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This Week’s Outsourcing Scan 04-21-14

Update: Upcoming Outsourcing Issues. April 21, 2014

1) National: Sallie Mae, which was privatized in 2004, is facing a probe for allegedly ripping off active duty soldiers who have taken out student loans. “‘The contract is black and white—if you violate federal law, you lose your contract,’ said Chris Hicks, an organizer who leads the Debt-Free Future campaign for Jobs With Justice, a Washington-based nonprofit that is among organizations that have called on Education Secretary Arne Duncan to suspend the department’s contract with Sallie Mae.” [Jobs with Justice Fact Sheet on Sallie Mae]

2) National: In a speech to the main trade association of contractors, the Obama administration lays out its ideas for better managing the government’s relations with contractors. “Office of Management and Budget Deputy Director Beth Cobert paid a visit on Tuesday to the Professional Services Council, a trade group for U.S. government contractors, to discuss the president’s management agenda—and how it could affect government contractors—for the next two years.” One shift involves “continuous evaluation” of employees.

3) National: National Institute for Occupational Safety and Health calls USDA’s assertion that increasing poultry inspection line speeds would not affect worker safety “misleading.” A new inspection program “was first proposed two years ago, but it has not been finalized due in part to opposition from members of Congress, unions, worker and animal rights groups. The proposal has been controversial because about 40 percent of government inspectors would be replaced with plant employees, leading some groups to say it would largely privatize poultry inspections.”

4) National: Amy Dean looks at successful strategies by unions working with families to fight school privatization. “Teachers’ unions are one of the few institutional forces with the power to fight back against austerity and privatization, and to instead insist that our understanding of education must extend well beyond the walls of the classroom. Scapegoating teachers will not get us to an educational model that takes the challenges of the system as a whole into account.”

5) National: Robert F. Kennedy Jr. and Mike Papantonio interview Aaron Cantu on the private prison industry on their Ring of Fire show.

6) National: Owners of local hotels are concerned that the Army’s privatization of lodging outside its bases could harm their businesses, a House Appropriations Committee report finds: “The Committee is very concerned that the Army has not been as

forthcoming when communicating with local communities regarding economic and related impacts of such facilities.” [Report]

7) National: A new GAO report analyzes class justifications for the Defense Department’s sole-source contracts. “About 90 percent of the class justifications in GAO’s sample cited only one responsible source to meet the requirements, generally because the contractor’s ownership of proprietary technical data or expertise prevented the ability to compete the contract.”

8) California: Debate heats up on Measure O, a June referendum on Monterey’s water system. “After 47 years of profit, 17 following a cease and desist order with no additional water for it’s part produced, we are about to reward California American Water to own absolute control of our resource with the $400 million desalination project. An extension of the cease and desist order will be required under any circumstance.”

9) Colorado: Denver City Council votes to replace the I-70 viaduct with a new roadway. The project goes before the state transportation commission in June. No procurement has yet been specified. [Sub required]

10) District of Columbia/Virginia: HOT lane tolls topped $11.55 on the Capital Beltway on April 3, according to Transurban. “While carpoolers can use the lanes for free as long as they have at least three people aboard and use the E-ZPass Flex transponder, about 91 percent of the trips taken during the past quarter were by toll payers.”

11) Florida: Hillsborough schools board chair Carol Kurdell wants to outsource the jobs of bus drivers to a for -profit company. “‘I don’t support it,’ board member April Griffin told a crowd of school bus drivers at an employee town hall meeting Monday. ‘We need to stay focused on what we need to do to fix transportation.’ Member Cindy Stuart said the board needs to first iron out other issues with transportation, such as replacing its aging bus fleet, before thinking about privatizing. ‘I do not want the privatization conversation to hold up the transportation conversation,’ Stuart said. ‘I’m not sure where this came from, but it’s now out in the community.’”

12) Georgia: Barrow County may attempt to create “public private partnerships” for the delivery of some county services. “If the BOC wants to move forward with getting proposals for public-private partnerships, [county manager] Dowling plans to ask for $20,000 in additional consulting fees for Oliver Porter, the consultant who conducted the initial study of the concept for Barrow County.” Dowling’s memo covered “engineering, buildings & grounds, roads & bridges, fleet management, water and wastewater, storm water, animal control, finance, information technology and property tax assessments.” The commission meets tomorrow.

13) Georgia: The public university system is moving ahead with plans to privatize student housing, and has issued a Request for Qualified Concessionaires (RFQC) . “Participating schools include Georgia State University, Georgia Regents University, the University of North Georgia, Columbus State University, Dalton State College, East Georgia State College, the College of Coastal Georgia, Armstrong State University and Abraham Baldwin Agricultural College.” Responses are due June 10.

14) Louisiana: Ride New Orleans, a public interest group, complains about bus service and rider facilities at the city’s downtown hub. Veolia Transportation, the regional transit authority’s consultant, says it can find solutions by working with the group. [RNO report]

15) Maryland: Chevy Chase hires Chambers, Conlon & Hartwell to lobby for the townin its continuing battle against the Purple Line light rail “public private partnership.”

16) Massachusetts: SEIU Local 888 reports that Malden custodians are protesting plans to outsource their jobs to a private, for profit company. “Citing a ‘task force’ report from two years ago that claimed the custodians were doing a poor job of keeping the schools clean, the mayor and School Superintendent David DeRuosi have proposed out-sourcing the custodian jobs to a private contractor. ‘That report was flawed and filled with inconsistencies in so many ways,’ said Kyle Crosby, a lifelong Malden resident and 17-year school custodian. ‘But even so, the school department still hasn’t followed the report’s recommendations to better manage the work and provide adequate staffing to get the job done properly.’”

17) Michigan/National: Associated General Contractors of Michigan and the National Council for Public Private Partnerships will be holding a one day session on “Building Michigan’s Municipal Infrastructure Through P3s“ on June 12, 2014 in Southfield. Similar events are planned for Pennsylvania, Florida and Colorado.

18) Michigan: U.S. bankruptcy judge orders mediation between Detroit and three neighboring counties over the future of its water and sewerage department. A breakdown in the talks, plus consideration of possible privatization, has clouded the picture for the DWSD and led to concern by bondholders. “After talks with the counties stalled last month, Detroit issued a request for proposals from private companies interested in taking over the system. Parties had until April 7 to respond.” [The Bond Buyer, April 21, 2014; sub required]. Despite the recent agreement between one of the Detroit’s pension boards and the city, water and sewer bondholders have yet to agree with the city on a debt restructuring.

19) New Jersey: Central Regional Board of Education (Berkeley) looks to outsource bus drivers’ jobs. “The news has drawn an angry response from the Central Regional Bus Drivers Association. The union has a petition circulating online here asking that the district stay with in-district drivers. ‘We the Undersigned urge the Central Regional BOE to keep the Transportation Employees, reversing its decision to bid for out-of district transportation to bargain with the Bus Drivers in good faith,’ the petition reads.”

20) New Jersey: 77 clergy members sign a statement to Cami Anderson, a Gov. Christie appointee charged with overseeing the “One Newark” plan that “will close many public schools and turn them over to charter corporations.” The statement calls for a moratorium on the plan. “The One Newark Public School Plan, as currently proposed, is already producing irreversible changes and fomenting widespread outrage. It has caused unnecessary instability in the Newark public school system, as well as the lives of thousands of its families.”

21) New Jersey: Tim Eustace, a Democratic lawmaker, looks at the numbers in Gov. Christie’s plan to privatize toll collectors’ jobs. “But the current cost of NJTA toll collection is $14,554,680, plus payroll taxes, for a total of $16,592,335. That means it would cost $495,853 more to collect tolls under a likely similar contract to that of the one currently between the SJTA and Faneuil. And that doesn’t even include $466,045 in management and administrative fees, for an operation that isn’t even one-tenth the size of the Turnpike.”

22) North Carolina: DOT selects Cintra to build high occupancy toll lanes on I-77, the DOT’s first “public private partnership.” Louis Berger will lead the design work on the $677 million project. The formal signing is expected in June. The project has attracted intense opposition from groups opposed to paying to drive on Interstates they consider freeways. “Two local anti-toll groups representing different communities along I-77 say they hope to influence the project. They don’t identify specific individuals on their websites, and describe their founders as ‘military veterans, nurses, architects, parents, grandparents, political volunteers, IT consultants, business owners, teachers and corporate executives.’” TollFreeNC.org, which says the project is “absolutely not a done deal for a number of reasons,” says “our goal is to stop the toll plans and widen our highways with regular lanes, not toll lanes.” Another group opposed to the “public private partnership,” Widen I-77, “also supports building additional lanes on the route, but not tolling them. The group has asked NCDOT ‘to postpone awarding the private company contract until all of the proposed solutions have been thoroughly vetted.’” [Sub required]

23) Ohio: The state has hit Aramark with $142,100 in damages for failing to meet its contractual obligations in prison food services. “The state’s Friday letter to Aramark obtained by The Associated Press also says Aramark has failed to staff 414 positions required by its contract. The letter by DRC’s associate legal counsel Stephanie Warner says Aramark’s actions required prison staff to perform food service tasks at several meals.” The Ohio Civil Service Employees Association said “prison employees have logged ‘thousands of incidents,’ including poor food quality and small portions since Aramark took over prison kitchens. The union is taking the state to arbitration beginning next week over what it contends was the improper privatization of food service.”

24) Pennsylvania: Federal prosecutors are looking into the process surrounding Wilkes-Barres’s failed effort to privatize its lots and parking meters. “Fox Rothschild’s board of directors included former U.S. Congressman Patrick Murphy. He’s the brother of J.J. Murphy who at the time just left his job as Wilkes-Barre’s city administrator. For four months of consulting work, records show J.J. Murphy billed the parking authority nearly $40,000. ‘It’s outrageous, outrageous.  And board members are outraged, and this was a complete waste of almost a quarter of a million dollars,’ said Bob Kadluboski of Wilkes-Barre.”

25) Pennsylvania: Carlisle Area School District board votes to outsource district food service operations to Chartwells, a division of the Compass Group. Board member Gerald Eby said that although the employee benefit package would be cut, workers could apply for unemployment benefits during the summer and over the holidays.

26) Pennsylvania: The majority union-owned Amalgamated Bank completes a $22 million loan agreement with Capital Region Water, formerly known as the Harrisburg Authority. Amalgamated has stepped up its role in public finance, has also assisted financially troubled Scranton and Allen Park, Michigan. Harrisburg exited receivership last month after a state judge approved a plan involving “the sale of the incinerator to the Lancaster County Solid Waste Management Authority and the long-term leasing of parking assets from the city and the Harrisburg Parking Authority to the Pennsylvania Economic Development Financing Authority.” [Sub required]

27) Virginia: Gov. McAuliffe shakes up port authority board, replacing five members. “McAuliffe has been openly critical of the 20-year lease the VPA signed to take control of the privately held APM Terminals facility in Portsmouth. [John] Milliken headed the board that pursued the deal, although it was finalized by McDonnell’s administration.The Virginian-Pilot quoted McAuliffe as saying, ‘it’s one of the worst deals I’ve ever seen negotiated.’” [Sub required]

28) Virginia: Public subsidies pad the bottom line for the private operator of the Elizabeth River Crossing “public private partnership.” “Gov. Terry McAuliffe, responding to calls for help from motorists and business owners, agreed to a deal with ERC in January to reduce the tolls for three years in exchange for $82.5 million from the state. ERC gets a portion of that money every month as revenue, while enjoying greater demand at the tunnels thanks to the lower fees.” The Virginian Pilot denounces the set-up in an editorial.

29) Virginia: Lawmaker says toll increases on the Dulles Greenway granted to Toll Road Investors Partnership II, are illegal. “In his complaint, Ramadan alleges that TRIP II is operating in violation of three relevant portions of the state code—requiring that the toll rates be reasonable, that the rates do not discourage use of the highway and that the operator does not make more than a reasonable profit.”

30) Washington: Ballots for King County’s Proposition 1 must be postmarked by tomorrow. Prop 1 would establish a $60 car tab fee and a one-tenth-of-a-cent increase in the sales tax to fund public transit. The Amalgamated Transit Union and Veolia Transportation have each donated $20,000 to the Yes campaign. The Washington Federation of State Employees gave $50,000.

31) Wisconsin: Recently-passed legislation would permit a new state board “to privatize any or all of the work now done by more than 600 county mental health staffers.” Concerns have been expressed over the fact that the new law removes oversight authority from the county board.

Legislative Issues:

1) National: A battle over permitting private collection of federal tax debts is again roiling Congress. “The National Treasury Employees Union said a similar effort by the IRS between 2006 and 2009 caused the government to miss out on millions of dollars in potential revenue while paying $102 million to fund administrative and commission costs. The NTEU had championed shutting down the program.”

2) National: Transportation Secretary Foxx, who is barnstorming the country to build support for transportation funding, says he “hopes” that DOT will release a draft transportation bill this month.

3) National/New Hampshire: Sen. Kelly Ayotte (R) has introduced legislation that would allow the use of federal funds “to help capitalize state infrastructure banks.”

4) Kentucky: The legislature failed to override Gov. Beshear’s veto of “public private partnership” legislation before it adjourned. [Beshear’s veto message]

5) Tennessee: Lawmakers overcome efforts by the Koch brothers’ Americans for Prosperity to block an important bus rapid transit project. “‘The good news is that the legislation to stop the Amp did not succeed,’ the mayor said in a statement, according to The Tennessean. ‘The new bill allows us to keep moving forward with the Amp, and that is what we’re going to do. We will work in close partnership with our new Citizens Advisory Committee, and we are committed to designing the best possible transit system for our city.’” But the legislation “requires the legislature to sign off on such projects, even if they don’t require any state funding.”

6) Tennessee: The House failed to pass legislation that would have relocated a portion of licensed beds, which was part of Nashville Mayor Karl Dean’s plan to privatize the Bordeaux Long Term Care and Knowles Home Assisted Living facilities. Even so, the plan is “still on.”

7) Vermont: A bill to put a two year moratorium on school privatization died on the House floor last week. “The hour-long debate was brought to a halt by Republican House Minority Leader Don Turner from Milton, who made a motion to amend the bill to strike the two-year moratorium. The motion led to a lengthy recess, and upon return, Peltz made the motion to let the bill lie.”