Outsourcing Sovereignty: Why Privatization of Government Functions Threatens Democracy

Link to article here.

Ex-W&M chief sets IT framework
Richmond Times-Dispatch by Jeff Shapiro
Sunday, August 2, 2009

As Virginia deals with the headaches — financial, political and administrative — of turning over its info-tech system to deep-pocketed defense giant Northrop Grumman, a voice from the past may offer guidance for the future of privatization in a state that seems more corporate subsidiary than commonwealth.

Paul R. Verkuil, former president of the College of William and Mary, is a free-market advocate who worries that relinquishing government responsibilities to the private sector only drives up profits at the expense of public capital.

In his book “Outsourcing Sovereignty: Why Privatization of Government Functions Threatens Democracy and What We Can Do About It,” Verkuil warns that taxpayers are surrendering power by letting big business do the people’s business.

Verkuil, now a professor at the Benjamin N. Cardoza School of Law at Yeshiva University in New York, made it clear the other day he’s not familiar with the continuing food fight over Northrop Grumman.

But, says Verkuil, if there are constants in these big-money deals — Northrop Grumman is pocketing $2.3 billion over 10 years in the state’s richest-ever outsourcing contract — they are: Is it appropriate to privatize a particular service? Is the public assured oversight and accountability?

On the face of it, farming out IT might a no-brainer.

But when one considers that Northrop Grumman is now custodian of data that make every man, woman and child in Virginia more than a number — remember the recent hacking of the state’s prescription-drug file? — it could be argued this exercise is fraught with risk. At a minimum, this would include your privacy as well as the state’s and the company’s liability.

“Not every public solution is wrong and not every private solution is better,” says Verkuil, president of William and Mary from 1985 until 1992.

Verkuil, who has examined such controversial privatization contracts as guns-for-hire in Iraq and housing in post-Katrina New Orleans, suggests that one measure of the effectiveness of the Northrop Grumman deal may be how it stacks up against IT programs still under state control.

The General Assembly and Virginia’s courts are not covered by Northrop Grumman’s contract with the Virginia Information Technologies Agency. Nor are colleges and universities. More than 80 departments, all in the executive branch, are on the Northrop Grumman hook for computer services.

The legislature, judiciary and higher education have contractual relationships with high-tech firms but, for the most part, retain authority over hardware, software, networks and staff. In other words, they determine their own destiny.

“Are these other branches prospering better in some ways — and why?” says Verkuil. “Is it because they retain power and capacity that Northrop Grumman didn’t allow [the state]?”

Perhaps these questions could be put to the watchdogs of this monster deal: the Joint Legislative Audit and Review Commission, which is the General Assembly’s investigative arm, and the Auditor of Public Accounts, the legislature’s bean counter.

One element of Virginia’s adventure in outsourcing-land that neither JLARC nor the auditor can fully measure: $833,374 in political contributions from Northrop Grumman since 2001. That year, voters chose as governor the techie who led us down this rabbit hole: Mark Warner.

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Link to article here.Sunday, August 02, 2009
Richmond Times-Dispatch – McClatchy-Tribune

EDITORIAL: Keep Digging

On July 2 we said: “A definitive judgment regarding the state’s information technology program must await the completion of a thorough report. We have confidence in the Joint Legislative Audit and Review Commission.” A determined probe remains an imperative.
The story broke with Lem Stewart’s ouster as head of the Virginia Information Technologies Agency.  Stewart had questioned the public-private partnership with Northrop Grumman. The questions have multiplied. Stewart’s reputation has been enhanced.

Situations such as this often have political implications. Governors take heat when controversies strike state agencies. The Northrop Grumman contract presents political complications, however. The public-private partnership was the brainchild of Mark Warner’s administration. The stories have surfaced during Gov. Tim Kaine’s watch. Yet if Republicans in the General Assembly attempt to score partisan points, they might run into some difficulties. Warner originally proposed that VITA report to the governor, but in a compromise with Republicans in the legislature he agreed to create VITA as a free-standing agency, led by a board independent of the governor’s office. Now add this: Although VITA does not fall under direct executive oversight, Stewart’s interim replacement — Len Pomata — also serves as Virginia’s secretary of technology, which makes him a member of Kaine’s Cabinet, which exposes the administration to second-guessing.

The questions bother Virginians. We do not have all the answers. Mergers in the public sector do not always proceed as smoothly as predicted. Business relationships such as these typically experience imperfections. They also require great scrutiny. Northrop Grumman concedes some of the delays but argues that the transformation process has proved more complicated than anticipated. The company points to considerable progress. Critics still wonder whether the commonwealth is seeing the expected efficiencies — and whether it ever will.

The program may be undergoing pains associated with birth, although this seems a protracted delivery indeed. VITA may suffer from organizational flaws. The private side of the partnership may be falling short.

The Times-Dispatch will continue to press the story. We hope the commonwealth will be spared unhappy choices.

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