The Problem with Faith-Based Contractors

There really is no constitutional problem with government contracting with religious organizations for purely secular services. The state can purchase medical care or babysitting or welfare services from any organization, religious or secular, having the capacity to deliver those services in a constitutionally appropriate way–i.e., without proselytizing vulnerable populations, etc.

A problem that is rarely discussed, however, has become painfully obvious in Washington, D.C.

The Catholic Archdiocese of Washington has announced that it will be “unable” to continue the social service programs it runs for the District if the city passes a proposed same-sex marriage law, a threat that could affect tens of thousands of people the church helps with adoption, homelessness and health care.

So–do we allow religious organizations to make their continued participation in these programs contingent upon the District’s denial of fundamental rights to gays and lesbians? Or to put it another way, can the government give in to demands that its public policies be consistent with the religious beliefs of a contractor?

One of the problems with privatization in general is that too often, it is accompanied by a “hollowing out” of governmental capacity to provide essential services. In such cases, the contractor–secular or religious–has officials by the proverbial “short hairs.”

Comments

Our Current Mess–a recent rant

[The other night, I spoke to the Washington Township Democratic Club, and thought I’d post those remarks here.]                                               

 

When I labeled this talk “The Current Mess” it was because I hadn’t decided what to talk about, and I figured “mess” covered pretty much anything I might choose—locally, I might be talking about our Mayor. (People tell me we do have one, although I’m dubious…). Or I could be talking about the state’s budget crisis, Mitch’s privatization fixation, or the multiple failures of what Harrison Ullmann used to call the World’s Worst Legislature. Nationally, there’s our economic meltdown, the fact that we are mired down in two ill-conceived and mismanaged wars, the damage that has been done to civil liberties and the justice system…well, you all know the drill.

 

But when I thought about it, I decided that there is a deeper problem—one that is really at the root of all the others. That problem is Americans’ loss of confidence and trust in government. I don’t mean our longstanding political debates about what government ought to do; those are both inevitable and in my opinion, productive. I’m talking about the de-legitimization of the whole enterprise of government. It is one thing to say that government should or should not do X; it’s another to say, as Ronald Reagan did, that government is the problem, not the solution.

 

I think our multiple current messes all begin with that attitude, with that scorn for using government to address even the most challenging of our collective civic problems. In my most recent book, Distrust, American Style (now available at a bookstore near you!!), I spend a lot of time discussing why Americans lost trust in our governing institutions. I actually wrote the book to address a different issue: the country’s growing diversity.

 

Because America is—and has always been—a remarkably heterogeneous country, we have long been consumed by the question “what is it that holds us together?”  The proper answer to that question, in my own opinion, is what one writer has called “our American covenant” and what I have called “The American Idea”—allegiance to the ideals that gave rise to the Declaration of Independence, the Constitution and the Bill of Rights.

 

Many of you are familiar with Robert Putnam’s book “Bowling Alone.” Putnam was worried about what the decline of civic clubs and bowling leagues meant for civic engagement. Well, more recently, Putnam has published research that led him to an even more troubling conclusion: he found that people who live in more ethnically diverse communities are less trusting of their neighbors than are people living in more homogeneous neighborhoods. And he found that they are less trusting of everyone, not just of those who belong to other ethnic groups.

 

Putnam’s original findings were controversial, but this current research has set off an academic firestorm.  Opponents of immigration, multiculturalism, and interfaith dialogue have seized upon Putnam’s research as evidence for their most paranoid fears. The article has especially been cited by opponents of immigration as proof that a continued influx of “others” will corrode the social fabric and doom the civic enterprise. You can almost hear Pat Buchanan urging “real” Americans to dig that moat.

 

When I began my research, I wanted to investigate whether this decline in what scholars call “generalized social trust,” assuming it had occurred, was really an outcome of increased diversity, or whether other aspects of contemporary civic life might be equally—or more—responsible. I also wanted to research whether the kind of trust America requires at this particular juncture in our national evolution is different from the kind needed in simpler, more rural communities, and if so, why and how.   In simpler societies, for example, we could depend on reputation to decide who was trustworthy. Gossip actually used to be valuable because it gave people information about who they could trust—and who they couldn’t. The prospect of a bad reputation that would become the source of gossip often was all it took to discourage untrustworthy behaviors. In more complicated societies, however, trust itself becomes more complicated. 

 

Think about it. We deposit our paychecks and take for granted that the funds will appear on our next bank statement. We make a deposit with the gas company without worrying whether they’ll turn on our heat. We mail checks to payees on the assumption that the envelopes will reach their destination, intact and unopened (if not always on time). We call the fire department and expect their prompt response. We even engage in internet transactions with merchants who may be located halfway around the world, merchants we’ve never dealt with before, because we trust their representations that their sites are secure and their merchandise will be shipped—the volume of business done in cyberspace multiplies exponentially month after month.

 

That kind of trust not only allows necessary social mechanisms to function, it makes our lives immeasurably more convenient and comfortable. But that isn’t trust in our neighbors; that’s trust in our common social institutions. And that’s where government comes in. Government is the largest and most important—not to mention the most pervasive—of our collective social mechanisms.

 

As America has grown larger and more complicated, the government has had to assume added responsibilities. Especially after the Depression, we recognized that citizens needed an “umpire,” a trustworthy institution to police and regulate a variety of business practices. Even the most ardent contemporary advocate of limited government is likely to concede the need for FDA regulations of food quality, for example. (I’m pretty libertarian, but I personally do not want so much “freedom” that I have to test the chicken I buy at my local Kroger for e coli. I prefer to trust the FDA.) Americans today rely on government agencies to ensure that our water is drinkable, our aircraft flyable, our roads passable, and much more.

 

It would be difficult to overstate the importance of our being able to trust government agencies to discharge these and similar functions properly. When America goes through a time where government is inept or corrupt, or both, as we have these past eight years, that confidence is shaken, and our skepticism and distrust affect more than just the political system. That is because trust in government institutions sets the tone for our confidence in all institutions. When we perceive that our government is not trustworthy, that perception infects the entire society. There was a reason the United States experienced so much upheaval and social discord in the wake of the Watergate scandal.

 

In urban communities and complex societies, we will never know most of our neighbors, even by sight. The informal mechanisms people employed in simpler social settings—reputation, gossip, identity—can no longer carry the information we require, cannot give us the guidance we need. We don’t have many places like the bar in Cheers, places where everyone knows your name. We have no alternative but to put our trust in the complex web of institutions we have created—the police and other government agencies, Better Business Bureaus, watchdog industry groups and the like—to discharge their responsibility for maintaining the trustworthiness of our economic and social systems.

 

In my book, I identified two culprits responsible for our loss of trust: one unwitting, and one just witless. The unwitting culprit is privatization, and I spend a whole chapter on the Goldsmith administration. (You’ll need to read the book to see the connection between institutional trust and privatization, but it’s only $14 at Amazon.com) Now, advocates of government contracting aren’t intentionally trying to make government less trustworthy—that’s just an unintended consequence. That’s why I say the outcome is unwitting.

 

The witless culprit, of course, was the Bush Administration. Let me just read the introductory pages of the chapter I devote to Bush, titled “Betrayal of Trust.”

 

The past decade has produced an unremitting—and seemingly escalating—litany of unsettling news, emanating from virtually all the major sectors of American society. It sometimes seems as if each day brings a new challenge or scandal. We sustained a stunning attack on American soil, reminding us that the oceans no longer safeguard us from the hostility of others. We invaded another nation because we were told that it had weapons of mass destruction that made it an imminent threat, only to discover that no such weapons existed. News reports have brought daily warnings that our governing institutions are “off the track.” There has been visible, worrying erosion of our constitutional safeguards. Meanwhile, the imperatives of population growth and commerce, technology and transportation, as well as politics, have eroded local control and hollowed out “states rights,” leaving people powerless to change or even affect many aspects of their legal and political environments.

Old-fashioned corruption and greed have combined with political and regulatory dysfunction to undermine business ethics. Enron, WorldCom, Halliburton, the sub-prime housing market meltdown—these and so many others are the stuff of daily news reports. Newspapers report on the stratospheric salaries of corporate CEOs, often in articles running alongside stories about the latest layoffs, reductions in employer-funded health care and loss of pensions for thousands of retired workers. Throughout most of this time, business forecasters have insisted that the economy was in great shape—a pronouncement that met with disbelief from wage earners who hadn’t participated in any of the reported economic gains, and whose take-home pay in real terms had often declined. By 2007, the gap between rich and poor Americans was as wide as it had been in the 1920s.[1] Many of the business scandals were tied to failures by—or incompetence of—federal regulatory agencies; others were traced back to K Street influence-peddlers of whom Jack Abramoff is only the most prominent example.[2]

Meanwhile, American religious institutions have not exactly covered themselves with glory, heavenly or otherwise.  Doctrinal battles over ordination of women and gays have split congregations. Revelations ranging from misappropriation of funds to protection of pedophiles to the “outing” of stridently anti-gay clergy have discouraged believers and increased skepticism of organized religion. In that other American religion, major league sports, the news has been no better. High profile investigations confirmed widespread use of steroids by baseball players. At least one NBA referee was found guilty of taking bribes to “shade” close calls, and others have been accused of betting on games at which they officiate. Football players seem habitually prone to wind up on the front pages; Atlanta Falcon Michael Vick’s federal  indictment and guilty plea on charges related to dog fighting was tabloid fodder for several weeks. Even charitable organizations have come under fire; a few years ago, United Way of America had to fire an Executive Director accused of using contributions to finance a lavish lifestyle. Other charities have been accused of spending far more on overhead than on good works.

The constant drumbeat of scandal has played out against a background of gridlock and hyper-partisanship in Washington. And—more significantly, for purposes of the public mood—all of it has been endlessly recycled and debated by a newly pervasive media: all-news channels that operate twenty-four hours a day, talk radio, satellite radio, “alternative” newspapers, and literally millions of blogs (weblogs), in addition to the more traditional media outlets.[3] Political gaffes and irreverent commentaries find their way to YouTube, where they are viewed by millions; wildly popular political satirists like Jon Stewart, Bill Maher and Stephen Colbert have used cable television to engage a generational cohort that had not traditionally focused on political news. Everyone who leaves government service seems to write at least one book pointing an accusing finger or otherwise raising an alarm; their exposes join literally hundreds of other books (most of them alarmist) cranked out by pundits, political scientists and scolds playing to partisan passions. The political maneuvering, cozy cronyism and policy tradeoffs that used to be the stuff of “inside baseball,” of interest only to political players and policy wonks, are increasingly the stuff of everyday conversation at the local Starbucks. In this hyper-heated media environment, if you don’t like the news, you can run—but you really can’t hide. Even partisans who limit their news sources to those likely to validate their opinions hear about the latest controversies, if only from their chosen perspective.

When you add to this constant din of revelations, charges and counter-charges the highly visible and widely reported ineptitude of the current administration’s handling of Hurricane Katrina, the drawn-out, inconclusive war in Iraq, the even more nebulous and worrisome conduct of the so-called “War on Terror,” and mounting questions about the nature and extent of government surveillance, is it any wonder American citizens have grown cynical?  Furthermore, all these miscues and misdeeds—and many more—are taking place in an environment characterized by economic uncertainty and polarization, as well as accelerating social, technological and cultural change (including but certainly not limited to the growth of diversity). Add in the so-called “culture wars,” and it’s not hard to understand why generalized trust has eroded.

 

We are not the only country to have gone through periods of turmoil, corruption or worse. I know of none that have escaped episodes of poor—sometimes disastrous—leadership. And as anyone who follows the news knows, democracy is no guarantee that you won’t get leaders who are ill-equipped to govern. All governments are human enterprises, and like all human enterprises, they will have their ups and downs. In the United States, however, the consequences of the “down” periods are potentially more serious than in more homogeneous nations, precisely because this is a country based not upon identity but upon covenant. Americans do not share a single ethnicity, religion or race. We never have. We don’t share a worldview. We don’t even fully share a culture. What we do share is a set of values, and when the people we elect betray those values, we don’t just lose trust. We lose a critical part of what it is that makes us Americans.

 

Policy prescriptions and ten-point plans are all well and good, but at the end of the day, our country won’t work unless our public policies are aligned with and supportive of our most fundamental values. The people we elect absolutely have to demonstrate that they understand, respect and live up to those values.

 

As we in this room know, the word “values” means different things to different people. In the wake of the 2004 election, I remember pundits telling us that Bush voters had come out on November 4th to vote for “values.” What they meant by values—opposition to reproductive choice and equal rights for gays and lesbians, and nationalistic jingoism masquerading as patriotism—was the antithesis of the American ideals most of us really do value.

 

Let me be quite explicit about what I believe to be genuine American values—values that have been shaped by our constitutional culture, values that are shared by the millions of Americans who have been dismayed, enraged and dispirited by the revelations of the past eight years. Real American values are the values that infuse the Declaration of Independence, the Constitution and the Bill of Rights, the values that are absolutely central to the American Idea.

  • Americans value justice and civil liberties—understood as equal treatment and fair play for all citizens, whether or not they look like us, and whether or not we agree with them or like them or approve of their reading materials, religious beliefs or other life choices.
  • Americans value the rule of law. And we believe that no one is above the law— most emphatically including those who run our government. We believe the same rules should apply to everyone who is in the same circumstances, that allowing interest groups to “buy” more favorable rules or other special treatment with campaign contributions, political horse-trading or outright bribery is un-American.
  • Americans value our inalienable right to speak our minds, even when—perhaps especially when—we disagree with our government. We understand that dissent can be the highest form of patriotism, just as mindless affirmation of the decisions made by those in power can create untold damage. Those of us who care about America enough to speak out against policies that we believe to be wrong or corrupt are not only exercising our rights as citizens, we are discharging our most sacred civic responsibilities.
  • Americans believe that when politicians play to the worst of our fears and prejudices, using “wedge issues” to marginalize immigrants, or gays, or blacks, or “east coast liberals” (a time-honored code word for Jews) in the pursuit of political advantage, they are betraying American values.
  • Americans value reason and respect for evidence, including scientific evidence. We may go “off the reservation” from time to time, especially when the weight of the evidence points to results we don’t like, but eventually, Americans will place reason and compromise above denial and hysteria in the conduct of our collective affairs.
  • To use the language of the nation’s Founders, Americans value “a decent respect for the opinions of mankind” (even European mankind).  
  • Finally, Americans value the true heartland of this country, which is not to be found on a map. The real heartland is made up of all the Americans who struggle every day to provide for their families, dig deep into their pockets to help the less fortunate, and understand their religions to require goodwill and loving kindness. The men and women who make up that heartland understand that self-righteousness is the enemy of righteousness. They know that the way you play the game is more important, in the end, than whether you win or lose. And they know that, in America, the ends don’t justify the means.

 

Americans’ ability to trust one another depends to a very great extent on our ability to keep faith with those values.

 

Life in a liberal democratic system is never going to be harmonious. Harmony, after all, wasn’t the American Idea. Despite the dreams of the communitarians, we aren’t all going to share the same telos; at most, we will have what the philosopher John Rawls called an “overlapping consensus.” In a country that celebrates individual rights and respects individual liberty, there will always be dissent, differences of opinion, and struggles for power. But there are different kinds of discord, and they aren’t all equal. When we argue from within our constitutional culture—when we argue about the proper application of the American Idea to new situations or to previously marginalized populations—we strengthen our bonds and learn how to bridge our differences. When our divisions and debates pit powerful forces wanting to rewrite our most basic rules against citizens who don’t have the wherewithal to enforce those rules, we undermine the American Idea and erode social trust.

 

At the end of the day, diversity (however we want to define it) is not the problem. And that’s a good thing, because the fact is that increasing diversity is inescapable. The real issue is whether it is too late to restore our institutional infrastructure and make our government competent and trustworthy again—whether it is too late to reinvigorate the American Idea and make it work in a brave new world characterized by nearly instantaneous communications, unprecedented human mobility, and the twin challenges of climate change and international terrorism.

 

The election of Barack Obama was a very hopeful sign, but the damage done during the past eight years to our most important national values and institutions is going to be very hard to reverse. As we lawyer-types like to say, the jury is still out.


 

 

 

A Very Tangled Web: Public and Private Redux

    A Very Tangled Web: Public and Private Redux

 

A Cautionary Tale

Terre Haute is a mid-sized town on the western border of Indiana. In 2007, it held municipal elections, and voted in a new mayor, Duke Bennett. Bennett had defeated the former mayor, Kevin Burke. Shortly after the election, Burke sued to have Bennett declared ineligible to serve, citing the provisions of Indiana’s Little Hatch Act prohibiting government employees from engaging in certain political activities. The trial court issued a somewhat convoluted ruling in which it affirmed the applicability of the statutes involved, but found that the election essentially had “cured” the problem, as Bennett by that time had taken office, and no longer held the position that had rendered him ineligible. Burke appealed.

            The Indiana Court of Appeals reinstated the suit, ruling that Burke had been ineligible to run and was therefore not entitled to assume office. The appeals court did not stop there, however; it also ruled that Burke could not be declared the winner of the election either, since voters had not been informed that Bennett was ineligible. Bennett has appealed, and at this writing, the dispute is pending in the Indiana Supreme Court.

            The case raises significant issues of federalism and even more significant (and troubling) evidence that the line separating public and private is rapidly becoming indecipherable, lost in a tangle of outsourcing, contracting, public-private partnerships and the like.

The  facts as the Court of Appeals described them were as follows: In 2005, Bennett had begun employment as Director of Operations at Hamilton Center, a local nonprofit established primarily for the purpose of providing behavioral health services. In 2007, the Center opened a Head Start program, for which it received a grant from Health and Human Services. (In 2007, the amount of the grant was $861,631.) Of that amount, $125,789 was for the Head Start program’s proportionate share of overhead, which included security, maintenance, liability insurance and similar generally accepted overhead costs. Bennett was responsible for providing and managing some of those overhead services, not simply for the Head Start program, but for all of the various programs conducted at Hamilton Center locations. The Court found that $2,041—or 1.84% of Bennett’s salary and benefits for 2006-2007—were attributable to the federal grant to Head Start.

On November 4, 2008, Bennett won the mayoral election, and on November 19th, Burke sued to have him declared ineligible under the provisions of 42 U.S.C. 9851, the pertinent portion of which applied the Hatch Act to Head Start Grant recipients.

“Any agency which assumes responsibility for planning, developing and coordinating Head Start programs and receives assistance under this subchapter shall be deemed a State or local agency. An agency that operates a Head Start program and receives federal grants to assist with the program is treated as a local government agency funded through Federal grants or loans, meaning that the agency and its employees’ political activities are subject to the restrictions of the Hatch Act.”

The trial court had analyzed this language and concluded that while Bennett had indeed been ineligible to run for mayor, neither Burke nor anyone else had tried to have Bennett disqualified prior to the election. It also, explicitly, found that “the violation was not willful or intentional,” and that the issue hadn’t been raised during any of his three prior election bids. And the trial court further noted that

“No evidence indicates Bennett willfully flouted the Act. No one from Office of Special Counsel informed him that he was precluded from running. No one from Hamilton Center told him the Act precluded him from being a candidate. His role with Early Head Start was essentially non-existent. Hamilton Center did not consider Bennett an employee of Early Head Start. Bennett approved work orders for minor repairs on two facilities.” 

After analyzing the operation of Indiana’s election laws and Hatch Act provisions under the circumstances of the case, the trial court had concluded that Bennett could serve as Mayor, since his election had removed him from employment at the Center and had thus “cured” any defect.

The appellate court disagreed. After an exhaustive analysis of case law and relevant state and federal statutes, the Court held that Bennett had been an employee of a nonprofit agency that the law deemed to be a state or local agency, that the nonprofit status of that agency was irrelevant, and that—despite the negligible proportion of his pay that came from the Head Start grant, his employment was “in connection with” an activity “financed in whole or in part by loans or grants made by the United States.”

            The ruling that Bennett had been ineligible to run and was ineligible to serve ended up being cold comfort to Burke, however, because the Court went further and declared the office vacant. Burke could not assume the office because the voters had not had access to all relevant information when they cast their ballots. (This part of the ruling raises a number of interesting questions about voters’ right to information, but analysis of that part of the ruling is inapposite here, and must therefore await a different inquiry.)

 

How Did We Get Here?

The original Hatch Act was passed in 1939, restricting certain political activities by federal employees, and the use of public funds for partisan or electoral purposes. It also forbid officials paid with government funds from using their positions to promise jobs, promotions, financial assistance, or any other benefit intended to coerce campaign contributions or political support. The act took its name from the Senator who sponsored it in reaction to disclosures that WPA officials were using their position to advantage the campaigns of local Democrats. (The original name of the legislation was “An Act to Prevent Pernicious Political Activities.”) In 1940, the original measure was broadened to include state employees paid wholly or partially from federal funds.( In 1994, the restrictions were eased somewhat; however, those changes are not relevant to the analysis in this case.)

Ever since its passage, the legislation has been controversial: proponents claim that it is necessary in order to keep government officials from coercing their workers to do partisan campaigning, while opponents believe the Act denies those workers the ability to exercise their First Amendment liberties. In the wake of the original Hatch Act, states have passed so-called “Little” Hatch Acts that apply similar restrictions to state government employees.

Whatever the merits or drawbacks of this particular piece of legislation, the real problem arises by reason of the sea change in the world of public administration since its passage. The term “governance” has all but replaced the older, more concrete “government;” it has come to be viewed as a more accurate descriptor of contemporary state structures, where—among other things—an ever-increasing percentage of the work of the state is outsourced to for-profit, non-profit and faith-based organizations. (Frederickson, 1996; Kettl, 2000; Milward and Provan, 2000; Pierre and Peters, 1998; Salamon, 1989; Hill & Lynn, 2005).

The reasons for this growth in “government by proxy” are varied, but among its roots are distrust of government and an often-reflexive preference for markets and/or civil society. What many of those holding that reflexive preference fail to recognize is that contracting-out is not “privatization,” properly understood—that is, the choice of private surrogates to deliver services on behalf of government agencies obscures but does not alter the fact that government is choosing, directing and paying for those services, and is thus ultimately responsible for them.

 
 
 
 
 

The relationship between governmental units and their surrogates has been the subject of a copious literature, much of which has focused on the wide variety of issues raised by these cross-sectoral partnerships. Understanding the complexity, diversity and significance of those issues is helpful if we are to fully appreciate the implications of the Terre Haute Mayoral election.

                                               

       The Problem(s) of ‘Governance’

            There are undoubted benefits to government that accrue through contracting, outsourcing and other public-private partnerships. Those benefits include flexibility, the ability to hire expertise not available in-house, the ability to address short-term needs without adding permanent employees to the payroll and many others. But the practice also raises a number of thorny issues, some of which should have been anticipated, others that are more surprising.

 

                                          Constitutional and Ethical Issues

         The “New Public Management” paradigm envisions the substitution of new forms of collaboration and management for the traditional hierarchical and bureaucratic chains of command. These new delivery methods, however, cannot and should not mean the abandonment of our constitutional values, nor of the constitutional norms of liberty, equality, and fairness. Nor should they obviate public actors’ obligations to meet the standards for government behavior that stem from the constitution and are incorporated in public law. (Jensen & Kennedy, 2005). As Donald Kettl has observed (1993, p. 40), the government “is not just another principal dealing with another agent.” The skepticism about government performance that prompted development of privatized governing arrangements should not be mistaken for a lack of concern over how public authority is deployed.

            Public administration scholars, unlike their law school colleagues, have paid very little attention to the constitutional implications of government by proxy, and that is a troubling omission, because the issues here are foundational. Public administration in the United States is grounded in a very specific constitutional philosophy, one that begins by placing certain limitations on actions that may be taken by the state. The Bill of Rights prohibits government from engaging in behaviors that would be constitutionally and legally appropriate if done by a private-sector actor. Efforts to keep government responsible and accountable—politically, fiscally, ethically and constitutionally—thus depend upon the ability to identify government and to recognize when it has acted. “Governance” may be robbing citizens and public managers alike of the ability to make that crucial threshold identification. (The situation in Terre Haute would certainly suggest that to be the case.)

            Public officials too often fail to recognize the importance of the State Action Doctrine, which defines invasions of constitutional rights as acts taken by government. Actions taken by the private sector may or may not be lawful, but by definition cannot be unconstitutional. Fortunately, there are a few public administration scholars—notably John Rohr and David Rosenbloom—who have emphasized the importance of the normative role played by the constitution. As Rohr (1990) wrote in an introduction to Constitutional Competence for Public Managers (Rosenbloom, 1992, 2002; Rosenbloom and Piotrowski, 2005; Rosenbloom, Carroll & Carroll 2000)

[W]e are witnessing the gradual reintegration of constitutionalism and public administration. I say reintegration because of the obvious connection between public administration and constitutionalism in The Federalist Papers. So integral was administration to the intent of the framers that the authors of The Federalist Papers made more frequent use of the word administration and its cognates they did of the words Congress, President or Supreme Court. (p. xiii)

The book itself makes explicit the connection between “public values” and the “daily decisions and operations of public managers.” (p. xvi)

Political theorists and public administrators alike emphasize the importance of legitimacy to public administration. Legitimacy requires fidelity to constitutional norms. As Michael Spicer has noted, “in the absence of consensus surrounding the role of government, bureaucracy becomes increasingly seen simply as a tool by which some groups gain benefits and privileges at the expense of others.” (Spicer, 1995, p. 4). A legitimate exercise of authority, no matter how coercive, is different in kind from the exercise of raw power unrestrained by adherence to constitutional norms and values, and it is seen differently by members of the polity. That difference is especially critical to those on the “front lines” of state and local government, who must make and implement policies that are anything but abstract to the citizens they affect.

            The central question of both political philosophy and public administration is “What is the role of the state, and how should that role be managed?” What, in other words, are the convictions that should animate public service, and how should that service be defined? The United States Constitution rests upon very specific understandings of human nature, the role of the state and natural and human rights. Those particular understandings and the philosophical commitments that flowed from them led the founders to sharply limit the power of the state. To put it another way, the original American concept of liberty was in the negative: liberty was seen as an individual’s right to be free from state control or interference, subject only to the equal rights of others.

            In order to limit government, however, one must first define it. And such definition is becoming increasingly problematic. The two elements of the usual definition—exclusive jurisdiction over a particular geographic area (an important element of  sovereignty) and a monopoly on the legitimate use of coercive power—are arguably integral to popular understanding of the concept of statehood, or government. But both elements are undergoing redefinition.

 

                                           Distinguishing Between Public and Private

Collaboration among the sectors is certainly not new, but over the past few decades, as contracting and other forms of collaboration have increased, scholars have documented increases in organizational overlap and interdependence and sectoral blurring in general (e.g. Cooper, 2003). Non-profits, for example, are becoming more “business-like” and commercialized (Weisbrod, 1998). Nonprofits and private organizations alike have become almost entirely dependent upon government funding, which calls into question their very identities as “nonprofit” associations or  “private” enterprises (Bozeman, 1987).

Numerous approaches to distinguishing among organization types can be found in the literature but none capture the full complexities and dimensions of organizational archetypes (Rainey, 2003). Dahl and Lindblom (1953) produced one of the earliest typologies, constructing a continuum with government-controlled agencies on one end of the spectrum and market-controlled enterprises on the other. They used organizational characteristics—including  objectives, incentives, and authority—to determine an organization’s position on that continuum. Interestingly, Dahl and Lindblom found that some organizations defied classification; i.e., corporations partially owned by government.

A very different approach to classification emphasizes ownership and funding (Walmsley & Zald, 1973), and yet another, proposed by Blau and Scott (1966), focuses on whether organizational outcomes benefit those who share ownership of the entity or whether the benefits accrue to the public’s interests. (Other scholars have pointed out that it is not always a simple matter to define that public interest (Mitnick, 1980).   Bozeman (1987) observes that every organization has some degree of “publicness;” he then attempts to capture this attribute in two dimensions: political authority and economic authority.) Ironically, despite the lack of consensus on how to define organizational types and which organizational characteristics should be relied upon in making that classification, there is no shortage of research comparing the effectiveness of public and private actors. Such comparisons have included schools (Chubb and Moe, 1990). hospitals (Savas, 2000), and airlines (Backx, Carney, & Gedajlovic, 2002), among others. It is not an exaggeration to say that there is a robust “cottage industry” of scholars attempting to chart the shifting dimensions of our public-private divide.

The changing definitions of public and private have not been caused solely by the growth of contracting out, of course; in industrialized nations, and perhaps elsewhere, the growth of the global economy and the worldwide penetration of the Internet are also increasingly challenging traditional notions of territorial jurisdiction. In America, the steady expansion of government since the New Deal has already required us to rethink the relationship between government power and fundamental rights. But the advent of widespread contracting, where a growing number of services are paid for by government but delivered by contractors, has raised a host of new questions, including but certainly not limited to the following:

·         Are partnerships with businesses and nonprofit organizations creating a new definition of government? 

·         How can we claim that private organizations are inherently more efficient if we can’t distinguish public from private organizations?

·         Is contracting extending, rather than shrinking, the state?

·         Does the substitution of an independent contractor for an employee equate to a reduction in the scope of government, as some proponents apparently believe?

·         If we are altering traditional definitions of public and private by virtue of the new governance—turning for-profit and non-profit organizations into unrecognized arms of the state—what is the effect of that alteration on a constitutional system that depends upon the distinction between public and private as a fundamental safeguard of private rights?

·         If the constitutional system is being altered, what are the implications for political theory and public management?

·         What about traditional notions of ethical behavior? i.e., to whom does the contractor owe a duty of care? Of loyalty?

In other words, what happens to constitutional rights when the comingling of public and private becomes so pervasive that citizens can no longer tell who is exercising authority? What happens when no one—not even the courts—can tell where public starts and private stops?

 

                                                Political Accountability

Constitutional accountability is not the only area complicated by the increasing incoherence of our governing structures and blurred sectoral boundaries. Political accountability is similarly compromised. Political accountability requires visibility and transparency; it requires an ability to recognize the locus of decision-making, and the identity of the office or officer in charge. To put it another way, voters can’t “throw the bums out” if they can’t tell who the bums are.

In their seminal book “Nonprofits for Hire,” Smith and Lipsky explored the issues raised for nonprofit organizations when they entered into partnerships with government agencies (1993). Among the many outcomes they explored was the effect of these relationships on governmental accountability. As they noted, “Government accountability to citizens is undermined when responsibility for admission, treatment and outcomes seem to be in the hands of private organizations (p. 209). The inevitable confusion over who is in charge is exacerbated in many cases where the services in question are being delivered to disadvantaged and/or marginalized populations. As Smith and Lipsky also pointed out,

“ These are private workers who are representing the state to citizens, but under the sponsorship of nonprofit agencies whose connections to government and to the average citizen may be very tenuous. At best, citizens would have a difficult time knowing when a matter was agency policy, and when it was government policy. Thus workers in nonprofit agencies buffer public policy to citizens and obscure the realities of public policies, because policies are mediated by nonprofit agencies” (p. 14).

There are sound reasons for favoring transparency in government: transparency generates trust by providing clear lines of authority; it invites citizen oversight and facilitates the monitoring of government agencies by the public and the media. Conversely, a lack of transparency breeds distrust, and an inability to determine lines of authority undermines political accountability. These are not abstract concerns. The increasingly impenetrable maze of contractual and legal ties among public agencies and their private sector “partners” has been a significant and growing deterrent to the sort of political accountability envisioned in our constituent documents.

            Recognizing the need for clarity if we are to hold government constitutionally or politically accountable is one thing; fashioning rules or formulas for doing so has proved to be considerably more difficult. The jurisprudence of state action is as incoherent and tangled as the reality of “governance” relationships.  As one commentator has wryly noted, the Court’s ‘sifting’ and ‘weighing’ in state action cases “differs from Justice Stewart’s famous ‘I know it when I see it’ standard for judging obscenity mainly in the comparative precision of the latter ” (Brest, 1982, pp. 1296-1330).  On one hand, the mere fact that a regulatory agency exercises oversight of a licensee and has thus implicitly approved the licensee conduct at issue has been held insufficient to attribute an action to the state (Jackson v. Metropolitan 1974).  On the other hand, where government intentionally funds an unconstitutional program conducted by private actors, the Courts have generally—but not always—found state action (Norwood v. Harrison 1973). Agencies looking to the courts for guidance are likely to be disappointed.

 

                                                    Management Issues

            By far the most scholarly attention given to the evolving modes of delivery for public services has centered on contracting and oversight problems. One way to categorize this literature is to differentiate between before-the-fact and after-the-fact concerns. As one would expect, before-the- fact issues involve the initial decision on whether or not to contract, typically referred to as the “make or buy decision”. There is also a growing literature on effective contract negotiation and management, concerns that arise after the decision to contract out has been made.

The prevailing assumption is that the private sector can produce goods and services more efficiently, i.e. more outputs for less inputs (Averch, 1990). In this view the principal objective of government is “budget maximization” (Downs, 1967; Niskanen, 1971). Government oversupplies (produces more than would be socially efficient) at greater than minimal cost (Fernandez, 2009). This technical and allocative inefficiency is due to the lack of favorable market conditions. Therefore, the theory goes, government outsourcing can reduce the cost and size of government and improve service delivery (Cooper, 2002; Osborne and Gaebler, 1992; Savas, 2000).

An opposing argument points out that cost savings are frequently less than anticipated (e.g. Greene, 2002), and sometimes do not materialize at all.  Several researchers have noted that contracting has obscured our ability to quantify government employees; a civil service head count no longer provides an accurate picture of the size of government (Light, 1999), because although the number of workers receiving government paychecks may have declined, the total number of people actually working full-time for government has increased (Gutman & Willner, 1976; Smith & Lipsky, 1993). Thus, the more accurate measure is one that relies on the total cost of service delivery (Rosen, 2005).

As several researchers have noted, both sectors bring strengths and weaknesses to service delivery. That is, the price system in free economic markets can control economic and production decisions, but political authority is a more inexpensive means of social control (Dahl &  Lindblom, 1953). According to this view, political hierarchies and economic markets are two alternative mechanisms for controlling political economies. The basic idea is that it is easier to direct people to obey the law than to work out a compensation system for doing so.

Market failure theory is consistent with this perspective (Weimer & Vining, 1999). It holds that there are certain conditions that make it impossible for the market to operate efficiently. Some goods/services are properly classified as “public goods” because their characteristics make it impractical or impossible to exclude non-payers (“free riders”) from their benefits. A favorite example is a lighthouse. Some may choose to pay for the service, but even the free riders will enjoy the benefits of the light. Similarly, the market is inefficient when a transaction between two parties affects (or spills over to) non- parties.  When, for example, pollution associated with the production of a good cannot be confined to the parties who pay for the service, even those who were not parties to the bargain will be affected, in this case negatively. Other goods and services have natural monopoly characteristics (i.e., the telephone until approximately 1984), in which case the market will also be inefficient. And finally, the market cannot operate efficiently in cases of informational asymmetry; when buyers and sellers lack full knowledge of the effects of a transaction, they cannot make informed decisions. These instances are among the traditional justifications cited for government regulation.

As the practice of contracting has become more pervasive, a separate literature has developed to address after-the-fact management concerns: How shall the contract be designed? How much detail is enough, and how much is too much?  Increasing reliance on contracting has led to a burgeoning literature on effective contract management.  Indeed, “privatization increases the imperative for public management rather than relaxing or easing it” (Rainey, 2003, p. 417).  The policy implementation literature focuses on the effects of resources, political support and other ingredients for successful contracting (O’Toole, 1986; Hall & O’Toole, 2000). Trust matters, too: sociologists have emphasized the role of trust in contracting (e.g. Granovetter, 1985) and economists have focused on trust’s role in reducing both transaction costs (Williamson, 1985) and agency costs (Jensen & Meckling 1976).

Although there is no dominant theoretical approach to determining what leads to successful contracting, several elements are typically highlighted, including the role of competition, monitoring, trust, and public management capacity (Van Slyke, 2003; Fernandez, 2009) As previously noted, a primary argument for the comparative efficiency of the private sector is that goods and services are produced in a competitive environment. A similar argument is that competition among potential suppliers is essential to government contracting (Borcherding, 1977). Indeed, the arguments for privatization over government delivery of public services assume competition (Van Slyke, 2003). Competitive bidding is necessary to reveal the lowest cost (Pack, 1989). Counter arguments also exist: competition can disrupt the delivery of services (Smith and Lipsky, 1993), provide an incentive for reduced quality (Kamerman & Kahn, 1989), or increase transaction costs (Sclar, 2001; Kettl, 1993). How many contracts are awarded to a sole bidder, or to a bidder chosen from a very small pool, has thus far gone undocumented, but anecdotal evidence suggests it is more the norm than the robust competition assumed by this literature.

The argument for the importance of monitoring typically relies on agency theory. In the public sector, there are two agency relationships: the voters (principals) and the bureaucracy (agents), and the bureaucracy and the contractor. The contract must be designed with incentive alignment and risk transfer objectives in mind (Hart & Holmstrom, 1987), because problems arise when the preferences of a principal and agent diverge.  As Machiavelli reminded the Prince, contractors (in his case, mercenaries) are only loyal to their pay; their real interests are at odds with those of the State.

The agency problem also implicates the issues of transparency and accountability addressed earlier. Government transparency implies access to relevant information. Citizens can neither act nor vote on what they don’t know. If government is to be fully accountable to its citizens there must be some degree of transparency. Contracting also creates problems for public managers because it complicates lines of authority and control, which also affects accountability. And because contracting adds a new level of complexity for public managers, those managers need a new set of skills, including but not limited to negotiating and bargaining expertise and mediation experience (Kettl, 1993).    

 

                                                            Sovereignty
         Contracting even implicates issues of national sovereignty. In December 2003, The Guardian reported that private corporations had become the second biggest contributor to coalition forces in Iraq after the Pentagon, and noted that the proportion of private contractors had grown markedly since the first Gulf War in 1991, when it was 100 to 1. By 2003, the proportion was ten to one, and nearly a third of the budget earmarked that year for the wider Iraqi campaign, or $30 billion dollars, went to private companies in what the Guardian called “a booming business” of replacing soldiers with highly paid civilians not subject to standard military procedures.

         .  This “booming” private sector has soaked up much of the expertise that became available as armies downsized after the Cold War, and its emergence has allowed America to wage war by proxy, without the congressional and media oversight to which conventional warfare is subject. Before the prisoner abuse scandal, as noted in the preceding section, most criticism of contracting focused upon perceived financial improprieties, and the public management challenges posed by privatization: lack of oversight, poor record keeping, ties between bidders and political actors, and the award of huge, “no bid” or “closed bid” contracts. Yet fiscal mismanagement and improprieties, while destructive of trust in government and the political structure, are only one aspect of the problem.   

         In June of 2003, Peter Singer published a book titled “Corporate Warriors: The Rise of the Privatized Military Industry,” in which he explored warfare by proxy (including occasional use of “low profile” forces to solve “awkward, potentially embarrassing” situations). Singer identified three categories of private military contractors: 1) Provider firms offering direct, tactical assistance—anything from training programs to staff services to front-line combat; 2) Consulting firms drawing primarily upon retired senior officers selling their strategic/administrative expertise back to the military; and 3) Support firms providing logistic and maintenance services. A host of  legal, policy and management questions are raised by this vastly expanded use of private companies. Among those identified by Singer include whether the ties of these organizations to their countries of origin will weaken as markets become more globalized, and opportunities for profit conflict with obligations of patriotism. Will states lose control of military policy to companies whose first responsibility is to clients and shareholders? How will foreign policy decision-making change when a declaration of war entails “hiring” soldiers rather than deploying young citizens? Will companies pursuing profits lobby successfully for military “solutions” to global conflicts? How will we control the behavior of “private” combatants?

         Whatever the eventual answer to these and many other questions posed by these arrangements, Singer argues that governments are surrendering a defining attribute of statehood, the monopoly on the legitimate use of force. If our legal system is increasingly unable to answer the question “when has government acted?” what will happen when we no longer know what a government looks like?   

                                               

 

 

                                                            Conclusion

            In Terre Haute, Indiana, voters and candidates are unfamiliar with the academic literature exploring the intricacies of these public-private contracting relationships. It is unrealistic—and unfair—to expect otherwise. They, and we, are entitled to a system that is intelligible to people of ordinary intelligence. They, and we, are entitled to know who is in charge of what, and even more importantly, who can be held responsible for violations of their rights as citizens. Whatever the merits or drawbacks of “governance” or government-by-surrogate, a public management that takes citizens’ interests seriously will recognize the considerable burdens and “transaction costs”—financial, ethical and constitutional—that are being incurred solely as a byproduct of complexity.

 

 

                                                         

 

 

 

 

 

 

 

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Statutes

Hatch Political Activity Act of 1939, Ch. 40, 53 Stat. 1147; Act of July 19, 1940, Ch. 640, 54 Stat. 767.

 

The Hatch Act, 5 U.S.C. 7321-7326

 

Little Hatch Act, 5 U.S.C. § 1501 et seq.

 

Cases

 

Burke, Appellant-Petitioner v. Bennett, Appellee-Respondent (2008)

 No. 84A01-0801-CV-2. Vigo Circuit Court.

 

Jackson v. Metropolitan Edison Co., 419 U.S. 345 (1978).

 

Norwood v. Harrison, 413 U.S. 455 (1973).