Reject Government Contractors Who Draw the Blinds on Sunshine

Once a year, Sunshine Week rolls around and presents us with an opportunity to assess how open and transparent our government is. But with more and more public services being contracted out to private companies, sunlight’s “disinfectant” effects are being lost, according to a new report by In the Public Interest – Closing the Books: How Government Contractors Hide Public Records. The report shows how government contractors are hiding the data needed to evaluate whether contracting out to private companies is a better deal for taxpayers than leaving services in the hands of public employees.

The private sector claims that it can provide better services at a lower cost than public employees, but how can we know if these claims are rooted in fact when private contractors hide the wage and customer service information necessary to make an accurate evaluation? Closing the Books explains that contractors deliberately withhold data from the public by claiming they need to protect their “confidential business information.”

The report looks at 13 crisply-presented case studies that document contractor attempts to hide information about the fees they charge, the way they spend public money, and details on the quality of services they provide.

Most disturbing are government responses to disclosure requests for information about public contracts. All too often, government allows the private sector vendor to redact whatever parts of the contract that the contractor considers “confidential” information. Government agencies have rules about what information can be redacted from FOIA requests and a review process to deal with complaints. Most confidential business information claims are not subject to review.  

Private contractors claim prices and fees are “confidential business information” that they don’t have to provide. A few examples:

  • In Connecticut, an NPR affiliate requested information on how much Maximus, a for-profit human services company, was charging to run a call center to respond to questions about the state’s health care exchange. The state returned documents with the necessary data blacked out. Maximus argued that such redaction was necessary to protect its competitive position. If others knew how much Maximus charged the government, they could be underbid the company. Exactly. And taxpayers would save money.

  • The Wall Street Journal asked the Iowa Public Employee Retirement System for information about the management fees charged by investment firm KKR on the $70 million hedge fund it manages on behalf of Iowa state workers. After consulting with KKR management, the retirement board responded with blacked-out documents.

  • The Jobs to Move America coalition asked the Chicago Transportation Authority (CTA) for its audit to assure that Bombardier, the subway car builder it had used, had complied with federal Buy America standards. The CTA provided the advocacy group with a copy of the audit, which had been heavily redacted at Bombardier’s request. Bombardier stated that the audit contained information that could affect its competitive position around the world.

  • Safety Research and Strategies Incorporated (SRS) requested Florida state records that included correspondence with highway guardrail supplier Trinity Industries. In 2005, Trinity changed its guardrail design and safety experts subsequently noted a sharp increase in deaths and injuries related to guardrail performance. In response to the request, the state provided 13 files, noting that Trinity was reviewing and redacting an additional 1,000 emails in order to protect confidential business information. SRS has sued the state to compel the release of these vital records.

Any private company that receives public funds to provide public goods or services should abide by the same disclosure rules as the public agency that provides the funding. If a private company feels such disclosure will hurt its business, then it doesn’t have to bid for or accept government contracts. Others will. A number of state governments require contracts to be posted online and have not had problems finding businesses who want to do business with them.

India passed its first national Freedom of Information Act in 2002, which requires private contractors to publicly post the costs of a project, to list the employees working on the project, and to specify the materials used – in order to protect against corruption (ghost employees, inferior materials, inflated costs). If remote rural Indian villages can demand this level of transparency from private contractors, surely federal, state, and local agencies in the U.S. can, too.

Serving the public is a privilege. Citizens have a right to see the rate of profits earned by those providing public services, in order to judge whether those profits are fair or exorbitant. Taxpayers should not be asked to write a check to a service provider that refuses to provide itemized costs. Government budgets are public information; government spending that flows through private companies should be, too.

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