The Civil Service Merit Council believes that the principal reason for contracting out the work of Civil Servants is very frequently a matter of corruption.
When former Mayor Giuliani wanted to establish his Republican conservative credentials, he hired Jason Turner to head the City's HRA. Turner was a darling of the Republican party, and as it turned out a general sleaze bag. He also was a man loyal to his family, some of whom were involved in a company called Maximus. Maximus was given a tiny contract to "study" the "welfare-to-work" program. It was given an office in HRA headquarters, full access to the "top management" (as if they did not get enough of that at family dinners) and all kinds of resources.
As it turned out, Maximus recommended that a contract be let for a half-billion dollars to a company which was specified to look exactly like Maximus, and in the "bidding" the mayor's office felt that only Maximus could fulfill the contract.
At the time, the Department of Employment had a good track record of getting job training and job placement, and job retention for poor New York City residents. It had served hundreds of thousands of citizens. The funds came from the federal Job Training Partnership Act and had strict and complicated requirements.
To fund the Maximus contract, Giuliani took the funds of the Department of Employment (now dead) to pay Maximus. Since it very quickly became apparent that Maximus could not even manage the record keeping needed to handle the funds, the Department of Employment was drafted to do the bookkeeping. Maximus chafed at the federal rules that required them to perform on the job.
Around this time the mayor became extremely sensitive about all the City's contracts, and took extraordinary efforts to keep any information about the performance of contractors, their identity and the contracts themselves very secret. Frequently Civil Servants who worked with these records found their access severely restricted.
A year or two later—and hundreds of millions of dollar down the tube, the Maximus contract was terminated quietly. The contract had severely failed to provide adequate training, job placement and job retention. A reporter or two had gotten the story of the failure. The Mayor refrained from expressing any outrage at the diversion of public funds to his friend's firm. No criminal charges were pursued, nor was Maximus made liable for their failure.
This is not, sadly, an exceptional story. The number of politically motivated contracts in this country cannot easily be gauged, and the amount of public funds wasted is very hard to imagine.
But one of the easiest ways for a politician to gain favor with the politically connected, and with the big contributors is the public contract.
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