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This Week’s Outsourcing Scan 1-26-15

Update: Upcoming Outsourcing Issues. January 26, 2015

1) National: Standard & Poor’s says that President Obama’s proposed Qualified Public Infrastructure Bonds (QPIBs) could boost interest in “public private partnerships.” The rating agency says “QPIBs would definitely provide a spark to start-up projects, advancing projects that might not have gotten off the ground otherwise. But for now, the big question, in our view, is: will it be approved?” S&P  “expects the proposal to undergo extensive deliberation in Congress.” [Sub required]

2) National: Families living in privatized military housing will be feeling the pinch of reduced allowances. “Families electing to live in privatized base units sign rental contracts that, until this year, had one unique feature: Rents always matched their monthly BAH. (…) ‘As far as we’re concerned it’s an equity issue,’ the official said. ‘But it’s also a maintaining-quality-of-housing issue. And if you put those two together, it’s just obvious that’s what we should do.’”

3) National: The Federal Bureau of Prisons issues two revised pre-solicitation notices, one for “the management and operation of a contractor-owned/contractor-leased, contractor-operated correctional facility for approximately 6,000 beds”; and another “for the management and operation of a contractor-owned/contractor-leased, contractor- operated correctional facility for approximately 4,800 beds.” The inmates will be “primarily criminal aliens.”

4) National: Fortune magazine says that lower oil and gas prices are a boon to road and airport municipal bonds, as more drivers hit the roads and air travel increases. “Moody’s Investors Service estimates that toll road traffic will grow by about 1.5% in 2015 and average toll revenues will rise by 5%, as operators hike rates.”

5) National: President Obama reportedly scraps plans to privatize the phone metadata collected through National Security Agency surveillance programs.

6) National: Education privatization activists will rally this week for “National School Choice Week.”

7) California: A nonprofit hospital chain that wants to sell out to a for-profit operator to retire its junk-rated municipal bonds runs into union opposition. “Some elected officials, including State Treasurer John Chiang, have joined SEIU-United Healthcare Workers West, a healthcare union that represents 2,675 employees in the chain, in opposing the sale since DCHS announced on October 10 that it would negotiate exclusively with Prime [Healthcare]. Two nursing unions want the sale approved, as do the DCHS board and most of the hospital chain’s medical staff.” [Sub required]

8) Connecticut: Gov. Malloy announces plans to widen I-95. Jim Cameron of the Redding Pilot has another suggestion: “There will be the inevitable debate about tolls and where they should be placed … at our borders or state-wide. Some will suggest we raise the gas tax. Maybe even offer privatized toll roads (or ‘Lexus lanes’). Those are the wrong discussions. Instead of widening I-95, we should be widening use of an existing resource … our rails.”

9) Illinois/Indiana: A local opponent of the controversial Illiana Expressway feels vindicatedby Illinois governor Bruce Rauner’s executive order to suspend the “public private partnership” project. “Palos Hills Mayor Gerald Bennett, the chairman of the Chicago Metropolitan Agency for Planning (CMAP), has long opposed the tollway and took a fair amount of grief last year when he described it as ‘a road to nowhere.’”

10) Illinois: Rick Perlstein digs into Chicago Mayor Rahm Emanuel’s privatization agenda.“For over a decade now, Chicago has been the epicenter of the fashionable trend of ‘privatization’—the transfer of the ownership or operation of resources that belong to all of us, like schools, roads and government services, to companies that use them to turn a profit.”

11) Maryland: The new governor, Larry Hogan, releases his budget and leaves in state funding for the Purple Line “public private partnership,” but has yet to decide whether or not he will go ahead with the project. Supporters and opponents of the project keep up the pressure on Hogan. His budget, which slashes proposed increases in education spending, will be subject to intense legislative and political wrangling.

Hogan has tapped “highway builder” Pete Rahn to be transportation secretary. Rahn, who previous served as transportation chief in Missouri and New Mexico, is an ardent proponent of road “public private partnerships.” In the aftermath of a New Mexico controversy over a Koch Industries-backed P3 road, retired Republican State Sen. Billy McKibben said, “in my opinion, Pete Rahn is a guy who really needs to be watched. Look at what he did to New Mexico. The whole legislature was against it, but it happened all the same. I want to warn business and government leaders in Illinois and Missouri: Be very, very cautious about turning your money over Koch Industries or to Pete Rahn.”

12) New Jersey: Gov. Christie imposes an emergency manager on the elected government of Atlantic City. “The order gives the manager authority to negotiate ‘with parties affected by the recommended plan’ and consult with stakeholders. It also seems to indicate that Christie, not the manager, would have the final say. Based on recommendations from the emergency manager, ‘I reserve the right to take . . . additional actions,’ Christie said in the order.” The emergency manager will be Kevin Lavin, a corporate “turnaround” veteran with FTI Consulting; he will be assisted by Kevyn Orr, who served as emergency manager of Detroit.

13) New Jersey: The Glen Rock Education Association is scheduled to hold a demonstrationtoday to protest the outsourcing of custodial jobs at a board meeting. “The four supervisory employees are the last remaining custodial workers employed directly by the district, since the balance were outsourced to Aramark Management Services beginning in the 2011-12 school year. (…) It is not certain whether those or other current custodial positions will be filled by Aramark, whose contract with the district is expiring. The relationship is now subject to a new request for proposal (RFP) and bid process.”

14) New Jersey: Gov. Christie’s privatization of the state lottery has failed to meet the goals he set out for it. “Lottery revenue is off 7.9 percent over the last six months, compared to the same period the previous year, according to new state figures. Lottery support for schools and people with disabilities amounted to $965 million in the last fiscal year, but that was $28 million under what was projected in the state budget.” Northstar took in $29 million. “Two months after Christie lowered the revenue target, GTECH made a $100,000 contribution to the Republican Governors Association, a political committee where Christie is the outgoing chairman after a one-year term.”

15) New York: The state Correction Commission finds “that gross incompetence by medical personnel and correction officers” led to the 2013 death of a mentally ill inmate. “The commission’s report makes clear that blame for the death lies squarely with the city’s correction and health agencies, as well as the private jail health contractor, Corizon Inc.” Last year the Justice Department and the New York Times found “a culture of violence permeated the jails on Rikers Island in New York City, particularly the facilities housing adolescent detainees.”

16) New York: Four Buffalo public schools will have their fate decided this week. The school board is likely to make the decision Wednesday unless they can get an extension. “Waiting in the wings are several well-regarded charter schools that want the chance to expand their programs into some of those same buildings. If they were to occupy Buffalo School District buildings, it’s unclear what would happen to the students currently in those schools. The board will hear presentations Monday afternoon from three charter schools interested in occupying Bennett or MLK.”

17) North Carolina: Anti-toll group hires an attorney to fight the imposition of “Lexus lanes” on I-77. The group, Widen I-77, is seeking a preliminary injunction to keep Cintra “from executing a 50-year contract to build and operate private managed toll lanes.” One item that is in dispute is whether a user fee is a tax. Taxpayers are also worried about “fronting nearly $90 million and being responsible for $75 million more if toll revenues don’t meet expectations.”

18) Ohio: The state finds empty seats at taxpayer-funded charter schools. “Dropout recovery schools operated by Akron-based White Hat Management were among the worst. ‘I was shocked to find that 50 percent [attendance] seems to be the average’ among one particular type of school, said State Auditor Dave Yost, who launched the “old-school” investigation because of recent allegations that charter schools might be inflating enrollment figures.”

19) Ohio: As the state’s prison overcapacity rate creeps up to around 30%, emergency early release is taken off the table. “It’s not hard to understand why that may be. Several state politicians—including some members of the [Correctional Institution Inspection Committee]—stepped forward to voice their support for CCA after they lost their contract to house over 1,400 federal prisoners at the Northeast Ohio Correctional Center (NEOCC). Some even vowed to help CCA find a new client to fill the empty beds.”

20) Ohio: As construction of the $429 million Portsmouth Bypass “public private partnership” is set to begin, taxpayers still do not know how much they will be on the hook for. “ODOT awarded the contract, but it hasn’t finalized the financial details, [ODOT spokesperson Melissa] Ayers said. That should happen in the coming months.”

21) Ohio: Civil engineer Henry Fischer proposes a regional planning solution instead of pouring $2.6 billion into the Brent Spence bridge corridor “public private partnership” project. “Does it make sense to spend $2.6 billion on this short 7.8-mile ‘bridge plan’ segment of our regional interstate system without having a comprehensive plan in place to substantially increase capacity throughout our Greater Cincinnati interstate system? Are there viable alternative solutions?”

22) Ohio: The state quietly renews its contract with the troubled Aramark company. “A sampling of recent reports involve mouse droppings on trays of cookie bars at London Correctional Institution west of Columbus and sour milk, and corrections officers having to serve food because of a lack of Aramark workers.”

23) Pennsylvania: PennDOT signs $899 million contract with Plenary for the state’s bridges replacement P3 project.

24) Virginia: The Virginia Department of Transportation will hold four public meetings this week to discuss the possible creation and modification of toll roads on the I-495 Beltway and on I-66, a major east-west highway. “VDOT is proposing adding two new toll lanes from the Capital Beltway to US 15 in Haymarket.  It would include converting the current HOV-2 lane to HOV-3, and then also widen the interstate to add one new lane in each direction.  The two lanes would then become tolled.” Federal rules require that “the addition of toll-paying drivers to the traffic must not worsen the travel conditions for the carpoolers.”

25) Virginia: The Office of Public Private Partnerships issues a Request for Information for a solar energy “public private partnership” project on state property. “VAP3, until recently known as OTP3 [the Office of Transportation Public-Private Partnerships], initially focused on transportation P3s. It recently dropped the specific reference to transportation as it seeks to pursue P3 projects beyond the transportation sector, such as social infrastructure.” [Sub required]

26) International: Syriza, which has promised to halt the privatization of public assets, wins Greece’s national elections.

27) International: Ontario public service workers press ahead with their contract demands to rein in outsourcing. “The government has tabled stuff that is basically going to gut our contracts. But we are really concerned about the privatization,” said Deb Tungatt of OPSEU.

Legislative Issues:

1) National: Rep. Sander Levin (D-MI) sees Republican efforts to block funding of the Social Security Disability program as a step toward privatizing the program. “That rule should not be used as a rule to essentially try to privatize Social Security. I think that’s the basic purpose of that rule,” said Levin.

2) National: Rep. John Delaney reintroduces his corporate tax breaks/infrastructure funding proposal. “Corporations buying the bonds could bring in oversea earnings tax-free on a one-time basis, Delaney said. The multiplier for the amount of tax-free repatriated earnings would be determined through a reverse-Dutch auction process, with the offer beginning low and then getting higher until an agreement is reached. A 4:1 ratio would allow $4 of foreign earnings into the U.S. with no tax liability for $1 of debt purchased, he said.” [Sub required; HR 413]. Sens. Rand Paul and Barbara Boxer are working on similar legislation in the Senate.

3) Alaska: Gov. Walker’s proposed cutbacks to the state corrections budget may bring in privatization. “Walker did hint in his budget address at consolidating services between DOC and the Department of Public Safety and looking at privatizing some of the state’s prisons. (…) ‘I also want services privatized to maximize local, nonprofit and tribal partnerships.’” Sen. Dennis Egan, D-Juneau, “said he liked the idea of consolidating and streamlining state services between departments, but wasn’t crazy about the idea of privatizing prisons.”

4) Florida: State corrections chief Julie Jones tells lawmakers she is dissatisfied with the privatization of health care services to Corizon and Wexford. “Jones said she is talking with both companies about terminating the contracts, renegotiating the deals or putting them out to bid again. ‘The standard of health care with our current providers is not at the level that’s required by their contracts,’ said Jones,” who also told lawmakers that she believed private prison companies were able to “cherry pick” prisoners.

5) Illinois: Last Tuesday, a group of progressive Chicago City Council Aldermen held a press conference to call for action on the Privatization Transparency and Accountability Ordinance, which has been stalled in a committee for over18 months. “The ordinance would require that the City Council hold a hearing on any privatization proposal in order to determine the actual costs and all implications. It would also require a cost-savings analysis in order to determine whether the contract would produce real savings for taxpayers without driving down employee wages. AFSCME Council 31 helped to draft the ordinance and has lobbied for its passage.”

6) New York: Gov. Cuomo dangles $1 billion in education funding before the legislature in return for “tougher teacher evaluations, changes to tenure, and more charter schools.” Zephyr Teachout, Cuomo’s opponent in the last gubernatorial race, “blamed Mr. Cuomo for the ‘most segregated schools in the nation’ and accused him of seeking to privatize education and take resources away from public classrooms. ‘In other words, he is holding children hostage to the demands of his Wall Street donors and his personal political motivations, while kids go to school in overcrowded classrooms without arts, sports, or counselors. He is right that we have one system for the rich and one for the poor, but the reasons is clear: the disparate funding that is his legacy,’ she said.”

7) Texas: State lawmaker files a bill to take eminent domain authority away from the Texas Turnpike Corporation, blocking its ability to build the state’s only private toll road northeast of Dallas. “They’re the only private company that is currently able to do this kind of turnpike because they fall under grandfathered rights,” said State Rep. Cindy Burkett, R-Sunnyvale.

8) Virginia: The Virginian-Pilot strongly endorses Gov. McAuliffe’s bipartisan effort to overhaul the state’s “public private partnership” procurement and oversight rules, pointing to disgraced former Gov. Bob McDonnell’s ill-conceived and ideologically motivated privatization initiatives. “It was as if tolls were incorporated into the U.S. 460 deal simply to create a public-private partnership, when the project would’ve been better built as a traditional publicly funded project.” The Pilot doesn’t spare McDonnell’s chief privatization operative: “Sean Connaughton, who served as transportation secretary under McDonnell, touted each of those projects, and also led the tumultuous—and ultimately, unsuccessful—effort to privatize operations at the Port of Virginia. That effort triggered its own set of revisions to the [Public-Private Transportation Act]. Connaughton didn’t respond to a request for comment. But he knew, or should’ve known, the flaws in each project. An inquiry revealed ‘all this information funneled through the secretary’s office, and they were clearly in charge,’ Layne said.” [HB 1886; HB 1887]

9) West Virginia: Legislation to permit charter schools in the state will be taken up by lawmakers. “House Bill 2005 calls for alternative teacher certification—allowing professionals with degrees and extensive work experience to teach classes related to their fields in the state’s public schools—while House Bill 2014 would allow for charter schools. Pasdon, R-Monongalia, said her committee is working with the Senate Education Committee to run the bills within the next couple of weeks.”