Now Is The Time to Reform Government, Not Swell Its Payrolls

by John Faso: Public health authorities have said that an essential part of the effort to contain coronavirus outbreaks is to institute a system of contact tracing across the nation. The Centers for Disease Control and others recommend that up to 300,000 contact tracers be hired and the federal government is providing funding to states and localities to initiate these programs.

Before we blindly rush into this process, Washington should require that this effort not result in a permanent expansion of government at the state and local levels. Contact tracing efforts will likely be needed over the next 12-24 months. Yet, some states and localities are treating this crisis as an opportunity to create new government jobs, despite the temporary nature of the task. With many states and localities struggling in meeting pension and retiree health obligations, it makes no sense to expand government payrolls, when private contractors are ready and able to perform such tasks.

The coronavirus has wreaked enormous human and economic devastation across the United States. Now in its third month, the virus has taken the lives of 100,000 Americans and put over 36 million on the unemployment rolls.

The economic shutdown has also devastated federal, state, and local government revenue collections. The federal deficit has exploded to over $4 trillion and counting. The business models for restaurants, retailers and travel and tourism industries have been shattered, perhaps for years. Colleges and universities, as well as K-12 education, have been totally disrupted.

In the aftermath of the crisis, companies, both large and small, are creating new ways to innovate, modernize and measure business operations to survive. Government, historically slower to react to change, needs to similarly reform how it serves citizens, creating efficiencies and lowering costs.

As Congress and the Trump Administration haggle over the next economic package, taxpayers and governments at all levels will be left with a massive fiscal hangover, requiring a significant rethinking of how government services are delivered. Revenue losses, like the virus, do not discriminate between red and blue states. For instance, updated budget projections in New York predict that state revenues will not reach 2019 levels until 2024. Florida and Texas, while in better financial shape than New York, have experienced dramatic drops in sales tax collections, their primary revenue source.

The crisis is an opportunity for states and localities to reform service delivery, especially where serious operational failures have been exposed. A prime example has been the inability of state unemployment insurance systems to process claims in an efficient and timely manner. While much of that problem can be explained by the unanticipated crush of millions applying for unemployment, too many states are still using antiquated, COBOL-based state computer systems which proved unready for the task. Considering this experience, states should move to cloud-based UI systems and competitively bid private sector contracts to administer the claims and benefit determination process.

Contractors, both non-profit and for-profit, have long provided critical support to government, delivering human services programs, construction, and other professional services. In the post-corona environment, it becomes even more crucial that government seek out innovative and cost-effective methods of delivering public services.

When deciding whether to deliver services utilizing public employees or private contractor’s government needs to conduct a strict cost analysis considering salaries, current and post-retirement benefits, capital costs and other overhead expenses. A 2011 study of Defense Department contracting conducted by the Center for Strategic and International Studies found that government consistently underestimates the true cost of utilizing government employees to provide services and recommended a more accurate method of comparison with private sector contractors. The Trump Administration should update existing OMB guidance to better reflect actual overhead costs for governmental administration. New coronavirus legislation should also adopt additional flexibility measures for states to deliver services more effectively.

The Trump Administration has already taken some small steps in this regard. The federal Office of Personnel Management determined in 2019 that private contractors utilizing merit system principles for their employees were qualified to administer federally funded programs. Governments should take advantage of this guidance and use competitive contracting for administering programs from motor vehicles, workers’ compensation, unemployment, and a full range of health and human services functions.

Private and public sectors in the post-pandemic world will be required by economic necessity to innovate, modernize, and reform administrative and program structures. Competitively bid service contracting offers a path to deliver services on a cost-effective basis.
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John Faso served as U.S. Congressman from New York's 19th District from 2017 - 2019. He is now a senior advisor to the Center for Accountability, Modernization, and Innovation (CAMI). H/T RealClear Policy.

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