COLUMN ONE : Angling for a Piece of the Action : Big-name firms and small entrepreneurs are seeing green in Orange County’s red ink. Waving banner of privatization, they promise to do government’s job for less, but obstacles are plentiful.

They roam the corridors of Orange County’s bankrupt government, delivering a message that goes something like this:

Give us your tired, your poor, your huddled masses. Toss in your inmates and other law offenders. We’ll take the sick and elderly, too. You’ll save money. Just give us our cut.

Here is Julie Sgarzi, speaking on behalf of a company best known for making planes and weapons. She wants Lockheed Martin Corp. to take over collection of child support, now handled by the district attorney’s office.

Daniel Jameson just flew in from Chicago. He would like his firm, a national food service chain, to feed the county’s bulging inmate population.

Three local retirees propose to be the county’s cops at sea, operating the harbor patrol. One used to be an FBI agent, another a data processor and the third Newport Beach’s director of marine safety. More accustomed to golf outings and trips to the Balboa Bay Yacht Club, the group believes it can save the county nearly $2 million a year.

James Hirsen aspires to be the county’s landlord. Representing a Santa Ana real estate consortium, he says he would plunk down $500 million to buy government-owned buildings, then lease them back.

Seeing green in Orange County’s river of red ink, home-grown entrepreneurs and some of the nation’s largest enterprises aim to provide home care for the elderly, defend impoverished defendants in court, and care for those locked up in jail. Some seek to buy county departments whole, including those that issue building permits and oversee redevelopment. Three firms are interested in buying John Wayne Airport.

All say they can provide the county with a quick infusion of cash and save dollars in the long run by running jobs more efficiently without costly overhead.

Orange County is ground zero of a national privatization craze.

Government agencies have toyed for years with the idea of selling off assets and farming out services to private business. The topic is sizzling in Washington. But Orange County--desperate for cash after last year’s collapse of its investment fund, distrustful of government and deferential toward business--may well turn out to be the country’s most willing guinea pig.

“There have been a number of attempts to privatize throughout the country, but no area has had quite the strong incentive for survival as Orange County has right now,” said Ron Utt, a visiting fellow for the conservative Heritage Foundation in Washington. “The savings that Orange County needs to look at are staggering.”

Having slashed its operating budget by nearly half, adopted plans to lay off 11% of its work force and reduced the salaries of its highest-paid employees--without making much of a dent in a cash shortfall that could force a $1-billion debt default this summer--the county is considering every offer, no matter how impractical or far-fetched it seems.

“Orange County has a great opportunity to be a lighthouse for the rest of the country,” said UCLA economics professor Werner Z. Hirsch. “The county . . . is under enormous pressure to change the way things are done. I would be very surprised if something innovative doesn’t come out of all this.”

And lucrative, too.

In recent weeks, the fifth floor of the Hall of Administration, which houses the offices of the five county supervisors, has been a gathering spot for executives pitching the virtues of everything from tracking the county’s low-risk offenders with electronic bracelets to helping collect the county’s outstanding debt.

“They’re lined up outside my door 10-deep and I just can’t meet with them all,” said Supervisor William G. Steiner one recent morning. “They all want to make a buck. But if it’s to the county’s advantage, what’s wrong with that?”

That is a question being asked these days at every level of government.

President Clinton’s 1996 budget calls for selling government hydroelectric projects, oil and gas fields and several low- and medium-security federal prisons. At the same time, Vice President Al Gore’s task force to “reinvent government” is looking at other areas, including whether to put Navy ship repair and government printing into private hands.

In December, as part of his middle-class tax-cut plan, Clinton unveiled a proposal to slash $20 billion in federal spending; it included private corporations taking over the nation’s air traffic control system.

The Republican-dominated Congress held hearings in March to study such potential privatization targets as tax collection for the Internal Revenue Service and the operation of Amtrak, which costs $1 billion of federal money to run each year.

There is even talk of privatizing certain functions of the Central Intelligence Agency.

Some of the ideas are throwbacks to the Ronald Reagan Administration, which formed a commission to study privatization as a means of deficit reduction. In its six-month study, the panel recommended that private interests take over air traffic control operations, Amtrak and mail delivery. Although the study was widely publicized, little came of it.

At the local level, the drive to privatize has taken effect with greater speed.

Mayor Stephen Goldsmith opened up more than 50 of Indianapolis’ services to the private sector, including trash collection and waste-water treatment. The city estimates it saves $28 million a year.

Chicago has privatized 35 services, including sewer maintenance, health care services and water billings. Philadelphia, faced with a $200-million operating deficit, has turned over 19 tasks, from street maintenance to security at the Philadelphia Museum of Art.

According to a recent study by the University of Pittsburgh’s Graduate School of Public and International Affairs, about 60% of government services throughout the country are handled by government workers, with about 30% done by private contract and 10% by franchises or volunteers.

“Privatization is a good thing under certain circumstances,” said Rowan Miranda, the assistant professor who conducted the study and is now on leave to work as Pittsburgh’s budget director. “You want to do it for things like trash collection, which is the easiest kind of service to measure. You don’t want to do it for health and human services, where there’s a financial incentive to shirk responsibilities with patients.”

The trend toward privatization has been rising. A survey by the Mercer Group, an Atlanta-based management consulting firm, found that municipalities have been turning over government work more often in recent years. Between 1987 and 1995, the number of local governments that have privatized jail food service, bill collection, ambulance, health and medical services and street maintenance has doubled, the survey found.

But the best chance of radical, rather than gradual, steps toward privatization are likely to come in Washington, D.C., which sits on the edge of bankruptcy, or Orange County, which is bankrupt, said William D. Eggers, director of privatization for the Reason Foundation, a libertarian public policy think tank in Los Angeles.

Congress is getting set to exert financial controls over the District of Columbia, which is $722 million in the red, and is weighing the possibility of making the city’s public schools private.

“Every type of restructuring has come as a result of fiscal crisis or fiscal stress,” Eggers said. “You have to reach your financial limit and have exhausted all your opportunities before you can consider some of these options.”

Orange County has reached that limit. Political leaders can scarcely see the bottom of the black hole left by the December failure of the county’s investment pool. With $1.7 billion in losses spread among cities, schools, special government districts and the county itself, privatization and asset sales are viewed by officials as critical ingredients in an odd stew of possible solutions.

Even before county leaders formed a task force to look at ways to privatize, the clamor for laying claim to pieces of county government was in full force.

At a public forum on financial recovery in January, just five weeks after the county filed for bankruptcy protection, people were lining up to offer their services--all for a price.

Private attorneys said they would like more opportunities to defend the indigent. Two firms talked about collecting the county’s overdue bills. Others spoke about providing paramedic service, running the airport and managing the county’s home-care program.

In February, the Reason Foundation weighed in with its analysis, suggesting that county government could recoup as much as $1.5 billion of its losses by selling its jails, landfills, office buildings, John Wayne Airport and the right to construct another airport at El Toro Marine Corps Air Station.

In March, County Chief Executive Officer William J. Popejoy went public with the first set of proposals that included seeking bids for payroll services, printing, and contracting out management of the county’s beleaguered investment portfolio.

While warning that privatization is not the sole answer to the county’s problems, Popejoy promised to dive more deeply into that area should two lawmakers, Assemblymen Curt Pringle (R-Garden Grove) and Mickey Conroy (R-Orange), get legislative bills approved that would allow greater leeway by letting the county contract with private companies.

Popejoy has also ordered his department managers to come up with plans for privatizing services. But he has already found that although many ideas are innovative, they face legal obstacles that cannot be overcome under current law.

“Privatization is sort of a buzzword that sounds great, like downsizing and ‘right-sizing’ and synergism, all of those things that when people use them you better watch out,” Popejoy said. “Because it means that they are probably carried away with the word, and not what it will do.”

So strong is the drive to privatize that some companies are willing to pay the county for a piece of the action, with promises of a payback later.

Four businesses that want to monitor low-risk offenders through electronic surveillance are bidding to pay the county Probation Department $16,000 a month for the job. The companies would charge the accused for the monitoring costs, such as the use of electronic bracelets.

“I’d be willing to lose some money for a couple of months just to get onto an approved list of providers because the electronic monitoring market in Orange County has a large potential,” said Daniel J. Verwiel, who owns a home detention service in Anaheim.

The Probation Department decided that it could no longer afford to run the program and is expected to turn it over to one or more firms this spring.

The last time the county faced financial troubles, in 1991, officials found that it was not so easy to divvy up its tasks among private parties. After four months, a task force came up with 56 services to privatize, including most of the harbor patrol’s law enforcement functions, airport security and landfill operations.

But only 12 ideas were implemented, and four predate the task force study. The county determined it was saving only about $450,000 a year and the projects it decided to turn over were fairly minor: landscaping, purchasing of medical and lab supplies in the Health Care Agency and rodent control at regional parks.

Many of the proposals ran aground when then-state Sen. Marian Bergeson could not get legislation approved that would have allowed widespread contracting.

Bergeson, now an Orange County supervisor, wants county voters to approve a charter government, giving the county more freedom to engage more private contractors starting in March. She is certain that the county has no other choice now but to streamline government.

“This is a totally different situation,” she said. “When things are considered normal, there’s a comfort level with the status quo. But we are extremely motivated to do things differently.”

Despite the deluge of ideas, many find the process of getting their proposals implemented--or even considered--somewhat strange.

Most of the privatization proposals are referred for review to a 12-member panel, which is staffed by county employees whose departments would likely suffer if the proposals were adopted. From there, they are forwarded to department managers, who also have no incentive to see them implemented. Popejoy then makes a presentation to the Board of Supervisors for final approval.

“As long as they turn to the kings of their bureaucratic kingdoms, they’ll have a problem,” said James Hirsen, who hopes to buy county buildings and have Orange County government as his tenant.

Hirsen, vice president and general counsel of a Santa Ana real estate company, was one of the fortunate few who got in to see the five supervisors and Popejoy.

Hirsen used Newport Beach developer Buck Johns, a board member of the conservative and politically powerful Lincoln Club, as his “consultant” to open doors.

“We have access to $500 million and we’re trying to find a way, creatively, to get that money into the hands of the county utilizing a real estate transaction that can provide funds for the county, and be profitable for us,” Hirsen said.

After two meetings with Popejoy, Hirsen is a bit miffed that the county is not moving faster to accept his offer.

“I have to say that in the private sector, if I had $500 million and I wanted to get it into someone’s hands, I wouldn’t have any problem having people getting in touch with me,” he said.

Welcome or not, the ideas keep pouring in. Even ordinary citizens have caught the privatization bug, although some of their ideas remain a mystery--often intentionally so.

Mark Weisbaum of Canoga Park recently wrote to developer George L. Argyros, a community and business leader, offering 60 “legitimate and legal” ideas that would forestall the need for any tax increases, layoffs or the sale of county assets.

If his ideas were accepted, Weisbaum wrote, they would restore the county’s credibility with Sacramento and Wall Street, ward off lawsuits and make Argyros a “financial hero.”

“Here’s the deal,” he wrote. “I disclose to you all my ideas. We have an agreement as to fair and reasonable financial compensation to me. You take credit as the financial savior of Orange County. I get a few bucks. Win-win situation. Let me know.”

So far, no one has taken Weisbaum up on his offer.

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