OUTSOURCING SOVEREIGNTY

Vol. 17 No. 11 (November, 2007) pp.868-872

OUTSOURCING SOVEREIGNTY: WHY PRIVATIZATION OF GOVERNMENT FUNCTIONS THREATENS DEMOCRACY AND WHAT WE CAN DO ABOUT IT, by Paul R. Verkuil. New York and Cambridge: Cambridge University Press, 2007. 248pp. Hardback. $80.00/£45.00. ISBN: 9780521867027. Paperback. $19.99/£15.99. ISBN: 9780421686884.

Reviewed by Philip A. Dynia, Department of Political Science, Loyola University New Orleans. Email: dynia [at] loyno.edu.

The events that occurred in Baghdad’s Nisour Square on September 16, 2007, have been called “Baghdad’s bloody Sunday.” On that day, a convoy of State Department officials, guarded by Blackwater USA mercenaries, was approached by an Iraqi vehicle whose occupants – a young Iraqi man, his wife, and infant child – had panicked in the chaotic traffic situation caused by the convoy itself. The Blackwater troops fired on and killed the driver. Next a grenade was launched at the vehicle, setting it ablaze and killing the woman and child, whose charred remains could not be separated. (In its official statement on the incident, Blackwater claimed the occupants were “armed insurgents.”) There followed a shooting spree by Blackwater troops that could, most charitably, be described as a rampage. At the end of the day, twenty-eight Iraqis were dead. Even as this review is written, other victims remain in critical condition and may or may not survive.

As is probably true of other high-profile atrocities connected with the Bush Administration’s disastrous Iraq war (Abu Ghraib and Fallujah spring to mind), this sordid blight on America’s reputation in Iraq and around the world represents only the tip of a larger (precisely how large remains uncertain) iceberg. There have been several deadly incidents involving Blackwater forces, but other private security forces – like Blackwater, paid billions of US taxpayer dollars – are guilty of similar abuses. (The GAO counts as many as 180 similar mercenary companies in Iraq, employing tens of thousands.)

In his excellent article (from which much of the forgoing account was taken) focusing on Blackwater in Iraq, Jeremy Scahill states that “[the Nisour Square] scandal is about a system” (p.23). That system is a large part of the iceberg, and a crucial component of that system is the topic of Paul R. Verkuil’s thoughtful, thorough, (perhaps unwittingly) timely and extremely informative study – an exploration of privatizing and outsourcing and a powerful condemnation of delegating the sovereign powers of government to private contractors. “‘Outsourcing sovereignty’ occurs when the idea of privatization is carried too far” (p.3). (Verkuil’s understanding of the concept “sovereignty” is a traditional one. He “accepts Weber’s view that sovereignty is the exercise of power by the state” (p.14).)

The scope of the contemporary outsourcing problem is vividly [*869] illustrated in a congressional report summarized by Verkuil:

During the period FY 2000 to FY 2005, the value of federal contracts increased by 86 percent (from $203 billion to $377 billion) and the value of noncompetitive contracts increased by 115 percent (from $67 to $145 billion). The largest contractors received over 20 percent of these contracts and Halliburton’s totals increased by 600 percent. Iraq is undoubtedly a principal cause of these increases in the growth of noncompetitive contracts, but government has also been turning more generally to contractors during this five-year period. (p.140)

Outsourcing was not invented by George W. Bush; several of his predecessors utilized it. But with the present administration the compulsion to outsource has been overwhelming. Verkuil quotes approvingly columnist Paul Krugman’s characterization of Bush II as the “Outsourcer in Chief.”

Much of this administration’s compulsive outsourcing – and most serious abuses of the process – stems from the Iraq war. Verkuil explains that Bush “went to war with a level of force that made contractors necessary. Contractors are now so entrenched they have become indispensable. Now they even negotiate directly with Iraqi and US military forces” (p.29). Many of these initial contracts were awarded without competitive bidding, which Verkuil understands. He finds less explicable – as should we all – the fact that four years into the war many contracts continue to be awarded this way.

Verkuil is not against privatization; he describes himself as one who has “long favored deregulation and the values of efficiency” (p.6). But while conceding that outsourcing has its uses – and he discusses several instances where it has been successful – he is far more concerned about its potential to undermine government performance (as with the IRS hiring private firms to collect delinquent taxes at a cost ultimately higher than if it had been done in house, or the Coast Guard’s disastrously costly decision to turn over to Grumman and Lockheed Martin its fleet modernization program) by atrophying government’s power to perform key functions in the future.

Thus, a stark and troubling question must be faced: Who is really in charge of government policy making? Verkuil sets himself the task of demonstrating two points: (1) that important work both significant to and often inherent in the concept of government is being contracted out to the detriment of democratic policy making, and (2 that the trend can (and though he does not say so directly must) be moderated, if not reversed, by changes in the way government operates.

His argument incorporates constitutional, statutory, administrative, and contractual sources, and his command of the relevant literature is prodigious. And yet ultimately his premise is simple, familiar, and fundamental: Under our Constitution, the people are sovereign. The people are the principal, Congress and the Executive the agents. Their powers are delegated by the people through the Constitution, and when Congress sub-delegates powers to the President or the President further sub-delegates powers to private parties, the Constitution must umpire these relationships. [*870]

Consider again the military and Blackwater. A concept largely unknown and perhaps unthinkable a decade ago – the “private military” – is now an industry with $100 billion in annual sales, and a bright future. In the absence of a draft, and with the Iraq war dragging on, enlistments are down and existing troops are being overused. Pressures to outsource as many military functions as possible are nearly irresistible. But when private contractors interrogate prisoners in Iraq or participate in military actions involving the use of force, they “usurp public authority, unless Congress has approved. The exercise of this authority is a public function, which makes the phrase ‘private military’ an oxymoron offensive to our Constitution” (p.104). Making matters worse, privatized actions are often nontransparent – private contractors are not covered by FOIA, a major failing of democratic control. In fact, “the desire for secrecy may be one of the motivations for executive delegations of significant authority to private contractors, at least for some presidents” (p.105).

Overseeing these contracts is a demanding and complex task. But in Iraq (other examples could be cited) there are not enough contracting officers. “And in general, the oversight problem is exacerbated by a shortage of [Department of Defense] contract administrators. Pentagon contracting officials were trimmed by 38 percent in the past five years” (p.148). And in a Catch-22 truly worthy of the military, close supervision, requiring additional staff, cannot be performed in house because of personnel limitations and thus has been outsourced. “When oversight becomes a commodity, its status as a public value has been diminished, if not eliminated. Outside monitors may do acceptable work, but they must themselves be monitored” (p.149).

The problems may seem intractable, but Verkuil attempts in the final two chapters to suggest solutions. His penultimate chapter deals with proposed structural reforms to government. The first has to do with the bureaucracy. Outsourcing was originally seen as a way to overcome unresponsive bureaucracy. Verkuil echoes the famous distinction made by Isaiah Berlin. The new bureaucrat must be a fox, not a hedgehog, possessed of judgment and management skills more than the ability to executive routine assignments (which “can be outsourced under this new regime” (p.159)). Senior bureaucrats must be used more effectively.

In addition, the ratio of political appointees to the number of senior career managers must change. Verkuil cites a report by the National Commission on the Public Service (the Volcker Commission) which notes that President Kennedy had 286 political leadership positions to fill, President Clinton 914, and President George W. Bush 3,361. Such a large number of political appointees paralyzes government for two reasons: it diminishes the civil service, and it involves the increasingly cumbersome and contentious appointment and confirmation process. Moreover, studies have shown that politically appointed bureau chiefs get systematically lower management grades than bureau chiefs drawn from the civil service (based on the Bush administration’s own Program Assessment Rating Tool – PART – used to [*871] compare the performances of SES (Senior Executive Service) personnel, politically appointed SES, and Senate-confirmed appointees). In short, FEMA’s Michael Brown, a particular bete noire of those whose suffering in the aftermath of Hurricane Katrina was exacerbated rather than abated by FEMA’s response, is just the pathetically obvious tip of a wholly different iceberg of incompetent cronies who have proliferated and prospered under the present administration.

These political appointees may, in fact, actually be encouraging outsourcing. “Political appointees who by definition see their careers as outside government can preserve their future by keeping close ties to private contractors. . . .[I]t is a situation rife with conflict of interest problems. And, just to add to them, contractors are also heavy campaign contributors” (p.167). While the phenomenon can be traced back at least to the Johnson and Kennedy administrations, their political appointees who took advantage of “friendly” consulting firms pale alongside Vice President Cheney’s connections to Halliburton (something of a “gold standard” in this regard). A further complication: any reforms here must answer a difficult question – how do you convince a president that it is in the public interest to reduce the number of political appointees?

A second structural reform involves acknowledgement that we are now in the era of “market-based governance.” Verkuil believes that governance and government are often in false opposition to each other and that both sectors can work productively together. He urges expanded use of Public-Private Partnerships (PPPs). He quotes Frank Kamm of the RAND corporation, outlining three essential features of PPPs: “(1) a formal agreement between or among public and private parties; (2) mutual sharing of resources, information, risks, and rewards; and (3) formal links between output-oriented performance measures and the allocation of risk and reward among partners.” One great advantage of this collaborative technique is that “[a]ccountability issues arising from the use of private contractors can be ameliorated” (pp.172-173).

A third structural reform involves a requirement for national service and the creation of a training academy for civil servants equivalent to the military academies. “This idea reflects a commitment to public service that would overcome many of the deficiencies highlighted by the Volcker Commission. And it would provide the United States a cadre of talented public servants” (p.178).

Finally, Verkuil urges retaining and possibly invigorating the False Claims Act (FCA), which gives “whistle-blowers” incentives to expose fraud by allowing them to retain a portion of the amounts recovered by the government. He considers this law a significant addition to contract monitoring resources at a time when contracting personnel are in short supply. He also urges additions to the Department of Justice’s fraud team charged with bringing these cases.

A final chapter devoted to “Conclusions” is essentially a reiteration of the book’s fundamental theme. Verkuil notes that most outsourcing decisions are initiated by the Executive [*872] Branch, which must in turn take seriously the responsibility to control the contractors and hold them accountable, especially in the military context. But Verkuil urges the Executive to also restore balance and competency to government by reinvigorating the SES and in general recruit talented civil servants. “The next White House needs to send the message that public service is crucial to the proper performance of important government functions” (p.191).

Verkuil also challenges Congress, the branch that “has the most to lose by the excessive use of contractors. Congress already suffers an information asymmetry vis-à-vis the president and the agencies. Contractors exacerbate this deficiency because their work is often outside the usual channels of review and oversight. And, in the foreign affairs arena, executive secrecy and deliberative privileges pose further obstacles to congressional information streams” (p.192). Verkuil does not doubt that Congress possesses ample tools to hold government officials accountable. Political will is another matter entirely.

Preserving “our public values in an era of unprecedented delegations of power to the private sector,” Verkuil cautions, cannot be done overnight. And probably never by an administration with values similar to those of the current White House. One can hope that the 2008 elections will bring changes and serious discussion of this growing problem. Certainly anyone interested in remedying the dangers of “outsourcing sovereignty” would do well to study closely Verkuil’s extremely valuable contribution.

REFERENCES:

Scahill, Jeremy. 2007. “Making a Killing.” THE NATION (October 15, 2007), 21-24.

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