Public Sector Competence
I've been talking to people up in Massachusetts about why the Big Dig has turned into such a black eye, while another project with a ...
I've been talking to people up in Massachusetts about why the Big Dig has turned into such a black eye, while another project with a similar initial budget that was also run by a public authority -- the cleanup of Boston harbor -- is widely viewed as a success.
I thought I'd share some notes from my conversation with Fred Salvucci, a former Massachusetts secretary of transportation who now teaches at MIT. His ideas have some salience to a wide variety of privatization efforts, I think. (I should note that he's been getting plenty of "I told you so" ink in the Boston media in light of the Big Dig mess -- but why should we be any different?)
The most striking difference between the Massachusetts projects is that in the case of the cleanup, there were plenty of layers of oversight. The efforts of the Massachusetts Water Resources Authority have been overseen by a federal judge. But MWRA also has an independent board of directors, to whom its managers were accountable. Those managers, in turn, held contractors' feet to the fire -- something that didn't happen enough on the Big Dig.
"It was essential to designate an 'owner' of the Big Dig and get the owner a seat at the table before the construction and design process," Salvucci says. "That was my top recommendation during the transition to Weld," referring to Bill Weld, the incoming governor in 1990 when the project had finally passed through the environmental impact phase.
That didn't happen, though. "This is really an organization and governance issue," Salvucci said, singing Governing's song. "The public oversight just failed. The extreme privatization theory that ignores the role of the public sector dramatically failed."
Salvucci says there are plenty of reasons for governments to turn to the private sector for help on projects large and small. Many companies can offer more continuity than governments and becuase they pay better can attract better talent. "But they've got a different stake," he said.
Private companies first obligation is to shareholders, "not the general public or the environment or sociery... The private sector does what it should in any contract negotiation, which is to seek limits on their liability."
It's the role of government to protect the broader interests, which is why even privatization adherents have come to realize the importance of keeping greater contract management skills in-house.
That doesn't mean Salvucci thinks leaving government solely in charge of public works projects is such a hot idea. He notes that the harbor cleanup might have been a success, but it became a necessity because the relevant agency never budgeted enough for maintenance.
"It's the partnership that works," he says.