Media Scans
SHARETweet about this on TwitterShare on FacebookEmail to someonePrint this page

This Week’s Outsourcing Scan 08-04-14

Update: Upcoming Outsourcing Issues. August 4, 2014

 1) National: President Obama signs an executive order making it more difficult for irresponsible contractors to win federal contracts. “The Fair Pay and Safe Workplaces Executive Order affects only new federal procurement contracts valued at more than $500,000 and will be implemented in stages starting in 2016.” [Executive OrderFact Sheet]

2) National: Reuters reports that private prison companies and other contractors may cash in on migrant children coming into the U.S. Geo Group and CCA “have thousands of unoccupied beds in their prisons and jails that potentially could be modified to house immigrant families.” The report cites the conversion of Geo Group’s Karnes Facility in Texas into a family detention center, and a possible spike in the ankle bracelet business of Geo’s BI Inc. if alternatives to incarceration are mandated. BI is ICE’s sole provider of ankle bracelets. Immigrant detainees have gone on hunger strike for a second time at Geo Group’s Northwest Detention Center.

 3) National: James Kilgore looks at the issue of electronic monitoring as an alternative to incarceration, and concludes that it “is no quick fix.” He points out that private prison companies are looking at electronic monitoring as a new profit center. “The key corporate players in the electronic monitoring industry prompt further concern. BI, which controls about a third of the national market, is a totally owned subsidiary of notorious private prison operator the GEO Group. (…) Firms like The GEO Group and Sentinel are constantly looking for new clients, referred to as ‘net widening’ in criminal justice circles.”

4) NationalGeo Group, the private prison company, is to hold its Second Quarter 2014 earnings call this Wednesday at 11 AM eastern time. 

5) NationalJacobin magazine publishes the second of former Teach for America and charter school teacher Allie Gross’s articles on charter schools. “The Charter School Profiteers” focuses on Detroit. “Privatization and limited oversight have conspired to produce a new figure: the education entrepreneur. In the chaos of the Detroit school system, education entrepreneurs see an opportunity for experimentation, innovation, and venture capital.”

6) NationalFort Belvoir janitors go on strike. “The workers are employed at the military base through a contract held by contractors Brown & Pipkins/Acsential of Atlanta, Ga. They allege that Brown & Pipkins refuses to bargain a contract in good faith with their union, 32BJ SEIU.”

7) NationalBooz Allen profits are up, revenue down. “Kevin Cook, Booz Allen’s chief financial officer, noted that the type of work Booz Allen received was mostly short-term. Government clients were still ‘reluctant to commit funds’ for long-term projects, Cook said.”

8) National: K12 Inc., the online private virtual school company, is to report its quarterly earnings on August 14 at 8:30 AM eastern time. NC Policy Watch has reported that “Tennessee’s education commissioner has ordered the closure of a struggling K12, Inc.-operated online school, as lawmakers here at home debate a budget proposal that could pave the way for K12 to finally set up shop in North Carolina.”

9) National: Ellen Dannin looks at the politics of water privatization. “The trough the finance people want to fill is an amended WIFIA that will give the private sector tax-exempt bonds to finance water projects.”

10) National: As Congress yet again fails to increase the gas tax to support public highway construction and maintenance, a construction industry executive predicts that “toll roads, P3s and creative financing will bring short-term gain, long-term disaster for the road building industry.” However, he lays the blame on federal transportation funding’s support for mass transit and other public transportation needs.

11) National: Campbell Brown refuses to divulge the names of funders of her Partnership for Educational Justice, which seeks to privatize public schools and is currently pursuing litigation aimed at undermining teacher tenure in New York schools.

12) National: Food & Water Watch denounces the U.S. Agriculture Department’s final rule on food inspection, which transfers poultry inspection from government inspectors to private companies “so they can police themselves.” FWW says “rather than making the contents of a revised rule public and creating a new comment period, the USDA and the White House are making a dramatic change to how poultry is inspected based on incomplete data and limited public review.”

13) NationalThe Kitsap Sun’s Tom Philpott spells out some of the details of Veterans Administration reform that may have been lost in the headlines. “A magical sounding item called a ‘Veteran’s Choice Card,’ for example, won’t be a limitless credit card given qualified veterans to cover whatever health services they receive from whatever physician they use. (…) Other details in the reform package will disappoint reformers who seek to fully ‘privatize’ VA care. The bill is a series of compromises between near-term action to address the patient wait-time scandal and steps to shore up the integrated VA health care system so prized by many veterans and their service organizations.” [Sub required]

14) California: Santa Rosa city council votes 7-0 to send all of its garbage to the Sonoma County landfill for the next 25 years, “a decision that significantly advances a long-delayed plan to privatize operations of the Mecham Road facility” to Republic Services.

15) Connecticut/Illinois: The Connecticut state judicial branch issued a cease-and-desist order to Redflex, the Australian photo ticketing vendor, for “giving the impression that its tickets and payment website came from the court.” The Newspaper.com reports that “confusion over what meets the definition of [a divided highway] creates the opportunity to trap motorists.” In Chicago, Reflex is reportedly caught up in a corruption investigation and controversy over its ticketing practices.

16) Connecticut: State Rep. Chris Perone (D) supports transparency on possible outsourcing of custodial jobs; receives the endorsement of Council 4 of AFSCME. “Perone said he supports the custodians’ effort to have a seat at the table for a contract bid to outsource their jobs. “‘I support transparency and for them to have a seat at the table,’ Perone said. ‘They have a contract and they should be included in the conversation. They work very hard here locally.’”

17) Connecticut: John P. McKinney, a Republican candidate for governor, says he would privatize social services. He “sees room to save money by privatizing the state-funded services provided to youth in the child welfare system, people with developmental disabilities, mental illness and addiction, and other groups. Currently, the state relies on both public employees and private nonprofit agencies to provide the services.”

18) Maryland: The Department of Transportation has released the Request for Proposals and technical documents for the Purple Line light rail “public private partnership.” The deadline for responses from the four teams of potential bidders is January 9, 2015; anticipated decision March 12. Bidding teams include Vinci/Infrared, John Laing/Kiewet, Meridiam/Fluor/Star America, and Macquarie Capital/Skanska. [RFP]

19) Michigan/International: At the last minute, Detroit moves to include a community benefits agreement in the proposed New International Trade Crossing “public private partnership” between Detroit and Windsor. “A coalition of residents and business owners in the Delray community have long pushed for a community benefits agreement attached to the bridge development.” A CBA will be negotiated over the next 30 days.

20) Michigan: Detroit Water and Sewerage Department workers overwhelmingly reject concessions. “The agreement, which would run through 2018, would give management a freehand to increase outsourcing, destroy the jobs of current workers and move to the privatization of the third largest municipally owned water system in the nation.” Last week, Emergency Manager Kevyn Orr turned control of the DWSD to Mayor Mike Duggan, who is “reportedly still in talks with potential private managers.” [Sub required]

21) New Jersey: County-run public nursing homes face an uncertain future as funding shrinks. “The biggest challenge to county-run homes, said [John Donnadio, president of the New Jersey Association of Counties], is that an average of 79 percent of their patients are covered by Medicaid, and reimbursement rates have dropped sharply since 2012.”

22) OhioAramark was fined $130,100 this month by the state for food shortages, staff vacancies and sanitation issues. Aramark was fined $142,100 in April for similar problems. DR&C Director Gary Mohr told lawmakers last Wednesday that “he is pushing Aramark to make improvements, closely monitoring performance, and has seen some recent progress, though not enough.” Mohr also told lawmakers that arbitration hearings over the termination of union employees after the privatization to Aramark is creating ill will and diminishing security.

OCSEA President Christopher Mabe also testified. “Cost shifting is also taking place, Mabe said, pointing to staff reallocations, additional inspections and increased security, among others. This has the effect, he said, of propping up the contractor. ‘So instead of Aramark servicing our institutions, perhaps it’s more accurate to say that DR&C is now servicing Aramark.”

23) OhioThe Cincinnati Enquirer discovers, via a public records request, that the FBI raided an Ohio charter school in June. “The news of the local search comes as 19 Ohio charter schools managed by Chicago-based Concept Schools are under investigation by state officials.” CityBeat reports that “despite lax regulations, the state has closed 157 charters for lack of academic achievement since 2000. But other chronically underperforming schools prove very hard to shutter under existing rules.”

24) PennsylvaniaTaxpayers benefit from the decision not to privatize the state lottery. The lottery set an all time record for sales in the past fiscal year, which ended June 30, bringing in $3.8 billion. “When the administration ended the privatization bid, Corbett said he would seek to expand the number of players and improve player loyalty to grow the lottery. That appears to have been achieved without handing over operations to a British company. At the same time, costs have been reduced.”

25) PennsylvaniaLots of questions remain about how PennDOT’s “public private partnership” for bridge replacements will work. A construction company spokesperson says “I don’t think I understand. I don’t see where it’s a benefit. Taxpayers are still paying for it one way or the other. Is it cutting red tape? It’s like they’re adding more employees to do what those PennDOT employees should be doing.” He adds, “some marriages don’t last as long as the maintenance term for the consortium.”

26) Pennsylvania: Teamsters Local 250 members are to vote on a contract this week that, if approved, will block privatization of the Mercer County Jail.

27) Puerto Rico/National: The New York Federal Reserve Bank has issued a report on Puerto Rico’s debt crisis, and has recommended more public partnerships with private industry, especially in higher education.

28) Rhode Island: Treasurer Gina Raimondo blocks a public records request seeking data on compensation to the state’s private Wall Street investment managers. “Raimondo is a Democrat who founded one of the financial firms that manages Rhode Island pension money.”

29) TexasProvidence Service, the contractor serving 1,100 foster children, quits. “The Department of Family and Protective Services said the company exercised an opt-out clause after state officials notified it about ‘several issues’ with contract performance, including missing targets on efforts to better place siblings together and keep children close to their existing homes.”

30) Tennessee: Nashville school board members are accused of breaking political rules by conducting campaign activities on public school property. “Bus drivers in Nashville are represented by United Steelworkers. SEIU represents groundskeepers, cafeteria workers and other support staff. SEIU has been incensed at [Schools Director Jesse Register’s] administration ever since he opted to privatize custodial services in 2010.”

31) Vermont: Vermonters for Criminal Justice Reform calls for Vermont prisoners held in Corrections Corporation of America facilities in Kentucky and Arizona to be brought back to the state.

32) VirginiaDebate begins on the wisdom of converting I-66’s High Occupancy Vehicle (HOV) lanes into High Occupancy Toll Lanes (HOT). “But will the early track record of under-performance [by Transurban’s Beltway HOT lanes]—compared with expectations—make it more difficult for Virginia to negotiate a favorable deal with private partners on I-66?”

33) Virginia: Fairfax County supervisors have signed a deal to build a $57 million garage for 2,100 cars along the new Silver Line Phase 2 metro spur. It will be procured through a “public private partnership.”

34) Virginia:  The Office of Transportation Public-Private Partnerships is requesting public comments on improving the implementation manual for the state’s “public private partnership” law. The office “is seeking public input on how to increase transparency, competition and public involvement” in PPP projects.

35) InternationalThe Long-Term Infrastructure Investors Association is launched by Meridiam, a “firm specializing in investments in public infrastructure assets,” Allianz Global Investors, Skandia Mutual Life Insurance Company, and the Development Bank of Japan. “The Association will also provide policymakers an infrastructure investment industry entry-point by linking financial regulations and infrastructure policies funding, contributing actively to market consultations at national and regional levels, and ensuring industry representation in relevant fora (G20/B20, MDBs meetings/workshops, etc.).”

36) InternationalOut-of-control user charges on “public private partnership” projects prompts a government review of the concession model in India.

37) International: The British Treasury releases “Investing in UK Infrastructure.” The report says “the UK currently has over 700 operational [PPP] projects with a capital value of over £50bn covering a very wide range of public sector services.”

38) Upcoming Meeting: The U.S. Army Corps of Engineers will hold “listening sessions” on different aspects of the new Water Resources Reform & Development Act. Session 2 (August 27) will focus on “alternative financing.”

39) VideoDonna Brazile, Co-Chair of Democrats for Public Education, addresses the AFT convention on the importance of public schools.

Legislative Issues:

1) National: Congress passes a funding patch for the Highway Trust Fund, lasting only through next May. A gas tax increase is again avoided. The road privatization industry had warned that a failure to rescue the HTF from depletion would have negatively impacted “U.S. infrastructure public-private partnership (P3) activities.”

2) National: Rep. Todd Young (R-MI), says he is “engaged with Paul Ryan’s budget committee staff” on a Social Impact Bond Act. He hopes to have hearings before the Ways and Means Committee this fall. A companion bill is being prepared in the Senate. [HR 4885]

3) North Carolina: State lawmakers to give public school employees only a $500 raise, as opposed to $1,000for other state employees. “So far, not one lawmaker who has had a hand in crafting the budget proposal has explained why public school employees are getting the shaft.”

4) North Carolina: The Senate-passed provision in the budget bill which would have privatized Medicaid does not make it into the final budget bill passed over the weekend. “Medicaid reform” will instead be “worked on during a special session this November, under a provision established in the budget bill.”