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LANSING—How do you tell how much money is saved through privatization? By comparing what the privatized service costs with what government was spending on the service before privatization, of course. Unfortunately, there are no pre-privatization numbers for MDOT to compare.
MDOT officials were recently called upon to tell the state Transportation Commission how much money a 5-year experiment in road-paving privatization has saved. In 1994, ABC Paving, a Trenton, N.J.-based company, was hired to maintain roughly 24 miles of Interstate 496, U.S. 27 and Lansing Road. Maybe, if there are enough savings, commissioners thought, the state could privatize its whole $200-million-per-year interstate highway maintenance program.
That may be just what MDOT was afraid of. It turns out that MDOT officials assured the commission five years ago that it would analyze its own costs of doing the work before ABC was hired, as well as the cost of contracting out. Unfortunately, according to an internal audit, MDOT did neither. Meaningful comparisons are therefore impossible, said Transportation Commission Auditor Jerry Jones.
And since expansion of road-maintenance privatization by MDOT must be based upon such comparisons, no new contracts will be put out for bid or existing ones renewed, according to Gary Naeyaert, an MDOT spokesman. None, that is, until comparisons can be made. But how can they be, if the data were never collected?
