Social Service Privatization:

Ethics and Accountability Challenges in State Contracting

HEHS-99-41: Published: Apr 5, 1999. Publicly Released: Apr 5, 1999.

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Pursuant to a congressional request, GAO provided information on states' social service contracting, focusing on: (1) the extent to which state government employees have moved to positions at social service contractors and the impact such movement has had on the management of publicly provided social services; (2) determining the relative success in winning contracts by contractors who hired state employees and contractors who did not; (3) state ethics laws, policies, and enforcement approaches that address the employment of former state employees and other related issues; and (4) state practices for holding contractors accountable for achieving program results through contracted services.

GAO noted that: (1) since 1993, 11 of 42 state child support enforcement directors who left their government positions accepted managerial positions with contractors providing child support enforcement services, according to federal and state program officials; (2) similarly, since 1993, federal and state officials indicated that 10 of the 41 high-level Temporary Assistance for Needy Families (TANF) managers who left state services accepted positions with social service contractors; (3) when the four states GAO examined lost child support enforcement and TANF managers and other staff, officials indicated that they experienced short-term difficulties because they were required to train staff selected to fill the managerial vacancies; (4) although, nationwide, these 21 directors and managers left the government to accept positions with social service contractors, GAO's review of 59 contract proposals in four states found that proposals listing former state employees as key personnel did not result in contract awards any more frequently than did proposals not listing such employees; (5) this was the case for both the child support enforcement and TANF-related programs; (6) GAO's analysis also showed that proposals listing former employees from the same state in which the bidding took place resulted in contracts about as frequently as did proposals not listing such employees; (7) most states have established some ethics policies designed to help ensure open and fair contracting by adopting provisions determined by the American Bar Association (ABA) and other organizations to be critical in prohibiting certain postemployment practices and conflicts of interest; (8) however, more than one-third of the states have ethics policies that lack one or more of these provisions; (9) among the four states GAO examined, enforcement approaches to help ensure compliance with applicable ethics provisions differed widely; (10) to address these inconsistencies, model laws prepared by ABA and others offer possible frameworks for strengthening state ethics policies; (11) once contracts have been awarded, several states have instituted mechanisms aimed at holding contractors accountable for program results; (12) these mechanisms include measures states apply when they assess contractor performance; and (13) while these states have established practices to assess contractor progress toward achieving program results, many others generally rely on basic accountability measures that focus on compliance with program rules rather than on results.

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