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Department of Labor

Recommendations and Actions

DOL11: Open the Civilian Conservation Centers to Private and Public Competition

Background

The Department of Labor (DOL) Employment and Training Administration operates 108 Job Corps Centers under the provisions of Title IV of the Job Training Partnership Act (JTPA). These centers provide residential-educational and vocational training, work experience, and other services for economically disadvantaged youth. Major corporations and nonprofit organizations manage and operate 78 of the centers under competitively awarded contractual agreements with DOL.

The Departments of Agriculture and Interior operate the remaining 30 centers as Civilian Conservation Centers (CCCs), located primarily in rural areas on public lands, under noncompetitive interagency agreements with DOL. DOL first introduced the idea of opening these contracts to competition in 1985, but the initiative has been continuously opposed by the Congress and special interest groups. Section 427(c) of JTPA expressly prohibits DOL from using nongovernmental entities to operate these centers.

Because of this legislatively created monopoly, federal agencies negotiating for the interagency agreements are insulated from the incentives that are everpresent when an organization is exposed to full competition. Federal CCC managers have few incentives to cut costs and improve quality when continuance of their funding is controlled by legislative rather than market dynamics. For the past five years, the average cost per trainee at a CCC has been about $2,000 higher (or about 11 percent) than at a contractor-run center. While incremental differences may result from variations in center size and curriculum, there is no contractor-operated CCC against which to compare operating costs.

Moreover, the President's fiscal year 1994 budget envisions a 50 percent increase in the $1 billion Job Corps Program by early in the next century. Lessons learned from opening CCCs to competitive contracts will help ensure that the expansion is carried out in a cost-effective manner, thus giving guidelines for improvement to federal and private CCC operators.

Action

Title IV of the JTPA should be amended to authorize public and private competition for operation of the Job Corps Civilian Conservation Centers.

The department should have little difficulty in carrying out this recommendation because the contracting procedures are already in place, and a market exists for such services, with a significant number of potential vendors among the corporate and nonprofit organizations that are now operating or have operated a Job Corps Center. In most cases, private firms deliver services more economically than public organizations. Where public and private organizations compete with each other, their costs and quality are roughly the same.(1)

Implications

By introducing competition into contracting for the operation of the centers, Congress would eliminate the present monopoly and force the Departments of Agriculture and Interior to operate these centers efficiently if they are to continue to receive the contracts.

Fiscal Impact

The exact cost savings from introducing competition into the CCC process cannot be estimated.

Endnotes

1. Osborne, David, and Ted Gaebler, Reinventing Government: How the Entrepreneurial Spirit is Transforming the Public Sector (Reading, MA: Addison-Wesley Publishing Company, Inc., 1992), p. 81.

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