Governmental Agencies provide a host of services including, but not limited to Certifications and Inspections. Certifying Fish, Meat, Airplanes, Repair Station Applicants, Aircraft Parts, Health and Sanitary Inspections, Air Traffic Control, and Hospitals comprise just a short list of those services. Most commonly, the continuance of business relies on those certifications, services, or inspections. This brings us to the current ‘sequestration’ environment. In the media we see rising alacrity among business leaders and trade associations regarding the apparent slowdown of those governmental services; pick your industry, and you’ll likely find such evidence. Frankly, during a time when governments have a clear mandate to do whatever it takes to stimulate business and therefor their economies, it seems inconceivable to engage in legislation that would manifest predictable, collateral damage to the efficient conduct of business, but here we are.

Although the term ‘sequestration’ is associated with the US, there can be no mistaking the fact that ‘sequestration’ is clearly equated with the ‘austerity’ measures widely reported now by so many nations, so the phenomena reported herein is really a global occurrence. There can be no question that as the slowdown of governmental services becomes entrenched, economies are affected, and the frustration of business leaders mounts, there will be a call to privatize the performance of those services.

Note that the title of this blog infers the acceleration, not the onset of such privatization. For years there has been what I’ll characterize as ‘privatization creep’ of this trend, and in case you think there are any untouchable fields, consider a sampling of the following existing areas:

• Air Traffic Control: In many parts of the world this is a private enterprise. A very good example is NAV CANADA. This from their web site: “NAV CANADA, the country's civil air navigation services provider, is a private sector, non-share capital corporation financed through publicly-traded debt. With operations coast to coast, NAV CANADA provides air traffic control, flight information, weather briefings, aeronautical information services, airport advisory services and electronic aids to navigation.”
• Air to Air Refueling of Military Aircraft: Look at this web site: http://www.omegaairrefueling.com/vms/
• Fighter Aircraft Aggressor\Adversary Squadrons: Yes, there are some private firms who are contracted to fly fighter aircraft profiles against our own fighters for training purposes, mimicking flight maneuvers, aircraft, and tactics of anticipated threat nations.
• Space operations: This used to be the exclusive domain of government and military operations. Launches, satellite operations, and now even resupply of space stations are being carried out by privately contracted firms.

If, in the past, the trend was merely a creep, watch it accelerate. So, who will champion the charge to privatization of certain governmental services? I predict the following:

• Trade Associations allied with the industry affected.
• Politicians whose constituents and contributors are affected businesses.
• Entrepreneurs who see an opportunity to fill the gap.
• Prominent business leaders whom are spokesman for their respective industries.

The natural evolution of the privatization process involves the likely outcome of the following:

• The government agencies whose services have been outsourced (yes, lets introduce the maligned “O” word in the discussion) now assume oversight and enforcement roles; a task they are already likely to be comfortable with.
• While we’re at it, let’s introduce another dreaded but critically important word into the mix, Fees. You will pay for those services, but in return expect timely performance, and a true customer-business relationship.
• Competition among service providers will produce new efficiencies and innovations which government providers were not optimally motivated to generate.
• Legislators may require governmental agencies to increase activities whereby certain activities are ‘delegated’ to private designated persons, AKA ‘designees’, or similar Organizations. The FAA’s existing procedures for Designees such as Designated Engineering Representatives (DER’s), Designated Airworthiness Representatives (DAR's), and Organization Designation Authorization (ODA), whom are already empowered to act on behalf of the FAA, may become the model for such delegations by other agencies.

In many countries, civilian government workers are represented by unions. In the current sequestration/austerity environment, there is the appearance in the media that those unions or workers may engage in slowdowns in an effort to exacerbate the effects of the sequestration/austerity measures, and to gain public support to remedy those measures. If so, those groups should be careful that the purported slowdowns may actually result in hastening the call to privatize.

For our ASA members, there is a story worth reciting. In the early 1990’s, when the ‘bogus parts’ issue was getting huge attention in the halls of Congress, the media, and FAA, one of the gaps identified in the processing of aircraft parts was that middlemen distributors (including Stockists and brokers) were unregulated, unlike manufacturers and operators which were, and continue to be highly regulated. It was thought that if unapproved parts were going to be infiltrated into the aviation system, this unregulated link was the likely place. I was working at a major airline at the time, and distinctly recall the emerging arguments and positions taken by various parties regarding how to close the unregulated distributor gap. One of those positions was a strong call to have the distributors regulated, much like manufacturers, repair stations, and operators. This would force them to implement aviation-style quality systems, and to also have a degree of oversight by the regulators. At the time it was estimated that there were about 2000 distributors globally who fit the bill of unregulated aircraft parts distributors. It did not take long for representatives of the regulator to share that unless there was a corresponding huge increase in their budget necessary to regulate and surveil those many more entities; a highly unlikely outcome, the regulated option was not viable. Then a curious thing happened. We all got a draft copy of the FAA’s AC 00-56, “Voluntary Distributor Accreditation Program”. At the airline, we had received our draft copy via the retained services of the Air Transport Association, and I was tasked with writing our airline’s position on the draft. It did not take long before we were sending out notices to our aftermarket suppliers expecting them to become accredited or face suspension from our approved suppliers list.

We often hear from government agency administrators that problems are most successfully addressed only with the cooperation of industry. I continue to herald that the FAA’s AC 00-56 was historic in establishing a government-industry cooperation model which effectively addressed a huge problem back then. Perhaps it’s time to apply such problem solving creativity to the current sequestration/austerity environment.

Make it happen,

Roy RESTO

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