Competitive bids for government jobs saves money

July 31, 2012

Free Market Foundation

President Bush has proposed opening hundreds of thousands of jobs in the U.S. federal work force to private-sector competition. One agency that has made a modest beginning in this effort is the Federal Aviation Administration (FAA), which is allowing private companies to run Air Traffic Control operations at a number of small airports. But the ATC union is opposed, and is trying to get Congress to kill the plan.

The FAA’s Contract Towers Programme allows private (FAA-certified) controllers to man more than 200 smaller airport towers.

So far the programme has saved taxpayers an estimated $54 million a year, or about $900,000 per tower.

The Contract Towers safety records are four times better than similar FAA-staffed towers, according to a Department of Transportation Inspector General’s report.

The Bush Administration wants to build on this by putting 15 percent of ATC jobs out for competitive bid by the end of the year. This is the first step in a larger plan to put all 850,000 commercial jobs, nearly half of the 1.8 million federal civilian work force, out to bid in the next four years.

As it happens, federal workers who already do the job win a competitively bid contract six out of 10 times.

But even when federal workers keep the contract, the government saves an average of 20 percent, according to a study by the General Accounting Office and the Centre for Naval Analysis.

Earlier this year, for example, the White House opened Bush’s annual budget document for bid; the Government Printing Office still won the contract but at a price 25 percent lower than the $500,000 GPO had originally estimated.

Source: Editorial, Union Libel, Wall Street Journal, September
9, 2003.

For text (WSJ subscription required)
http://online.wsj.com/article/0,,SB106306662243356500,00.html
For more on Privatizing Transportation http://www.ncpa.org/iss/pri/

FMF Policy Bulletin/ 16 September 2003