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This Week’s Outsourcing Scan 11-10-14

Update: Upcoming Outsourcing Issues. November 10, 2014

1) National: The Federal government now employs the fewest people since 1966. “Federal employment initially rose during the recession and climbed further in 2009 and 2010 with the stimulus package (and, again, the especially sharp spike for the census). The federal government has since shed about 200,000 jobs.” At the same time, competition for government contracts is becoming more cutthroat.

2) National: Macquarie is “aggressively raising funds” to pursue infrastructure “public private partnerships” in North America. Last month the firm closed its latest infrastructure fund at $3 billion. Investors include the Illinois State Universities Retirement System and the Arkansas Teacher Retirement System. The firm is building ties to the Obama administration. [Public Works Financing, October 2014; sub required]

3) National: The Environmental Protection Agency will be holding “listening sessions” on the recently established Water Infrastructure Finance and Innovation Act (WIFIA) in San Francisco on November 17and Washington, DC on December 8.

4) National: The General Services Administration rolls out the details of a new initiative on procurement contracting—the Common Acquisition Platform—at a National Contract Management Association meeting in Washington. Acquisitions chief Anne Rung says “it’s a shift to managing entire categories of acquisition across government and bringing common spending under single managers.” Rung notes that “many in the stretched acquisition workforce are jacks of all trades who wear multiple hats.”

5) National: David Sirota sees the financial services industry as a big winner in last Tuesday’s elections. “From Illinois to Massachusetts, voters effectively placed more than $100 billion worth of public pension investments under the control of executives-turned-politicians whose firms profit by managing state pension money.”

6) National: Corrections Corporation of America and the Geo Group, the private prison corporations, reported their quarterly earnings. CCA beat earnings expectations and its stock soared to a 52-week high before falling back a bit. GEO Group also beat earnings expectations and its stock reached a 52-week high on Friday. [Earnings call transcripts for CCA and GEO]

7) National: Bob Herbert takes on “The Plot Against Public Education: How millionaires and billionaires are ruining our schools.” Herbert writes: “Few people would accuse Gates of acting out of greed. For other school reformers, however, a huge financial return has been the primary motivation. While schools and individual districts were being starved of resources, the system itself was viewed as a cash cow by so-called education entrepreneurs determined to make a killing.”

8) National: Alan Singer of Hofstra looks at the school to prison pipeline.

9) Arizona: Republican Governor-elect Doug Ducey is expected to aggressively push outsourcing. “Jaime Molera, a Republican who served as superintendent of public instruction and is now a political consultant in Phoenix, [says] ‘Ducey, I’d suspect, will come out strong for a lot of (Republican Wisconsin Gov.) Scott Walker-type initiatives, particularly like privatization efforts.’”

10) California: Tom Torlakson, a strong supporter of public schools and opponent of privatization, defeats Marshall Tuck in the closely followed race for California schools chief. Steve Zimmer writes, “the results of yesterday’s election once again confirm that public education is not for sale. Against a gale storm of unprecedented funding, Tom Torlakson, State Superintendent of Instruction narrowly won re-election. This was the most expensive State Superintendent race in U. S. history.” But he calls for a truce: “While it is tempting to feel exhilarated in the wake of this important victory, I mostly feel exhausted. I am sick and tired of dodging bullets from corporate education reform billionaires who have an endless magazine of resources to shoot at folks trying to solve the problems facing our schools.”

11) California: Prop 47, mandating reduced sentencing for “nonserious and nonviolent property and drug crimes,” passes by a wide margin. One caregiver says the success of the measure will depend on increased public funding for rehab programs and facilities. “It’s a good thing to keep them out of prison. But we shouldn’t just excuse them, leave them out there and hope they’ll be OK, because I don’t think they will.” Both Corrections Corporation of America and the Geo Group have cited such legislation as a potential risk to their business models because they could reduce inmate populations.

12) Colorado: Jefferson County students continue their battle against efforts by the right wing school board to tamper with Advanced Placement history. Other demands include that the district “allocate resources to in-class instruction rather than board expenses that perpetuate an agenda to privatize JeffCo schools.”

13) District of Columbia: After the District radically scales back its plans for a streetcar “public private partnership,” new Mayor Muriel Bowser will have tough decisions on its future. The project was cut from a planned 22 miles to 8 miles. Three firms have been picked to advance to the RFP stage. Some still hold out hope.

14) Florida: A draft Request for Qualifications will soon be issued for a “public private partnership” (DBFOM) desalination plant by the Miami Dade County Water and Sewer Department. [Public Works Financing, October 2014; sub required]

15) Georgia: CH2M Hill will make a pitch tomorrow to privatize multiple departments of Barrow County. A decision will be made on November 25. “There have been questions from some county employees about job security and how the change could affect their benefits. Dowling told the Barrow County News in April that the contract can require that all county employees are retained, but can mandate it only for a certain period of time.”

16) Idaho: Gov. Butch Otter wins reelection despite his handling of the Corrections Corporation of America prison scandal.

17) Illinois: Public benefit recipients and state public aid employees come together to demand an end to Chicago’s Medicaid eligibility screening contract with Maximus. “Our fight against outsourcing targeted the for-profit Maximus Corp., which had received a $76 million contract to review eligibility of Medicaid recipients. AFSCME Council 31 filed grievances for improper outsourcing of state work. We focused on the harm Maximus was doing to Medicaid recipients: tens of thousands of eligible people were wrongfully cancelled, and Maximus tried to cancel even more. Through this, the Alliance for Community Services was able to organize recipients against privatizing state jobs.”

18) Illinois: Janitors whose jobs were outsourced return to the Rockford School Board to ask for help. Most are making only $11 an hour. “While they no longer are district employees—their work was outsourced in 2005—small groups of school janitors have been attending board meetings in recent months, asking for the district’s support as they attempt to negotiate a new one-year contract with their employer, GCA Services Group.” GCA Services is owed by the Blackstone Group, which just reported a 13% rise in its third quarter profits, to $758 million. Assets under management are $284 billion. “When they ask for better working conditions to care for the buildings, they are told there are no funds.”

19) Indiana: The State Supreme Court has asked attorneys for IBM and the state to consider mediation in their legal dispute over the botched effort to privatize the state’s welfare system. The parties have 30 days to decide.

20) Indiana: Interested potential bidders for the assets/debt of the bankrupt Indiana Toll Road reportedly include the Canada Pension Plan Investment Board, Hastings Fund Management, Abertis, IFM Investors, Alberta Investment Management Company, and the Abu Dhabi Investment Authority. [Public Works Financing, October 2014; sub required]

21) Indiana: Indiana Public Access Counselor Luke Britt issues a formal opinion saying that the Request for Proposals for the proposed $600 million Indianapolis criminal justice facility should be released to the public. His move backs up media requests for the information. “In most public procurements, the government makes public its RFP as well as questions from vendors, answers to those questions and amendments to the RFP. The city has been following a different process, which is similar to one that the Indiana Finance Authority and Indiana Department of Transportation follow when entering public-private partnerships.” Last year, the RFQ was shared with vendors but not the public.

22) Maryland: Concern mounts among supporters of the Purple Line that the new Republican governor, Larry Hogan, will kill the transit “public private partnership.” The state is scheduled to award a contract next spring to design, build, finance and operate the line. “Hogan has waffled on his Purple Line stance. In mid-September, the Baltimore Sun quoted him as saying he would cancel both the Purple Line and a planned $2.9-billion Red Line in Baltimore. In early October, Hogan told WBAL radio that he was ‘not really opposed to either project’ and that both were ‘worth considering.’”

23) Maryland: Voters pass a constitutional amendment that will lock up road, bridge and transit fundingfor that specific purpose, and block state officials from using the Transportation Trust Fund for other purposes. “Some transit and smart growth advocates [had] privately said they support[ed] the proposal but are nervous about the fact that this initiative is coming primarily from road lobbying groups like AAA and SMTA, who very clearly advocate for more money to expand roads.”

24) Massachusetts: The state Department of Conservation and Recreation comes under fire for its practices in leasing public land to private entities. “In some cases, the agency failed to collect payments from renters, ignored lease expiration dates, or renewed agreements in perpetuity at ridiculously low rates.”

25) Mississippi/National: Corruption scandal rocks the state’s troubled prison system, as Corrections Commissioner Christopher Epps is indicted in a bribery scheme involving private contractors. “Epps and the man accused of being his partner in the alleged bribery scheme, former state lawmaker Cecil McCrory, pleaded not guilty Thursday in a 20-minute hearing in U.S. District Court in Jackson. U.S. Magistrate Keith Ball set a Jan. 5 trial date and released each on $25,000 unsecured bond. Both men declined to comment to reporters. Hours after that hearing, Gov. Phil Bryant ordered the Corrections Department to rebid contracts with all companies mentioned in the indictment, though none of the businesses or their employees was charged. It was unclear whether other people or entities were being investigated.” Bryant also set up a contracts review task force. Just last year, Bryant signed a legislative commendation to “recognize and salute”  Epps.

Epps and McCrory pleaded not guilty. The New York Times reports that “Mr. Epps, according to the indictment, had suggested that Management & Training Corporation hire Mr. McCrory as a consultant, and had also negotiated Mr. McCrory’s fee.” [Grand Jury Indictment]

Epps, who is president of the American Correctional Association, has served as the ACA’s treasurer and auditor, and as a member of its accreditation and standards committees. James A. Gondles Jr., executive director of ACA, says Epps “has shown time and again that his leadership and positions supporting the profession are bedrock foundations of ACA’s founding principles.”

26) New York: New York City Comptroller Scott Stringer discusses a new corporate governance initiativeto hold companies in New York City’s portfolio more accountable to the public. [Stringer press release on his Boardroom Accountability Project]

27) New York: CSEA Orange County Local 836 President Sabina Shapiro takes on the link between selective corporate tax breaks and the privatization of Valley View nursing home. “Now it’s time to sell the Government Center, Camp LaGuardia and other surplus properties, and demand the county Industrial Development Agency stop its carte blanche tax breaks and ensure all businesses pay a fair share. It’s only fair to the other businesses here that have played by the rules. Look for other options before cutting county services and jobs.”

28) New York: The Rochester community discusses “Why Would Anybody Want to be a Teacher Today?” at a forum. “Students and more experienced teachers at last night’s event cited multiple reasons for the trends: too much testing, union busting and pressure to eliminate tenure, societal ills that have fallen on teachers to manage in the classroom, and a general societal resistance to address growing poverty and income inequality in the US. The negative influence of corporations and wealthy individuals who seek to privatize public education and a general mistrust of government are also factors.”

29) Pennsylvania: The privatization industry expects new Pennsylvania governor Tom Wolf to be pro-“public private partnerships.” A member of PennDOT’s P3 advisory team says “the sense is that a lot of folks from the Rendell universe might be involved in putting his team together.” [Public Works Financing, October 2014; sub required]

30) Pennsylvania: The private equity firm KKR and United Water have signed a 50 year concession deal with financially stressed Middletown to operate its water and sewer utilities. “In a press release, Mayor James H. Curry III endorsed the decision and called the long-term lease agreement ‘the lesser of two evils.’” The town’s communications director said “there was nobody on the council that wanted to do this.”

31) Tennessee: Teachers organize to resist the takeover of Shelby County public schools by the state-run Achievement School District charter school network. “The Shelby County Teachers Coalition plans to protest at several upcoming meetings, at which the local school board will make crucial decisions about what to do next year with its lowest performing schools.”

32) Texas: Voters pass a constitutional amendment directing taxes from the oil and gas industry to road transportation. “The constitutional amendment includes conditions, such as the revenue can’t be used on toll roads, and the revenue stops flowing to the State Highway Fund if the Rainy Day Fund, the state’s savings account, gets too low.” Terri Hall calls for some of the money to be used to fix US-281 without tolls. Meanwhile, even a developer of “public private partnership” toll concessions tells Public Works Financing that “we’ve got to stop telling people that tolls are the only answer.”

33) Texas: A proposed Corpus Christi desalination plant may be developed as a full “public private partnership,” including private financing as well as private design, building and operations. But public financing seems the most likely option. The city is now bidding out the consulting contract. [Public Works Financing, October 2014; sub required]

34) Utah: Iron County sheriff Mark Gower denounces plans to privatize the county’s ambulance service. “‘I disagree that the private sector should be over public safety and in the business of saving lives,’ he said. ‘I don’t think stockholders and business owners should be deciding on matters of life and death.’ Gower has received support by the various mayors in surrounding communities who have either sent letters or called him to let him know they don’t agree with the commissioners considering privatizing the ambulance service.” Commissioners will open three sealed bids today.

35) Wisconsin: 80% of Wisconsin voters approve a constitutional amendment to put road and transit funding in a lock box. The measure was heavily backed by truckers and the road industry. Opponents were concerned that passage of the amendment would enable the state legislature in the future to cut transit, bicycle and pedestrian funding by simply excluding them from the transportation trust fund.

36) International: Kevin Skerritt looks at public pensions and private interests in Canada. “These developments raise important strategic questions for the labor movement beyond just ‘how can we stop privatization and fight P3s’ (as important as that is). As pools of privately-invested pension funds continue to grow and consolidate into larger and larger entities, trade union representatives (including those on pension boards) have found themselves largely unable to exert meaningful influence on their investment practices in a way that would see them break with this overwhelming neoliberal logic.”

37) International: Public Works Financing  ranks the top global “public private partnership” concession developers since 1985. The top five are ACS Group/Hochtief (Spain), Macquarie Group (Australia), Global Via-FCC-Bankia (Spain), Abertis (Spain), and Vinci (France). Ferrovial/Cintra (Spain) has the most in the U.S., with six transportation concessions.

38) Revolving Door News: Robert F. Hale, the former comptroller of the Defense Department, has been has been selected as a Booz Allen Fellow and will serve as an advisor to the firm. As comptroller, Hale “acted as the principal advisor to three Secretaries of Defense on all budgetary and fiscal matters, including the development and execution of the Defense Department’s annual budget of more than $600 billion. As Chief Financial Officer, Hale oversaw the Department’s response to the 2013 sequestration and government shutdown and supervised the Department’s financial policy and financial management systems.”

39) Think Tanks: The National Education Policy Center’s Think Twice think tank review project refutes ALEC’s report on school performance. “According to University of Illinois Professor Christopher Lubienski, a co-author of the NEPC review, the new Report Card is little more than an advertising pamphlet for the more than 60 pieces of ALEC model legislation listed at the document’s end. ‘Despite their best efforts, the authors are unable to show that their preferred policy changes of market-style models and privatization of public schooling are linked to better outcomes. They make specious causal claims about their preferred policies (claims that would not be taken seriously by researchers), and are unable to show any actual causal link.’”

40) Think Tanks: AASHTO releases its widely followed surface transportation revenue options paper.

41) Think Tanks: The Reason Foundation’s Robert Poole is experiencing angst about the politics of road privatization: “I’m increasingly worried about the political vulnerability of P3 concessions.” Poole is stressed out because he thinks that when opponents of subsidized “public private partnerships” figure out how the subsidies work, “they will characterize that 35-year stream of payments to the concession company as ‘guaranteed revenue.’” [Public Works Financing, October 2014; sub required]

Legislative Issues:

1) Useful Resource: 2015 state legislative session dates.

2) National: Discussion begins on a possible deal exchanging a corporate tax amnesty for infrastructure investment. “Mr. Obama and some Republicans agree on certain elements of a corporate tax overhaul, including slashing the rate from 35 percent to somewhere in the high 20s and using some of the money raised for infrastructure investments. But they are deeply divided on other vital issues, including whether the plan should raise revenue in the long term and whether to pair it with tax cuts for individuals.”

3) National: Jockeying for Congressional committee leaderships begins in the aftermath of last Tuesday’s elections. In the House Transportation and Infrastructure Committee, Peter DeFazio (D-OR) and John Garamendi (D-CA) are facing off for the position of ranking member. The committee will be the site of key debates and votes on transportation funding and policy, including over “public private partnerships.”

4) National: State legislators who backed taxpayer protections against irresponsible outsourcing did well in last Tuesday’s elections. “On an evening when many elected leaders sweated late into the night, those who took a stand and protected taxpayers had nothing to worry about,” said Donald Cohen, Executive Director of In the Public Interest. “Candidates competing in coming elections would be wise to take a lesson from these results.”