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If We Don’t Buy Here, They’re Going to Find Us

June 25th, 2007 · No Comments

An op-ed in The New York Times argues that the “orthodoxy of privatization — that it’s the government that’s mired by inefficiency and a lack of competition — has been turned on its head in the intelligence industry.” And fair enough, but it’s worth noting that the “orthodox” argument for the superior efficiency of the private sector always turned on features of markets that are often absent when the government is the primary buyer—and a fortiori when it’s acquiring intelligence tools under a cloud of secrecy. Private companies tend to be more efficient not because people in the private sector are intrinsically more competent, but because they’re subject to the discipline of being in open competition with many other suppliers for the patronage of many consumers who are spending their own money. So while you’d expect private outsourcing to be relatively efficient when the state is just one of many buyers of an ordinary service or commodity, there’s no such guarantee here. Still, as the op-ed points out, there are many ways procurement could be more intelligently handled, among them: constraining conflicts of interest by more stringent limits on people with acquisitions authority taking jobs with private contractors and greater accountability for firms that routinely blow deadlines and cost estimates.

Tags: Economics



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