"We have to make sure everyone
in California has a fantastic job," Arnold proclaimed last year. He
even made phone calls to California executives asking them personally
to keep their business and workers in California. But, to paraphrase
the old adage, you are who you eat with. It seems that California’s CEO
has ignored his own advice and has turned to the business strategies of
those who have sat with him for fundraising dinners. Major
Schwarzenegger donors like Hewlett-Packard ($271,200) and
Anheuser-Busch ($250,000) have been criticized for firing Americans and
sending their jobs abroad. In that spirit, with a contract he signed
last week, the gov may have undercut his message to the business world
that California is teeming with efficient and creative employees and
one of his central themes about keeping jobs in California.
The recent contract with American Management Systems has that company
using "strategic sourcing tools" to lower the cost government spends
purchasing goods and services. "We will save millions of dollars just
by being smarter about how we buy things," Arnold said. But, according
to a report in Political Pulse,
American Management Systems is one of the world’s largest outsourcing
firms. It is not even American. It’s part of a Canadian firm called
CGI-AMS, which specializes in the "offshoring" of work to countries
with lower labor costs like Poland and India.
The payment structure for CGI-AMS — the firm gets a percentage of
savings created — also cuts in two different directions. The firm has
an incentive to lower taxpayer expenditures because it makes more money
by saving money. But, like any such arrangement, it also creates an
incentive to cut corners, ignore standards, and search for goods and
services based on price rather than quality. By entrusting the state
checkbook to a company located in another country that scours the world
for the cheapest goods and services, the gov sends a troubling message
about the products and workers of California.
The question for Arnold is: What is the cost of creating these taxpayer savings? Could it be those fantastic jobs?
