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Innovation in the Public Sector

Innovation in the Public Sector

The DEADLINE is DECEMBER 14, 2014. This is a Graduate course. Please use double-spaced
format. Responses should be in APA style and must include citations and a bibliography. You
are strongly advised to access a variety of information from academic journals and other
scholarly works. Ensure that your answers are well-organized and that they respond to the
specific question asked, display the range and depth of your learning, and demonstrate your
ability to conform to the analysis, writing, and research standards of master’s level work. Both
questions must be answered fully. Each question needs to be 10 pages and each question
needs to have 9 references.

Question 1
You have been hired as a special consultant by the U.S. Government Accountability Office

(GAO) to provide recommendations on whether privatizing the Transportation Safety
Administration (TSA) will increase efficiency, cost effectiveness, and satisfaction by the
The following assumptions apply:

  1. There will be an estimated cost savings of 15% by privatizing the TSA.
  2. 25% of existing employees will lose their jobs.
  3. Privatized employees will have less training and education and will be paid less.
  4. Government contractors will earn a generous profit.
  5. Public satisfaction and overall efficiency may decrease as a result of privatization but the
    majority of Congress will be favorably inclined towards the change.
  6. There may be other unknown results both good and bad in terms of risks to the public,
    safety, and overall fiscal policy.
    In making your recommendation, be sure to consider the following:
    a. What organizational, financial, political, and human resource issues would you consider in
    making such decisions?
    b. Who are the stakeholders here in the TSA and how will they be affected?
    c. What are the benefits and drawbacks to privatization considering not only fiscal but other
    theoretical aspects?
    When discussing the above be sure to discuss the decision making process, social or ethical
    issues affecting the public, applicable theory and trends, any diversity or ethics issues, and
    fiscal considerations.

Question 1

Issues to Consider in Making Decisions

Organizational Issues

The decision to privatize TSA will get it out of the screening business, and that
responsibility will be devolved to the nation’s airports. The devolution will save the nation of
billions of resources currently with centralized management of 53,000 screeners distributed in
more than 450 in different airports throughout the nation who do not play a major role. All
airports unique variations since they are designed to suit different passenger levels.
Privatization will require, for example, the the need to continually adjust TSA’s workforces.
Currently, TSA is very slow in implementing these changes. Most airports anchor on this
reason to bargain for their return to the private screening.
The impact of unionization of TSA’s workforce achieved recently could further hinder
effective management. Attempts to unionize workers in TSA were previously blocked by the
Bush administration. According to Admiral James Loy, a TSA administrator, collective
bargaining cannot be matched with the required level of flexibility to fight against terrorism
(Edwards, 2013). However, the Obama administration has openly supported unionization, a
push aimed at covering workers in TSA with collective bargaining. Following a ruling made
in 2010 that TSA members be allowed to vote, an election was approved in 2011for the
exclusive representation of TSA’s nonsupervisory workers. According to the Federal Labor
Relations Authority, approval of this election would ensure that the organization participates
in setting up the leadership that is most appropriate to work with (Workforce Management
Innovations in Transportation Agencies, 2010).
The American Federation that lead Government Employees (AFGE) was allowed as
the TSA’s monopoly union. In 2012, AFGE and TSA entered into a collective bargaining

agreement, in 2012, covering 44,000 employees. With a collective bargaining in place, the
monopoly union control over a workplace would tend to decrease efficiency at work place. It
will also protect workers whose work is poor and determine to establish larger staffing levels
compared to that which is required. As a result, the workers may resist any attempts to
introduce laour-saving technologies. The resistance is brought as a result of creating a rule-
laden workforce. For instance, TSA managers have the mandate to negotiate with
representatives of the union about the reassignment of employees. This negotiation is
problematic a dynamic industry such as aviation. The frequent changes in route volumes and
air carrier schedules have been associated with the unstable demand for air port screeners
(NETView Communications, 2014).
Financial Issues
Privatization will save much money that are unnecessarily paid in form of wages and
benefits. In a study carried out to compare wages of federal employees to those of the private
sector, it was found out that the federal pay system gives the average federal employee 22
percent hourly cash earnings above that is given to the average private worker. Additionally,
federal employees earn about 30 to 40 percent in wages and benefits that are more in total
compensation than the private-sector workers in the same category. The recommendations
made by Heritage, the government, should hire more contractors, and this supports the idea of
privation. The choice to use contractors would be more cost-effective as the government
incurs excessive costs in outsourcing. The costs are incurred by the groundkeeper services
kept in-house. The average compensation given to the federal groundskeeper employees
$13,187 per year greater than the billing the contactors will be requiring from the
In another research carried out by POGO discovered that the government can save
approximately 20 percent by outsourcing groundskeeper services. The government estimates

closely matches with the difference between the two sectors. The average annual billing rates
for the contractor are 1.6 times the compensation for the private sector groundskeepers.
According to the research of POGO, the government pays federal employees who operate as
medical record technicians 0.01 times more average annual billing rates than that of the
contractor, that is $58,641 and $57,782, respectively (Chassy & Amey, 2011).Political Issues
Privatization of TSA is surrounded by multiple political issues. The individual
airports do not have the permission to “fire” the screener because that is within the
jurisdiction of the federal government. Although the SPP program has began making some
changes on this policy, there is need for much larger reforms. The transfer of this
responsibility from TSA to the airports, according to a government official, Poole, would
give the airports an opportunity to establish a more effective and integrated security system
that will provide better services than the traditional TSA. At the moment, the airport has
already taken over the responsibility of controlling the general airport security. This form of
integration would create a platform for cross-training of the staff among the security
functions at airports which would, for instance, improve skills and enhance morale. Some
politicians support shrinking the role of TSA in aviation security and expanding of private
screening to all commercial airports to include only setting security standards, analyzing
intelligence and auditing screening operations (Transportation Security Information Sharing,
Mica is one of the representatives who are pushing for the privatization of the airport
screening. He believes that TSA workforce needs to be reduced to approximately 5,000
workers. Rand Paul (Senator) has proposed that TSA be fully privatized, and his proposal has
been supported by Cato Institute scholar Jim Harper. The United States will not be the first
country to privatize its airports since many other countries have passed policies to enable
privatization of their airport screening. For instance, more than 80 percent of commercial

airports in Europe use private screening companies. The countries are such as Germany,
France, Spain and Britain. A big hindrance to privatization is the politicians who are
opposing it for their own interests. Top managers could not stay long in the TSA since they
are political appointees who easily dismiss an agency’s previous activities to introduce new
ones which they can tag their names on. Middle managers are safer since they are not easily
entangled with political dogfights (Denning, 2012).
Human resource Issues
According to POGO’s research on human resources management, it finding showed
that the government may be paying an average annual rate of $228,488 to contractors that is
more than twice the compensation of the government to the federal employees ($111,711).
Also, the average annual billing rates for the contractors are 2.27 times the compensation of
the private sector companies to their employees. With regards to the job classifications
analyzed by POGO, the research showed that they are usually considered as “commercial” in
nature. Jobs that are commercial in nature are those that are accessible in the phone book. The
HR function of the federal government plays an important role outsourcing activities and
functions that are important to the US security.. For example, Director of National,
Intelligence has released a report indicating that the government has recently outsourced 28
percent of its current intelligence workforce. It is therefore paying contractors 1.66 times the
cost of the work that can be done by the federal employees, that is an annual payment of
$207,000 for a contractor employee against $125,000 for a federal employee).
Additionally, an analysis of the costs of regarding the outsourced language specialists,
it was discovered that the government may be paying them an average billing rates of
$211,203 per year. This payment is more than 1.9 times $110,014 per year the government
compensates a federal employee. The language specialists are usually used to perform
intelligence functions. Again, contractors may be billing the federal government almost 3.5

times $61,010 per year, on average, what it may be compensating the private sector language
specialists on the open market (Chassy & Amey, 2011).
Stakeholders in the TSA
The greatest stakeholder in TSA is the federal government. TSA consists of the
aviation system with the government as the major stakeholder. The government sets
standards and policies that govern the entire aviation system. It plays the role of the
regulatory oversight of all the screening operations. For instance, the government sets
principles on arms regulations, as a basic good-government principle.
There are three expert private firms that carry out screening at TSA airports namely
G4S, Securitas and Garda and each of firms these are responsible for a group of specific
Canadian Airports. There are also Aviation Security firms which form part of the
stakeholders that offers a great deal of expertise. They have accumulated this expertise for
decades. The firms provide best practice service which is exemplified their professional
response to the clients’ demands
The firms apply the best practices that are provided across different airports.
Effect of the Privatization on the Stakeholders
The Transportation Security Administration’s (TSA) through the Screening
Partnership program (SPP) provides cost reviews of federal government and the contractor
employees. TSA created SPP in the process of introducing privatization with an aim of
allowing commercial airports an opportunity to hire contractor screeners in preference to the
federal employees. According to the Aviation Transportation Security Act of 2001 (ATSA) P.
L. 107-71, it is the responsibility of SPP to allow the airports to go through the process
themselves from the screening services provided by the federal government. As a stakeholder
in TSA, airports are therefore allowed by the law to choose whether to remain working with
the federal government or to use private screening services. A report released by GAO on

TSA contractor in 2009, showed that passenger screening at the airports where the staff
consists of contractors has historically cost the federal government or the tax payer’ money
from 9 to 17 percent more than the airports with federal employees. The contractor screeners’
performance was at a level equivalent to or greater compared to that of the staff from the
federal government. The recommendations made by GAO based on the highlighted
limitations focused on the methodology applied by TSA that will form part of the foundation
of privation policy (Program Application, 2014).
The most affected stakeholder in TSA is the workforce in case of downsizing in the
course of privatization. In order to reduce expenditure through paying salaries and wages,
private companies usually reduce the size. Both private and commercial airlines will have to
adjust all their levies upon a full implementation of the policy to privatize TSA (Rebuilding
TSA into TSA into Smarter, Learner Organization, 2012).
Benefits and Drawbacks to Privatization
The SPOT program helps to illustrate the problems associated with the top-down
federal system of controlling the aviation security. The TSA “deployed SPOT across the
nation without prior determination of whether this action had a scientifically valid basis. The
TSA did not perform a cost-benefit SPOT’s cost analysis before deploying it. Although this is
the tradition of the government, rolling out an expensive plan that will affect the whole
country, it is one way taxpayers’ money is misused. Cost-benefit analysis is paramount in any
organization before implementing any plan. This is because of the reason that the government
does not care whether the ultimate benefits will materialize or not. Despite a huge investment
of more than $1 billion in SPOT in just the previous decade, the GAO discovered 23
occasions where known terrorists from neighbouring countries managed to breeze through
airports where SPOT was operated by TSA. None of the terrorists have ever been caught of
the last one decade. In this case consider the escape of Faisal Shahzad from the JFK in New

York, an airport with an active. His name was in the “no fly”. House Republicans considered
SPOT as one of TSA’s greatest failures, bearing a great cost but leading to meager results.
Although it is has been used to apprehended 1, 083 criminals, over 2 billion passes through
the airport gates applying SPOT. According to TSA employees, privatization is likely to
jeopardize passenger safety.
Decision Making Process
The privatization process of TSA began when Rep. John Mica tabled a motion in the
Congress in 2010 requiring the urgency to be privatized. Orlando Sanford International
Airport announced in 2010 that it was necessary to opt out using TSA for the Screening
Partnership Program. The Aviation and Transportation Security Act, Public Law 107-71,
under ยง 44920 allowed the creation of a private screening program through which the SPP
was formed. The House Committee dealing with Transportation and Infrastructure was then
given the mandate of analyzing the reasons and impact of privatization. The committee then
compiles a report with recommendations on how to go about the privatization to the congress.
Upon receiving the report, the Congress holds a debate on the issue and votes whether to
allow the TSA to be privatized or not.
In the case of Orlando International Airport, it was alleged that there was a different
reason for pushing for the privatization of the airport rather than enhancing security.
Although several airports had done their exploration and saw the necessity of opting out
using TSA, politics has it that he is drumming up support for his daughter D’anne Mica.
D’Anne was the head of the Airport’s Strategic Communications at the time the Sanford
International Airport expressed interest in using SPP. Being the Communications Contractor,
the father, and the daughter had a reason to push for the privatization of the agency.
However, the decision-making process in transportation planning and ensuring security is

designed in a manner that involves all users of the organization. The users include the
business community, environmental organizations, freight operators, and the general public.
Social or Ethical Issues Affecting the Public,
The use of a costly investment technology on TSA has drawn a lot of controversies
due to the application of Advanced Imaging Technology (AIT) machines. The machines that
were deployed in 2008 are “full-body scanners”. It is unethical to use these machines since
they are able to see beneath passengers’ clothing resulting to major privacy concerns. They
also bear an antisocial effect since it may lead to erosion of values of the airport workers
using these machines since they are likely to become immoral with time. The machines also
cause extra airport congestion and carry high costs. The questionable detection gains of the
AIT machines make them a dubious investment. The screening process involves ransacking
travelers’ personal items which are sometimes lost. Additionally, it is common for travelers to
miss their flights as a result of the screening procedures.
The conflict of interest is another source of ethical issues. Employees breach Ethical
Conduct Standards. Examples of breaching ethical standards include preferential treatment
and endorsement of private entities, misuse of government resources such as funds and
information (Potts, 1999). Abuse of civil liberties had frequently been associated with the
nationalization of TSA.
Applicable Theory and Trends,
Privatization of government agencies has become a trend in many countries. The U.S
has become a laggard privatizing its efforts. The country Airports such as Orlando
International Airport is one of those that have already established its links with SPP. The
terrorist attack of the U.S.A in 2001 had initially led to a unanimous vote in the congress to
federalize the security at the airports. According to Representative John Mica, one of the
architects of the 2001 TSA legislation, it was a mistake nationalizing airport screening. His

scathing attack on TSA as a bloated bureaucracy and that the agency had set a track record of
failure especially in catching terrorists is very influential. The Federal Aviation
Administration (FAA) was in charge of the civil aviation. Part of its duties included
supervising passenger and baggage screening done on behalf of the airlines by private
companies. The primary reason that seems to cause the push for privatization is to enhance
Currently, almost all stakeholders are pushing for the abolition of TSA. Emphasis is
laid on the elimination of activities that do not show substantial benefits not only to the
government but also to the travelers. For instance, passenger and baggage screening should
be moved to the airports where they will be subject for private bidding. They form two-thirds
of the annual budget of TSA. It is suggested that the remaining fraction of TSA such as
intelligence and analytical activities be moved to other federal agencies E(dward, 2013).
Diversity or Ethics Issues
Promotion of ethics such as by respectful and lawful treatment of both employees and
travellers, observing the federal laws, privacy and civil rights protecting regulations,
affording redress and prohibition of discrimination are to a large extent promoting diversity.
Being among the workforce is everyone’s obligation to be dedicated in upholding the code of
ethics of the organization and being professional. In so doing it is easy to promote diversity,
although in unity (Edwards, 2013)
Fiscal Considerations
A comparative cost analysis released by the House Committee on Transportation and
Infrastructure in June 2011 showed that the efficiency of SPP screeners is more efficient by
65 percent than their TSA federal counterparts. The analysis also indicated that the taxpayers
are likely to save $1 billion spread within five years if the top 35 airports in the nation
performed efficiently, such as the San Francisco International airport which is already under

the SPP program. It is hard task to compare the costs incurred by when using federal
employees and private employees. This is because contradictory results are produced as a
result of using disparate methodologies. To facilitate a smooth process of privatization, the
government needs to create a system that can give exact cost of executing commercial
services. Otherwise, it will be hard for the pubic to determine the actual savings realized in a
fiscal year (Rebuilding TSA into TSA into Smarter, Learner Organization, 2012).



Edwards, C. (2013, November 13). Privatizing the Transport Security Adminstration.

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