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An earlier (1995) report by the Little Hoover Commission had pointed out the problem of backlogged infrastructure projects, arguing that restricting state agencies’ ability to contract for services undermines the public interest in efficient and timely infrastructure project delivery.12 The report specifically recommended allowing contracting with private firms to do public work. “The state needs to find more cost-effective ways of doing business, and it cannot be precluded from looking to the private sector for that efficiency.” However, the state courts, in a series of rulings capped by the 1997 California Supreme Court decision in Professional Engineers in California Government v. Caltrans, have held that the language in Article VII of the state constitution—“in the civil service permanent appointment and promotion shall be made under a general system based on merit ascertained by competitive examination”—means that if state employees have ever performed a job, it cannot be outsourced. This puts California markedly out of step with national and international trends and best practices in outsourcing infrastructure projects. 13

Public agencies outsource because strains on their finances, project delivery schedules, and personnel resources have left them unable to meet the infrastructure demands of thriving economies.

In November 2000, California voters will revisit the issue. The “Fair Competition and Taxpayer Savings Initiative,” put forward by the private engineering industry but supported by many other groups, including local governments, would allow the state to contract with private firms to help meet the growing backlog of

infrastructure improvement projects.14

Allan Zaremberg, president of the California Chamber of Commerce

and chair of the coalition supporting the initiative, calls its passage vital:

Already we’re facing an almost $3 billion bottleneck in transportation projects. This is work that needs to be done, work that’s ready to be done, but work that is on hold because the state does not have the staff to

do it, and we can’t contract with the private sector to design and engineer any of this work. This isn’t just a transportation issue. We need new schools, water projects and wastewater systems. We need work to be done to upgrade existing infrastructure. But the way it stands right now, California won’t be able to use private sector architects and engineers. That means we’ll wait longer for that work to be done, we’ll pay more for those public works projects when they are built, and we’ll have to do the work without having the freedom to use the best people for the job.15

Amid the battles over outsourcing in California and elsewhere around the nation too often filled with administrative bias, union pressures, and flawed research, one clear fact is that outsourcing is a management tool that can work well in appropriate circumstances and not so well in others. Like any policy tool, outsourcing is no panacea. There can be pitfalls, and prudent public officials will strive to use best practices and learn from others’ experiences. Done right, outsourcing creates competition in infrastructure project delivery, fostering an environment in which the best-quality project is delivered in the most efficient manner. To understand how outsourcing fits into the mix of infrastructure project decisions and how it can be used to further public goals of improved infrastructure, we have to understand the trends in its use and the policy debates that have surrounded it.


Little Hoover Commission, Too Many Agencies, Too Many Rules: Reforming California’s Civil Service, Report No. 133 (Sacramento: State of California, April 1995), www.lhc.ca.gov/lhcdir/133rp.html.


Ibid, p. 50.


_ See www.celsoc.org/TFC%20Pages/main koi.htm.



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