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Last week, it was reported that our state government has been outsourcing. People with food-stamp debit cards sometimes need to call about their accounts. If they speak Spanish, the call is routed to Tijuana. If English, then India.
This is not a direct state policy. The state contracts the work to JP Morgan Electronic Financial Services, which subcontracts to firms in India and Mexico.
Other exports were reported, such as a printing job going to Canada, and some data entry work going to India.
I've heard the opposing arguments many times at meetings of county commissioners, town boards, city councils, school boards and the like.
One side is simple: Save tax money by going with the lowest bidder, no matter where that enterprise is located.
The counter-argument is more complicated. In rural areas, a local firm may face higher costs for shipping, utilities, etc. But that firm also pays local taxes that support the school district or municipal government, and it provides local jobs. Thus, even if it is not the low bidder, the community might come out ahead by awarding the bid to a local firm.
One county government used to put every significant purchase out to bid, and out-of-county firms were welcome. But the county gave a 5 percent edge to locals.
For example, if the sheriff's department needed new patrol cars, a metro dealer might bid $17,000 apiece. If the local dealer's bid was within 5 percent of that -- less than $17,850 in this case -- then the local dealer got the bid.
This was a reasonable compromise. It kept local taxpayers from being gouged, while encouraging local enterprise. When I asked the county manager how they derived the 5-percent differential, he admitted that they plucked it out of the air.
On the state level, I was surprised by what was out-sourced, since the most logical candidate is higher education. It might well be cheaper to send Colorado students to Kansas or New Mexico, rather than build and operate colleges here.
Further, if they all went to school out of state, we would be spared football recruiting embarrassments, the drinking deaths and grade-inflation scandals. Republicans in our legislature could put their time to productive use, rather than looking for liberal professors.
One of those legislative Republicans, out-going Sen.
John Andrews, says outsourcing is good for the state.
We're in the global economy, and it's good for
everybody.
Besides that, The way to contract for
state services is low-bidder.
Republicans often point to the private sector as the example for how government should operate, but in this case, that doesn't translate well.
In my experience in small business in a small town, the
lowest price is a factor, but one often outweighed by
service, experience, compatibility, credit -- and the most
important rule of small-town enterprise: if you scratch
my back, I'll scratch yours.
If the state ran that way, though, it could be an open door to corruption. Taxpayer money should be spent carefully.
But is there any objective way to determine which
process (local preference
or lowest bidder
)
leads to greater prosperity? I couldn't find any relevant
research.
I do know that the state and federal governments make certain demands on Colorado businesses -- things like minimum wage, extra pay for overtime, workplace safety, maintaining air and water quality -- and that those standards are often lower in other countries, thereby allowing them to underbid Colorado companies.
So, if these things are important, and many of us think they are, then the state ought to insist that all bidders meet the same standards. Otherwise, perhaps we should consider outsourcing the General Assembly, since laws could certainly be debated and written more cheaply in Belize or Malaysia.
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