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This Week’s Outsourcing Scan 5-2-2016

1) National: In the Public Interest releases comprehensive and data-rich reports on how private government contractors cut corners across a variety of public goods and services and at every level of American government, harming employees, the public, service users and recipients, and the environment. 
 
By providing an array of case studies from across the country, Cutting Corners: How Government Contractors Harm the Public in Pursuit of Profit, shows that Americans’ negative firsthand experiences of government contractors cutting corners are a systemic and widespread result of privatization. ITPI recommends a number of steps, including measures to ensure that any savings be tied to efficiencies rather than cuts, and requiring contractors to comply with all public interest, occupational, and environmental laws at the local, state, and federal levels, including those that would apply to the contracting agency if it provided the service in-house.
 
Cutting Corners in America’s Criminal Justice System: How Corrections Companies Harm Prisoners and the Public in Pursuit of Profit
 includes detailed case studies of 10 states. It shows how private prison companies such as Corrections Corporation of America and GEO Group—in an effort to provide services with fewer resources while also maximizing profits—often cut corners, harming prisoners, employees, communities, and taxpayers.
 
2) National/Indiana: A memorandum of understanding that the GEO Group reached with the Gary Economic Development Corp. on Sept. 23 has finally been made public and is drawing criticism. The Northwest Indiana Federation of Interfaith Organizations issued a statement on Friday saying “The Federation and our ‘NO GEO’ allies object to the manner in which this MOU was created; in secret and with no public involvement about the immigrant detention center/prison.”
 
3) National: The GEO Group reports an 18% rise in its bottom line as compared to the first quarter of 2015. Revenue for the first quarter 2016 rose 19.4% to $510.19 million, up from $427.37 million last year. “According to the company, the Q1 2016 revenues reflect construction revenues associated with its contract for the development and operation of the new 1,300-bed Ravenhall Prison Facility in Australia.” [FinancialWire, April 29, 2016]. 
 
In a conference call, CEO George Zoley emphasized the opening of the Kingman prison in Arizona, the federal contract with GEO Care, and the Ravenhall project. He also said “ICE is continuing to look for beds in Gary, Indiana in the Indiana area, Illinois area and then in the New York.”
 
Its CFO boasted of GEO’s “occupancy rates in the mid-to-high 90s with customer retention rates in excess of 90%.” Its president of GEO Corrections and Detention, David Donahue, went into the licensing procedure for its Karnes ICE “residential center,” saying “we submitted our license application in early March and are hopeful to complete the process within the next month after which the center will be one of the few, if not the only licensed family residential facility in the United States.” GEO makes $57 million a year in revenues on Karnes. “CAR 16 proposals were submitted last June and contract awards are expected in late 2016 with new contracts going into effect in the first quarter of 2017.”
 
At the state level, Donohue said “there are several states including Arizona, Oklahoma, Ohio and others which are considering public-private partnerships for the housing of inmates as well as the development and operation of new and replacement correctional facilities. (…) Additionally, other states including Minnesota, Alabama and Michigan have recently discussed proposals for the development of new facilities or for the leasing of available private facilities to meet ongoing bed needs or replace older more costly facilities.”
 
4) National: A North Carolina attorney who went to Texas to give legal assistance to immigrant detainees “held at the so-called ‘South Texas Family Residential Center’” recounts his experience. “The center is operated by the Corrections Corporation of America to the tune of millions of taxpayer dollars per year. The Obama administration justifies holding these women and children in detention to deter other refugees attempting to make the same journey. But that ‘detention as deterrence strategy’ not only violates basic principles of human rights but U.S. law as well. If President Obama truly wants to focus enforcement on ‘felons not families,’ this jail needs to close.” 
 
Talking to The Progressive, Joel Gonzalez, a former ICE prosecutor who now runs an immigration law practice in San Antonio, says “it’s crazy. The idea that somewhere in our laws are embedded guarantees to these for-profits is crazy.”
 
Corrections Corporation of America reports its first quarter 2016 results this Thursday after market close, and will have a conference call on Friday.
 
5) NationalBlack Agenda Report interviews Dr. Shawgi Tell, professor of education at Nazareth College, on charter schools; and Josh Rovner of The Sentencing Project on racial disparities in youth arrests and incarcerations.
 
6) National: Onvia, a research firm, reports that opportunities for state and local government contracts were up 2.7% in the first quarter of 2016. According to Dan White, Senior Economist for Moody’s Analytics, “state, local and education (SLED) agencies will face heightened budget pressures for the foreseeable future, but for contractors, this will bring opportunities for partnering.” It is unclear whether contract oversight and monitoring resources are keeping pace.
 
7) AlabamaLawmakers pass an $800 million bond approval to build four new state prisons. As the legislation was being debated, CCA chief Damon Hininger just happened to appear in the state. “While there are no CCA managed prisons in Alabama, the company operates a number of prisons that virtually ring Alabamaincluding in Mississippi, Tennessee, Georgia and Florida.”
 
8) Arizona: In a letter to the editor of the Arizona Republic, Carol Walters of Mesa says “shame on Waste Management” for outsourcing local jobs to India. “They do not care about this country, and they do not care about their workers. Bah humbug! Americans are sick of this kind of corporate behavior. It is not ethical to relocate some of the workers and then terminate their jobs shortly after. The amount of money the company saved is a drop in the bucket, and their behavior is sickening.”
 
Waste Management announced in the middle of last month that it was outsourcing the jobs of 120 workers in its call center to India to save labor costs. The Arizona Star reports “opponents say the job losses fatten corporate profits while hurting American workers and sustaining unethical, exploitative and environmentally unsafe employment practices overseas. They also say outsourcing perpetuates poverty at home and abroad while undermining the U.S. economy.”
 
9) California: Public library advocates take the next step after fighting privatization—supporting a tax measure to fully fund the libraries. “It’s estimated Measure F would increase Kern County’s roughly $7 million library budget by $15 million a year for 16 years, flooding resources into the system that serves 840,000 people across 8,000 square miles.” The Tea Party is opposing the library funding.
 
10) Colorado: Writing in the Colorado Independent, Marianne Goodland details how charter schools dodge Colorado laws. “But charter schools have found a legal workaround and many Democrats and Republicans look the other way. After all, charters have been the darlings of education reformers from both parties for more than 20 years. (…) Currently, the Board of Education automatically grants 18 waivers involving laws related to benefits, hiring and firing. The state makes this process easy because nearly every charter school obtains these waivers.”
 
11) District of ColumbiaD.C. Circulator drivers step up their fight for pay parity with D.C. Metrobus. “We drive the same streets, we stop at the same stops picking up people, and they make $30 an hour and we make $20,” says Circulator driver Flynn Burke. “Circulator drivers are among the lowest-paid public transit operators in the Washington region, a wage gap that creates turnover in the operations but also a disparity that troubles labor and religious leaders pushing for parity.” Sesil Rubain, the trustee with Amalgamated Transit Union Local 1764, says “if you do the same job, for the same city, for the same people of Washington, why shouldn’t you be paid the same?”
 
The Circulator is run by First Transit, whose parent company, Firstgroup PLC, had 2015 revenues of £6 billion (approximately $8.76 billion). The problems with D.C. Circulator don’t stop there. In the Public Interest’s Donald Cohen points out that First Transit “is cutting corners on maintenance. Inspectors found issues with safety equipment, driver controls, brakes, and loose lug nuts, posing dangers to riders, drivers, and other vehicles on the road. There were an average of nearly three ‘serious safety defects’ per bus, defects that ‘should render a bus out of service until repaired.’”
 
12) Florida: After years of bad experiences with private, for-profit operators, Escambia County has insourced recyclables services to the Emerald Coast Utilities Authority, a public agency. Santa Rosa County is also taking advantage of ECUA’s new facility. “A third party processing recyclables proved troublesome as ECUA bounced from Gulf Coast Recycling to West Florida Recycling to Infinitus Renewable Energy Park in Montgomery. In 2015, Escambia County agreed to let ECUA construct the facility at Perdido Landfill. ‘We haven’t had a really good recycling operator in many years,’ said Pat Johnson, director of Escambia County Solid Waste Management Department. ‘Hopefully this will solve problems.’”
 
13) IllinoisThe Chicago Tribune reports on Gov. Rauner’s privatization drive. “Since January, he’s formed a private not-for-profit corporation to handle the state’s business recruitment efforts; announced a plan to allow private companies to build and manage new toll lanes along a congested stretch of the Stevenson Expressway; and called for private donors to step in to help the financially struggling state museums and fairgrounds. And the first-term chief executive continues to insist the state should be allowed to expand its ability to outsource work to private contractors, one of the key stumbling blocks that has stalled negotiations on a new contract for unionized state workers.”
 
14) Illinois: After receiving expressions of interest from 40 parties in February, the Chicago Infrastructure Trust has issued a Request for Qualifications from potential private bidders on a streetlight replacement project. In addition to Siemens, Parsons Brinkerhoff, Star America, Plenary, and a Chinese/Midwestern team, BlackRock may be interested. BlackRock participated in Detroit’s street lighting ‘public private partnership.’ Last October, BlackRock infrastructure chief Erik Savi “said that part of what drew his team into the Detroit deal was that there were other states and municipalities looking to replicate the structure that was chosen for the Michigan project. He mentioned Chicago, Cleveland and the state of Arizona as potential markets.” [Sub required]
 
15) HawaiiCorrections Corporation of America submits the only bid for a three-year contract to house up to 1,800 Hawaii prisoners on the mainland. State officials will begin negotiations the company over the next few weeks. “CCA has also invested heavily in lobbying in Hawaii. According to the latest filings with the Hawaii State Ethics Commission, it was among the state’s top lobbying companies in January and February, retaining six lobbyists and spending $21,624 during that period. And the terms of the request for proposals look tailor-made for CCA: As a minimum requirement, vendors must have a facility capable of handling at least 1,800 prisoners within 100 miles of a major airport—with direct flights from Honolulu.” 
 
On Friday, a legislative panel killed a bill to fund expansion of a local public prison. Gov. Ige wants to finance the relocation of the crumbling Oahu Community Correctional Center, possibly through a ‘public private partnership.’ “We are basically being taken hostage,” said Kat Brady, coordinator of the Community Alliance on Prisons. “CCA knows they are in a great negotiating position. And, once the contract is signed, they know they can get away with a lot of stuff because we have no other option. That’s a recipe for disaster.”
 
16) LouisianaThe New York Times reports on the devastating impact of Bobby Jindal’s slashing of government jobs, privatization of hospitals, and deep cuts to education. “The public sector has long been home to the sorts of jobs that lift people into the middle class and keep them there. These are jobs that have predictable hours, stable pay and protection from arbitrary layoffs, particularly for those without college or graduate degrees. They’re also more likely to be unionized; less than 7 percent of private-sector workers are represented by a union, while more than a third of those in the public sector are. In other words, they look like the blue-collar jobs our middle class was built on during the postwar years. The public sector’s slow decimation is one of the unheralded reasons that the middle class has shrunk as the ranks of the poor and the rich have swollen in the post-recession years.”
 
17) LouisianaTeachers at Lusher Charter School are to file a complaint with the National Labor Relations Board after the Lusher board votes not to recognize their union. If they win they will be the third charter school to organize. “Randi Weingarten, the president of the AFT, said in a statement to The American Prospectthat the AFT is excited that three New Orleans charter schools ‘have formed unions and want contracts that give them a voice on the job, resources for their students and treat them fairly.’ The AFT currently represents 225 charter schools in 15 states, and Weingarten says ‘we’re working with educators at other charters in the Crescent City and across the country who want a voice at their school.’”
 
18) Missouri: A legal battle is looming over charter school funding in St. Louis. “The St. Louis Public Schools and the St. Louis NAACP recently filed litigation in U.S. District Court for the Eastern District of Missouri against the Missouri Board of Education, claiming that state officials have diverted millions of dollars to charter schools over the past decade, in violation of a court-ordered desegregation settlement.”
 
19) Nevada: A controversial law creating “education savings accounts” is splitting the “school choice” movement. Nelson Smith, a senior adviser to the National Association of Charter School Authorizers, opposes it: “I think the focus right now should be on serving kids in the most dire need and don’t have access to good options.” But Matthew Ladner, a senior adviser to the Florida-based Foundation for Excellence in Education, supports it. The state attorney general will push this week for the state supreme court to step in and rule on the law’s constitutionality.
 
20) Oklahoma: Oklahoma City public schools’ acting superintendent Aurora Lora says she wants to be more transparent about charter school expansion. Her predecessor “was criticized by parents and board members for not disclosing more details about expansion proposals being floated by John Rex Charter Elementary School and KIPP Reach Academy.” Lora “said she will meet this week with leaders from both charter schools and ask them to identify schools they are targeting for charter conversion, something Neu didn’t do.”
 
21) OregonFaced with widespread public opposition, activists abandon their effort to privatize liquor sales. Dan Lavey, an adviser to opponents of privatization, said “There are two reasons why people abandon or never start campaigns—lack of money or you don’t believe you have a path to victory. The grocers don’t lack for money.”
 
22) PennsylvaniaKunkletown battles “predatory water extraction” by Nestlé. “Kunkletown residents’ effort to keep Nestlé out of their community is not an isolated or parochial fight. Nestlé, which has the largest share of the bottled water market in the United States, is looking to secure and privatize water resources in the US and around the world.”
 
23) Pennsylvania: Writing in the Philadelphia Inquirer, architecture critic Inga Saffron looks at “the public cost of privatizing Philadelphia’s parks.” She writes, “Franklin Square—a gift to the city from William Penn—is now cordoned off with a chain-link fence and an opaque black curtain. The enclosure, which looks like something you would find at a top-secret construction site, was installed last week so the park’s nonprofit manager, Historic Philadelphia Inc., could lease the public square to a private company for a nightly Chinese lantern festival. (…) It’s bad enough that our transit systems and cultural institutions are expected to pay their way. The decision to monetize Franklin Square in the evenings takes the philosophy of privatism to a disturbing new level.”
 
24) PennsylvaniaMore bridges are to be replaced through a ‘public private partnership.’ “Last year, Northampton County Bridge Partners, a private consortium comprising Clearwater Construction (lead contractor), Pennoni (designer), Key Bank (debt provider/arranger), and Polsinelli (legal counsel) submitted an unsolicited proposal for the replacement of 34 bridges. (…) The project is separate from the Rapid Bridge Replacement Project, an $899 million project PennDOT is delivering as a P3 which entails replacing 558 bridges across the state.” The county had to transfer ownership to the county’s General Purpose Authority to qualify the project as a P3.
 
25) Pennsylvania: Ex-Gov. Rendell’s one time chief of staff is “to plead guilty to wire fraud for pocketing thousands of dollars in supposed campaign contributions” in an FBI sting. “The Enterprise Fund reported it received $100,000 from the president of a Pittsburgh-based nursing home services company and $25,000 that filtered through two other political action committees after being given by the CEO of a Chester-based charter school management firm.”
 
26) Puerto Rico: As Puerto Rico hurtles toward default and massive cuts in public services and structures, the Puerto Rico Highways and Transportation Authority has agreed to extend its road privatization deal with Abertis. In exchange for a $115 million payment from Abertis, “PRHTA has agreed to lower its share of toll revenues to 25 percent from the current rate of 50 percent and to extend the Metropistas concession to 2061.” [Sub required]
 
27) International: Health workers in Britain speak out about why they support the junior doctors’ strike and how it relates to attempts to privatize the National Health Service (Video).
 
Legislative Issues
 
1) National: The Senate Appropriations Committee calls for a ban on privatizing air traffic control, which is in a House bill. “While the committee acknowledged growing congressional opposition to the [privatization] plan, it added the prohibition on use of funds for the ATC plan in case ‘there be any effort to bypass the will of Congress.’” Nevertheless, Rep. Bill Shuster (R-Pa.) has vowed to press ahead with his privatization scheme. But legal authority for FAA expires July 15, and with three weeks of recess until then, Shuster is under heavy time pressure.
 
2) ColoradoA legislative row is brewing over charter school funding.
 
3) Minnesota: A Republican-backed plan to reopen Appleton prison survived in a budget vote on Friday, but “its future remains dim,” and “an agreement was announced that also could reduce future overcrowding issues: shorter sentences for some drug crimes.” Sen. Ron Latz (DFL), “has expressed his opposition, and it’s his committee which would need to hear the bill.” A House-Senate conference committee looks likely to decide the issue eventually.

 

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