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This Week’s Outsourcing Scan 7-11-2016

1) National: The New York-based Marshall Project, a nonpartisan, nonprofit news organization that seeks to create and sustain a sense of national urgency about the U.S. criminal justice system, releases a major report on horrendous conditions in privatized prisoner transport. It focuses on U.S. Corrections,  a “rapidly growing company” registered in North Carolina, and Prisoner Transportation Services of America (PTS), which merged last year with one of its biggest competitors, Florida-based U.S. Prisoner Transport. “‘Just stay in jail. It’s better,’ said Lauren Sierra, 21, who said she was repeatedly sexually assaulted by a guard in 2014 while being transported by U.S. Corrections, a rapidly growing company registered in North Carolina.” 
 
The New York Times
 summarizes the report: “On most trips, every meal for days is a fast-food sandwich. Water is rationed and bathroom stops limited. Prisoners who cannot wait often urinate in bottles or on themselves, and sometimes defecate on the floor of the van, according to guards and lawsuits. ‘People were screaming, complaining, passing out. I threw up,’ said Roberta Blake, 37, who spent two weeks in 2014 being transported by P.T.S. from California to Alabama, including a week in a stifling van.”
 
PTS has been under critical scrutiny for over thirty years
. In 1985, the Orlando Sentinel reported “both the Department of Corrections and Titusville officials last week ordered Prisoner Transport to stop housing inmates at its office after it was learned that since 1984 the company had kept about 20,000 prisoners for brief periods at its office off State Road 405.”
 
2) National: The U.S. Department of Education reports that the growth rate of state and local government spending on prisons now exceeds the growth rate of spending on education. “On average, state and local higher education funding per [full-time-equivalent] student fell by 28 percent, while per capita spending on corrections increased by 44 percent,” according to the report. [DOE Brief]
 
3) National: The St. Louis Post-Dispatch says “When prison privatization costs lives, [it is] time to reverse course. (…) The drive to privatize doesn’t always bring greater efficiency. It certainly doesn’t produce more accountability or transparency for taxpayers. This is one case where the public’s interest is better served by keeping prisoner transport services entirely under government management.”
 
4) National: The Commission on Care, formed by Congress to study the Veterans Administration, issues its 300-page final report. Though not calling for full privatization of the VA system, the report calls for more private sector involvement in veterans care, including the ability of all veterans to see private doctors through a newly-created and controversial alternative personnel system—the “VHA Health Care System.” 
 
AFGE National President J. David Cox calls this a “horrendous, anti-veteran proposal
” that would “essentially destroy the veterans’ health care system, leaving millions of veterans without the integrated care they rely on. Veterans would suffer from a drastically reduced quality of care, higher costs, less access, and the system as a whole would become unaccountable to veterans and taxpayers. Instead it would place veterans’ care in the hands of executives with corporate backgrounds, leaving veterans without a voice.”
 
Also, in a letter to the editor of The New York Times, specialized nursing expert Diana Mason says “private-sector providers should be required to demonstrate that they have the knowledge and skills to care for veterans. Studies show that fewer than half of primary-care providers in the private sector screen for prior military service or have a good understanding of military-related health problems that veterans and their families may develop.” The commission report also heavily pushes the idea of performance benchmarking, “monitored with metrics that are routinely used by the private sector,” and advocates more VA property divestiture through 75-year leases to the private sector, which has been restricted by law.
 
5) National/Texas: Be careful what you outsource, whether public or private. An outsourcer gets burned by outsourcing: “What happens when an outsourcing company outsources a key workplace function and it backfires? The dispute ends up in federal court. PSC Industrial Outsourcing, an industrial cleaning service based in Houston, hired ADP to do its payroll processing, and now the cleaning company says it’s facing more than $1 million in damages for payroll errors, according to a lawsuit filed last week in U.S. District Court in Houston.”
 
6) National/InternationalSpecialty finance firms are springing up to find financing for start-up charter schools. “The result is that taxpayer money flows to entities across the country and around the world to repay debts and cover outsourced services. (…) Besides scouting for start-up funds, volunteer boards that want to start a charter school often pay for outside expertise to run one. Some are affiliated with for-profit companies like Charter Schools USA and National Heritage Academies or KIPP, which is nonprofit. Others are independent but contract for help.”
 
7) NationalMinnPost looks at who got rich off the privatization of the student debt program. “Almost every American knows someone like Suren, an adult burdened by a student loan. Fewer know that growing alongside the legions of indebted students is a formidable private industry that has been enriched by student debt. Decades ago, the federal government relinquished direct control of the student loan program, opening its bank to corporations concerned with profits, not diplomas. Private equity companies and Wall Street banks seized on the flow of federal loan dollars by peddling loans that students sometimes could not afford and then collecting fees from the government to hound those students when they defaulted.” The story was produced by Reveal from the Center for Investigative Reporting in collaboration with Consumer Reports.
 
8) NationalESSA school accountability comments pour in. “More than 1,000 National Education Association members recently submitted public comments urging the Education Department to overhaul its draft accountability rule.” Politico reported on Friday that “some of the comments submitted recently follow a template offered by Diane Ravitch’s Network for Public Education. Those comments also urge the department not to restrict states from holding schools accountable using non-academic indicators.”
 
9) California: Education historian Diane Ravitch sends up a call for those pushing back against the school privatization and charterization onslaught in California to join together to defend public education at an all-day seminar at Richmond High School on July 30. [Flyer; the conference will also be streamed live at http://ilmlivestream.com]
 
10) CaliforniaAttorney General Kamala Harris’s office announces a $168.5 million settlement with K12 Inc. over allegedly misleading and deceiving prospective students into enrolling. “A whistleblower told the AG’s office that K12 allegedly counted logging on for as little as one minute as a full day of attendance. This, they allege, wasted taxpayer money and harmed students by depriving them of a full day of high-quality academic instruction. Additionally, the AG’s office alleged that K12 and its employees persuaded nonprofit online charter schools to enter into unfavorable contracts that put them deep in a financial hole. These agreements, the investigation alleged, show that the online schools are not really independent from K12. Instead, records suggest that K12 operated the schools to make money by taking advantage of laws governing charter schools and nonprofit organizations.”
 
11) California: Mountain View residents protest the presence of a transitional facility owned by Corrections Corporation of America.
 
12) Florida: The South Florida AFL-CIO, Miami Dade’s largest coalition of labor unions, has endorsed school board member Raquel Regalado’s challenge of Miami Dade County’s pro-privatization mayor, Carlos Gimenez. “‘To public-sector unions, Gimenez has consistently said he wants to privatize government,’ said Cynthia Hernández, spokeswoman for the AFL-CIO, an umbrella group that includes all county unions except for the ones representing fire and police employees. ‘We’ve seen departments that are understaffed and not functioning well.’” But Gimenez has been endorsed by three AFSCME chapters of the AFL-CIO coalition. The nonpartisan primary is on August 30.
 
13) Georgia: Jack Hassarda, a former high school teacher and Professor Emeritus of Science Education at Georgia State University, warns Georgians that they are about to get swindled if Gov. Deal’s Opportunity School District constitutional amendment passes in November. “Indeed what will happen next year if this amendment is passed is that 20 schools will be pulled from their districts, and forced to adhere to a system of education that is much akin to a boot camp style of education in which students are trained to take tests and jump hurdles that have little to do with learning. Don’t be fooled by these fools. Open your eyes.”
 
14) Georgia: Voter approval of a half-cent sales tax increase in November would enable Atlanta’s transit system to more efficiently finance transit improvements. Robbie Ashe, chairman of MARTA’s board of directors and an attorney with Bondurant Mixson & Elmore LLP in Atlanta, says long-term improvements for MARTA will be built using public financing rather than through a ‘public private partnership’ method. “Although the capital plan totals $6.11 billion, he does not envision that MARTA will use public-private partnership contracts to finance the work. Though all financing options will be considered, he said P3s probably won’t be used because the 40-year sales tax will provide long-term bonding capacity. ‘Given the tax capacity we hope to receive, it will be cheaper for us to pursue construction financing through the bond market,’ Ashe said.” [Sub required]
 
15) Illinois: A possible strike looms over the state as AFSCME and Gov. Rauner lock horns. Privatization is one of several issues. “AFSCME bargainers have roundly rejected the administration’s contract offer. They said it would result in substantially higher health insurance costs for members while also freezing pay for four years. They said the contract offer would also allow the administration to privatize services and would eliminate job protections in the event of layoffs. The Rauner administration also wants to impose a merit pay system for workers.”
 
16) Indiana: In what could be a significant victory in its lawsuit against IBM over the botched privatization of its welfare operations, the state of Indiana’s request to change judges in the case is granted. “Attorney John Maley, who’s representing Indiana in the case, said the state argued that [Judge] Dreyer exceeded his jurisdiction by ruling that the state couldn’t recover damages because the period after the contract with IBM was signed in 2006 was marked by a recession and 2008 floods that displaced thousands of Indiana residents. (…) He said in a statement that Dreyer made his May ruling ‘without any notice, briefing, or opportunity to be heard.’’ Under state trial rules, the two parties can now either agree on a new judge or, if that fails, three potential judges for the case will be appointed and each side can remove one, Maley said.” The state may eventually recover damages from IBM topping $200 million.
 
17) Louisiana: As educators and parents salute the signing of the first union school contract after Katrina in New Orleans, the battle continues. “The fight over the appropriate role of unionized labor in New Orleans public schools, nearly all of which are charter schools, remains far from settled. While Morris Jeff, a politically progressive school that was founded as a bit of an antithesis to the “no-excuses” charters that had come to dominate the city in the years after the storm, didn’t put up a fight when teachers notified the board of their intentions to form a union, elsewhere in the city the battles have been fierce. Just this summer, teachers at one school voted down a union, while educators at another charter unionized. The National Labor Relations Board supervised both votes. AFT President Randi Weingarten said that the Morris Jeff contract is part of a wave of unionization at charter schools around the country.”
 
18) Maryland: The state attorney general is warning that a judge’s suggested moratorium on construction of the Purple Line light rail ‘public private partnership’ could derail the whole project. “Plaintiffs in the lawsuit said in their filing that a six-month delay would allow a review of their claims that ridership on the system would be less than expected and produce lower revenues due to the recent maintenance woes of the Washington Metrorail system. (…) ‘We have a dire need to fix Metro before we attach things to it that rely on it,’ said John M. Fitzgerald, a Maryland environmental lawyer who is a plaintiff in the 2014 lawsuit.”
 
19) Massachusetts: The Boston Carmen’s Union blasts an outside audit that says there were security problems in the MBTA’s cash room. “The labor group has been sending several workers to testify before the T’s Fiscal and Management Control Board, asking its members to vote against outsourcing jobs. James O’Brien, president of the union, said that the problems at the money room stem from bad management practices, not the workers in his union. ‘It’s disappointing that MBTA management is attempting to disparage money room workers so they can embolden an effort to privatize the operation.’”
 
20) Massachusetts: Fall River’s decision to privatize its sanitation services prods a high school student to take to social media to improve local government. “You need to do these simple things to have a functioning city and the mayor is not doing a great job with that and the City Council can not function at all and we need to do something to change that,” says Collin Dias.
 
21) New YorkMiddletown debates outsourcing trash collection. CSEA Local 1000 spokeswoman Jessica Ladlee said they are willing to work with Mayor DeStefano on his plan. But “privatization, Ladlee said, was just ‘not an option,’ and she said the union would adamantly oppose it both publicly and possibly through a lawsuit.”
 
22) InternationalAnti-privatization activist Lesbia Yaneth is assassinated in Honduras. “Lesbia Yaneth was a fervent defender of the community rights and opponent of the granting of concessions and privatization of rivers in La Paz,” a statement by the Civic Council of Popular and Indigenous Organizations of Honduras. The group said Urquia’s killing “confirms that a plan has been put in motion to disappear those who defend nature’s common goods.”
 
23) InternationalWhat is the answer to corruption in privatized local wastewater treatment in Brazil? Privatized international wastewater treatment, or at least so says Infrastructure Investor. “But if the problem is a shortage of funds, why haven’t municipalities sought the help of the private sector? The answer is they have—granting concessions primarily to Brazilian construction companies such as Odebrecht, OAS and Camargo Correa. These groups have dominated the sector due to their deep knowledge of the local market and the synergies they had with the industry, according to one source. But many of these companies now find themselves embroiled in the gigantic corruption scandal highlighted by Brazil’s ‘Operation Car Wash’. This development could very well present opportunities for foreign investors, one person said. ‘That is a breath of fresh air because we would expect foreign investors to be more compliant.’” [Sub required]
 
24) Think Tanks: The Manhattan Institute, funded by the Charles G. Koch Foundation and Donors Trust and chaired by “vulture investor” Paul Singer, says the problem with the disastrous Chicago parking meters privatization deal is not the fact that private financiers gouged the people of Chicago out of a reliable revenue stream for decades, it was that it was the wrong choice of asset. The proof? Just look at the marvels of the bankrupt Indiana Toll Road ‘public private partnership,’ on which distressed debt investors were able to make a cool profit. Investors who purchased the distressed debt of the privatized Indiana Toll Road for 60 cents on the dollar received 95 cents on the dollar from IFM, which bought out the lease of the toll road then refinanced the debt. [Public Works Financing, July/August 2015; sub required].
 
25) Think Tanks: The Campaign for America’s Future’s Jeff Bryant sizes up the charter school issue in the Democratic Party’s platform on education. “The issue of charter schools is complicated and hard to address in a broad document like a party platform. But here again, the platform authors could have reasserted the need for schools to be democratically controlled by and accountable to the entirety of the population that the school is intended to serve, which would be a clear statement of opposition to the rapidly expanding industrial approach to schooling being spread by large charter management companies.”
 
Legislative Issues

1) National: Business interests launch a renewed offensive to privatize government services through “competitive sourcing,” a battle that extends back to the Reagan administration and the Grace Commission in the 1980s

John Palatiello, the longtime head of the Business Coalition For Fair Competition, points to multiple examples of Democratic privatization initiatives at a House Oversight and Government Reform Subcommittee on Government Operations hearing on Contracting Fairness. He recommends looking at Utah: “A current best practices example worthy of review is Utah`s Free Market Protection and Privatization Policy Board. This body has conducted a state commercial activities inventory and reviewed privatization opportunities, including those suggested from outside of state government that agencies themselves may not promote or identify on their own.” Maurice McTigue of the Donors Capital Fund and Koch-backed Mercatus Center also kicks in.

Don Kettle of the University of Maryland takes the privatizers on
, calling for much tighter and adequately funded contract management, development of an effective cost comparison system, and other new and enhanced strategies such as beefing up the acquisitions workforce and better “category management.”

2) National: Flanking the new report of the VA Commission on Care (see above), House legislation is introduced to relax firing policies at the VA (H.R. 5620). “J. David Cox, president of the American Federation of Government Employees, said in a statement that the bill would inversely weaken whistleblower protections by reducing employee rights. ‘Real accountability at the VA comes when frontline employees are empowered to speak out about issues with veterans’ healthcare,’ he said. ‘Chipping away at vital due process rights leaves these employees more exposed to retaliatory acts, cutting off a vital feedback channel for improving veterans’ care.’” AFGE supports a competing Senate bill, the Veterans First Act, S. 2921.

3) National: Key House and Senate lawmakers agree on a deal to a short term reauthorization of FAA programs and policies, which expire on Friday. “Rep. Bill Shuster, R-Pa., chairman of the House Transportation Committee, has agreed to temporarily drop his contentious plan to privatize the nation’s air traffic control system in order to allow a bill to move forward.”

4) NationalUSAction says the proposed WATER Act would improve water quality. “Since 1977, federal spending on water has dropped by 75%, leaving cities and states to pick up the bill. And to make matters worse, private water corporations like Veolia and Suez are taking advantage of this crisis to privatize water systems across the U.S. The crisis in Flint will just the beginning if we don’t act now. We can’t let greedy corporations and weak regulations put our families at risk. (…) (H.R. 5313) will provide dedicated funding by closing corporate tax loopholes to keep our public water and sewer systems up to date and protect our drinking water for generations to come. It includes special funding for the most contaminated communities—including American Indian reservations.”

5) Ohio: Senate Minority Leader Joe Schiavoni denounces “a lawsuit filed by the Electronic Classroom Of Tomorrow (ECOT) to block the Ohio Department of Education from doing a full audit of the school’s attendance records. “ECOT argues in the lawsuit that they are not required to ‘provide’ education to their students. They assert that they are only required to ‘offer,’ or place, the courses online.” Schiavoni calls the suit a desperate “Hail Mary.”

 

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