately responsible for protecting the public interest, and that responsibility doesn't end when the public's business is contracted out. Governmental policy and contracts must contain adequate oversight mechanisms and resources to hold companies accountable for safe and effective performance.
La. privatization requires "layer" of oversight
A battle is shaping up in Louisiana that could provide a model for other states to bring public accountability to privatization decisions. On a lopsided 64-27 vote last month, the state House approved a bill that would enable lawmakers to review and veto privatization contracts.
Gov. Bobby Jindal is planning to lay off state workers and hire outside firms to run psychiatric hospitals and other healthcare facilities. Rep. John Bel Edwards said the legislature must be allowed to review long-term contracts to make sure they save money and don't reduce patient care.
Predictably, the pro-privatization Reason Foundation objects that it's too costly to hire three auditors to review the contracts worth hundreds of millions of dollars. Opponents of the legislative review called it "just another layer of bureaucracy."
As recent events have shown, privatization requires that layer -- whether it's called bureaucracy or responsible oversight -- and it must figure in calculations of the cost of privatizing.
What can InThePublicInterest.org do for you?
The new resource center, InThePublicInterest.org, is the first comprehensive national clearinghouse on privatization and efforts to preserve accountable, public control of public properties and services.
Dozens of national and regional organizations have helped collect materials useful to advocates, lawmakers, academics and media.
There are several easy ways to access the information:
 Sectors. From the homepage, go directly to pages for 10 different sectors -- administration, defense, prisons, transportation, schools, water, and so on. Each page has featured cases, research, media coverage and documents specific to that sector.
- Location. The map on the homepage links to similar pages specific for each state and the federal government. We are still building this section, and welcome contributions!
 What's at stake. A third section organizes the cases, news and other materials differently, by the issues at risk. There are separate pages exploring the track record on costs, service quality, corruption, and six more.
- Featured cases tell the stories of privatization battles and outcomes in cities and states across the country. Each has links to relevant documents.
Please tell us how we can make the resource center more useful to you, and send us content that could help others. Send comments and ideas to shabibi@inthepublicinterest.org.
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