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Privatization reservations

In his latest privatization venture, Gov. Jeb Bush is now looking to lay off 6,440 state workers and hand a five-year, $701-million contract to a company to do the same job. But a review committee he created has offered an unusual assessment: The conversion may not save taxpayers a dime.

So why pursue it?

The Department of Children and Families says it is only trying to be financially diligent as it moves toward streamlining the way it processes nearly 4-million applications each year for food stamps, Medicaid and cash assistance. But, given the governor's blind obsession with privatizing state government, such assurances are less than convincing. His first privatization czar, U.S. military management expert Ruth Sykes, quit after only four months, saying she felt rushed to outsource state jobs without proper financial analysis. Since that time, state auditors have questioned a series of contracting misadventures, including procedures followed for a $350-million personnel services contract and a $126-million technology contract.

At DCF, more to the point, seven top administrators have resigned or been fired over the past half-year amid allegations of rigged contracts and cozy relationships with businesses that have profited. DCF's director of contract services, Robert Fierro, resigned last month in protest. Fierro, a West Point military academy graduate, wrote that "the public is more often ill-served than well-served by haste in contracting" and noted "some very important upcoming projects with the department that may fall victim to this same syndrome."

That syndrome was evident in a December meeting of the Bush privatization committee. At the meeting, DCF Secretary Lucy Hadi was cautioned to move slowly, in part because of federal Medicaid regulations. Her reply, according to the Tallahassee Democrat, was: "The federal government wanted that, but we're sensitive to who we work for."

Hadi indeed works for a governor bent on firing state employees, but she also works more broadly for the public. From that vantage point, the path she is following makes little sense. The committee, in its written analysis, found that DCF could modernize the eligibility services with state employees and save the same amount _ $69.2-million _ as it could expect to save with a private company. The committee also noted the enormous risks in handing over such an essential and sizeable chunk of government service to a private company: 1) Once the government fires its own staff, it has little leverage to keep the company from later raising prices and delivering bad service; 2) The transition itself would be costly and duplicative; 3) The change would require a federal government waiver.

A DCF spokesman says the report's financial projection was "conservative, so as not to over-promise" the savings from privatization. But he also says the agency might ultimately award a contract that offers no savings, if the state deems the corporate services to be superior. Given the governor's marching orders, who could blame Hadi for doing anything else?

The committee, called the Center for Efficient Government, was created in March to answer growing public and legislative criticism over Bush's reckless approach to privatization. It is supposed to provide better contract oversight and give lawmakers better financial information because the governor "believes that greater accountability throughout the process will ensure that the promise of outsourcing is fully realized." Yet, in this case, the committee's findings are being dismissed as largely irrelevant, and the governor is pressing ahead. Why bother with the pretense?