How and why a two-person company won a $300 million contract to repair Puerto Rico’s transmission system is, as they say, a little cloudy. But however it came about that Whitefish Energy is repairing that electricity grid, canceling it now was the wrong thing to do.
I speak from some personal experience — no, I have nothing to do with Whitefish, Puerto Rico, or any of the other direct players here. But I have done the odd small piece of Federal Emergency Management Agency-related work and have colleagues who have years of experience in similar government work.
There’s actually a reason, a good one, why this sort of emergency work is hived off into the private sector — the complete ghastliness of the federal government, or indeed any portion of government, trying to hire people directly. The result of all of those rules we’ve got to make sure that hiring is fair, diverse, meets all of the criteria, ticks all of the boxes, is that when people need to be hired quickly, we simply have to ignore all of those rules.
It just isn’t possible to produce skilled labor out of a hat if it is done directly by the government. Thus there is a whole sub-culture of small firms out there, almost labor gang masters, who are able to turn on and off the taps for these workers as required. For example, one colleague (no, I am not a part of this specific business) has provided hundreds of truck drivers for some part of the Defense Department, for example. Sure, no doubt the Pentagon could find drivers directly. But how long would it take to find them and what would be the management cost of their being directly employed?
It would take them more time and more cost than going out to someone whose business is producing the skilled labor required exactly when it is required. When some set of this skilled labor is required, perhaps linemen or truck drivers, this is the way the system generally works. Load the task onto a subcontractor, who is then largely free of those rules we have about hiring permanent staff onto the federal books. There is a whole penumbra of these small companies out there too, just sitting and waiting for these sorts of opportunities.
It’s also a good deal for us taxpayers, for those who benefit from the work being done. Because, given that bureaucracy covering hiring, this is indeed the way it gets done quickly.
Which brings us to the insistence that the Whitefish contract had to be canceled. I note again that I have nothing to do with anyone in this particular story. But this furor over the contract is a good example of why we subcontract these sorts of things in the first place. Look at what is happening:
Puerto Rico’s electric company moved Sunday to cancel a $300 million contract with a small Montana firm for repairs to the territory’s hurricane-ravaged electrical grid, saying controversy surrounding the agreement was distracting from the effort to restore power.
Why cancel the contract? Because of the political arguments about who got it and how. Yet canceling a contract which has already put some 300 people on the ground doing the work isn’t one of those things that is going to speed up getting the work done.
I make absolutely no comment at all about the rates that are being charged, the structure of the contract itself, who got it, or why. But I do insist that precisely this set of arguments leading to the cancellation of the work already being done is one of those reasons why the world of subcontracting exists: Politics and bureaucracy isn’t a good way of getting things done quickly in an emergency.
Tim Worstall (@worstall) is a contributor to the Washington Examiner's Beltway Confidential blog. He is a senior fellow at the Adam Smith Institute.
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