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This Week’s Outsourcing Scan 7-13-2015

Update: Upcoming Outsourcing Issues. July 13, 2015

1) NationalPresident Obama will become the first sitting president to visit a federal prison when he goes to Oklahoma this week. Public interest advocates say that mass incarceration is being driven in part by the profit motives of private prison corporations, which are major federal contractors. Immigration detention quotas and profit guarantees are driving increasingly aggressive federal immigration enforcement strategies. “Two major private prison corporations have emerged as the main corporate beneficiaries of immigrant detention policies: Corrections Corporation of America (CCA) and GEO Group.” The president is expected to issue executive orders this week commuting the sentences of nonviolent drug offenders.

2) NationalImmigrant detainees sue the Geo Group for forced labor, saying were paid only $1 a day to perform janitorial work, “sometimes under threat of solitary confinement.” Last week a federal judge allowed the suit to proceed. The judge ruled that the suit “could proceed on the allegations that GEO unjustly profited from the detainees and violated the federal Trafficking Victims Protection Act, which prohibits forced labor.” He also ruled that the GEO Group “couldn’t claim a government contractor defense based on the federal government directing that the detainees be paid only $1 per day. (…) Although the contract with the government provides that the GEO Group only would be reimbursed for the Voluntary Work Program in the amount of $1 per day per detainee, nothing in the contract prevents the company from paying detainees more than that amount.” [Bloomberg BNA, July 9, 2015; sub required]

3) National/InternationalInfrastructure investors are fretting about the actions of regulators in their asset class. “For example, if a subsidy regime is perceived to have been too generous to investors, it seems that regulators will these days not think twice about intervening to adjust it. Where investors get stung by such interventions, however, opinions differ regarding their own culpability—or at least partial culpability.” They worry that the “dumb money” may “flee to the hills.” [Sub required]

4) NationalThe DC Circuit Court upholds a federal contractor ban on pay to play. “The Court upheld the constitutionality of a 75-year-old law that bars individuals and corporations from making federal campaign contributions while they negotiate or perform federal contracts. (…) However, contractors can still engage in other forms of political activity, such as speaking or writing about candidates and political issues, volunteering for campaigns, and hosting fundraisers.”

5) NationalSam Seder of The Majority Report interviews Professor James McCommons, author of Waiting on a Train: The Embattled Future of Passenger Rail Service, on “the history of political compromise that created Amtrak. Why Amtrak will always need public subsidies. Why Amtrak can’t be profitable. Why so few Americans have used train service. When government stopped supporting the railroads. Why politicians attack Amtrak. What we need to do in order to reform and grow the American rail system. Why passenger rail trains run late. Why Republican governors like Scott Walker and Rick Scott killed major rail projects in 2009. Why there is hope for expanded rail in California. And what are the best train lines to ride in the country.”

6) National: The government is boasting that it exceeded its targets for directing contracts to small businesses, but “unfortunately, past experience shows that the SBA’s numbers must be taken with a handful of salt.”

7) NationalSteven Singer calls for more public involvement to hold schools accountable. “Anyone who speaks of fiscal accountability in education yet is in favor of its further privatization is either disingenuous or in need of a basic math course! The solution, however, is not to withhold additional funding. The solution is more oversight. And I don’t mean only government oversight and regulations. I mean oversight by the public. Democracy only works if people participate.”

8) National: Psychiatrist and Duke University professor emeritus Allen Frances asks “Have we gone too far down the road of privatization?” On medical and mental health, Dr. Frances writes, “De-institionalization and the privatization of community mental health centers allowed the states to off-load responsibility for the severely mentally ill so that now about 300,000 are in prison and a like number are homeless. (…) Our chaotic, profit-driven [medical] system delivers poor health outcomes even though it costs about twice as much per person as the more government regulated systems in the rest of the developed world. People who don’t need it get too much medical care because it is profitable to providers, while one in seven people lack any coverage at all.”

9) Arizona/National: In the wake of the Kingman prison riot, Caroline Isaacs of the AFSC-Arizona warns that for-profit prisons threaten public safety. “Even when there are monumental failures, there appears to be no accountability for Arizona’s private prison contractors. In about two weeks, all three of these companies (and probably others) will likely be submitting bids for up to 2,000 more medium security prison beds. In light of this latest fiasco, Gov. Doug Ducey has an obligation to stop the bidding process, at least until the investigation into the Kingman riots is complete. None of these companies deserve another billion dollar 20-year contract.”

10) California: Victor Valle, an emeritus professor in ethnic studies at Cal Poly San Luis Obispo, takes a long terms perspective on City of Industry. “The City of Industry is a great and quintessential California story, the municipal embodiment of California’s tendency to hand over public institutions to private enterprise—everything from prisons to police, from universities to the military, from transportation to trash pickup.”

11) California: The Presidio Parkway linking the Golden Gate Bridge and San Francisco opens today. It was developed as a “public private partnership” despite sharp criticism. Democratic Leader Nancy Pelosi says the project represents a “beneficial partnerships between the public sphere and private sector.”

12) Colorado: The state supreme court’s landmark ruling “that a county’s so-called “Choice Scholarship Program” violates the Colorado Constitution because it unconstitutionally diverts public school funds to private, religious schools,” may be headed to the U.S. Supreme Court.

13) FloridaLax state regulations governing charter school openings lead to another scandal. Eagle Arts Academy in Palm Beach County “ran up hundreds of thousands of dollars in debt and struggled to put in place its arts-infused curriculum,” but “a Palm Beach Post investigation has found that it served a very different purpose: filling the bank accounts of its founder’s private businesses.”

14) FloridaPublic library supporters fight back against the Marion county commission’s plans to privatize to LSSI or slash funds. Friends of the Ocala Public Library“has written two white papers as a result: one about the possible consequences of cutting $500,000 from the budget, and the other about the potential consequences of privatization.” Among FOPL’s critiques: “A for-profit corporation assuming control of a government department flies in the face of our Government in the Sunshine as we, the citizens of Marion County, would no longer have access to budgets, salaries, expenditures, quality control, hours of access, etc.” Key board of county commissioners meetings will take place this Wednesday, September 10, and September 24.

15) GeorgiaThe massive Northwest Corridor managed lanes project begins to take shape. The design-build-finance (DBF) project, which has 30 miles of reversible lanes and 39 new bridges, is expected to reduce congestion around Atlanta. [Sub required]. Earlier proposals to develop the project using a “public private partnership” model were abandoned in favor of the DBF model.

16) IllinoisEast Moline’s attempt to privatize its garbage service goes before a judge tomorrow. AFSCME filed an unfair labor practice complaint with the Illinois Labor Relations Board.

17) MaineLawmakers pass, and Gov. LePage signs, legislation to issue $85 million of public infrastructure bonds. “In November, Maine residents will have the final say on the matter when the bond measure appears on the ballot.” [Sub required]

18) Maryland: The deadline for the scaled-back Purple Line light rail “public private partnership” is pushed back to November 17. “Maryland Transportation Secretary Pete K. Rahn said Thursday the state has found at least $215 million worth of design-change savings. Another $75 million could be saved by giving the bidders more flexibility in ‘commercial’ considerations, such as whether to enter into certain labor agreements.”

19) MassachusettsCritics say lawmakers put taxpayers at risk by suspending a due diligence law regulating privatization. “Now the public and taxpayers will be kept in the dark about the cost and quality of services provided, and there will be no one to hold contractors accountable. As Larry Hanley, International ATU president, said, ‘the selling point of these “incredibly open and honest” private transit companies is to provide savings by paying workers less, eliminating pensions, and offering fewer benefits. This is about taking an experienced professional workforce and turning it into a part-time job, not appropriate for a safety-sensitive industry where employees are driving massive vehicles and entrusted with the lives of millions of passengers each day.’” Brockton Rep. Mike Brady voted against the budget because of the suspension, saying “I’m against suspending the rights of workers for three years.”

20) MinnesotaState education officials insist that charter schools diversify their student bodies. “So far, the biggest opposition to the changes comes from operators of the state’s burgeoning charter school industry, which are luring students away from traditional public schools in increasing numbers.”

21) Nevada: A constitutional challenge may be coming for the state’s voucher law, which has been called “the most extremist” in the country.

22) New JerseyCWA stages a rally to protest against plans to privatize 911 dispatch in Camden. “‘Companies care more about making a profit than they do about the safety of Camden,’ said Jim McAsey, a national staff representative with the CWA. ‘This rally is about good jobs, not just for 25 people but good jobs for all Camden workers.’ Speaking at the rally, McAsey stressed that while only 25 workers would be impacted by the privatization of dispatch, it could be a slippery slope that leads to privatization of additional public jobs.”

23) New YorkThe Hedge Clippers demonstrate outside a fundraiser being held by hedge fund magnate Daniel Loeb for Gov. Andrew Cuomo. “The billionaire hedgie has worked closely with Cuomo on the issue of charter schools.” On Saturday, the New York Times reported that Cuomo conducted an intense behind the scenes campaign to promote charter schools. “Mr. Cuomo convened a meeting at the Harvard Club in Manhattan in late April to lay out his broad battle plan for enacting his agenda. Speaking to a group of charter-school advocates and donors, he urged them to apply vigorous pressure to the reluctant State Assembly, where the governor’s fellow Democrats hold a majority.” [Hedge Clippers report: Hedge Fund Billions Boost Cuomo’s Privatization Push]

24) New YorkReuters law columnist Reynolds Holding urges Columbia University to think about investing in “social impact bonds” (SIBs) similar to a Goldman Sachs agreement with New York City to improve recidivism at Rikers Island. The pay-for-performance vehicle (it is not actually a bond) did not hit its targets and Goldman lost $1.2 million. It was modeled on a project in Peterborough, England which also did not meet its objectives. SIBs have attracted support among some U.S. foundations, but have also drawn skepticism.

25) PennsylvaniaRounds of layoff and a multimillion dollar deficit raises questions about Philadelphia’s Aspira charter school corporation. “District officials say they’re actively investigating the origins of Olney’s current deficit, even as they continue to seek answers from ASPIRA about a number of other longstanding financial concerns. ASPIRA officials have said that Olney’s deficit springs from various changes in pension-funding laws, but district officials say they cannot confirm that at this time.”

26) PennsylvaniaThe Alliance to Reclaim our Schools has been organizing statewide action to protect public education. “On-line education, the University of Phoenix, and Charter school models are the most obvious examples of privatized schools. It is nearly common knowledge now that programs like those offered by the University of Phoenix do not produce quality education, but mountains of student debt contributing to the looming, potentially disastrous, student debt bubble.”

27) PennsylvaniaGov. Wolf appoints a 48-member task force to provide guidance on the build out of pipeline infrastructure in the state. The task force includes government, private industry and environmental groups, and will report back to Wolf in February 2016. The task force’s first public meeting is July 22 and will be livestreamed on the DEP website. [Sub required]

28) PennsylvaniaScranton’s parking privatization plan is moving ahead, but without transparency or public accountability. “Citing the need for secrecy to get the best possible deal for the Scranton Parking Authority, city officials and consultants are keeping the details of preliminary offers from five companies who want to take over the operation close to the vest.”

29) PennsylvaniaThe Morning Call reports that the FBI has subpoenaed the billing and procurement records of the Arts Academy Charter School in Allentown. The investigation became public with the agency’s raid on Allentown City Council.

30) Tennessee: A charter school consultant who was investigated and “exiled” is now working in Chattanooga. “Authorities in New Jersey told Steve Gallon III to stop working with the state’s public schools and not come back. Now Gallon is in Tennessee and working with the Chattanooga Charter School of Excellence.”

31) VirginiaGov. McAuliffe’s administration has negotiated a $149 million refund for the “disastrous” US 460 “public private partnership” toll road. “The $149 million the McAuliffe administration was able to recoup still falls short of the approximately $250 million Virginia has paid to the contractor. ‘I regret that that contract did not allow for greater steps to mitigate the impact of this failed project, but I am proud of the bipartisan reforms we worked with leaders like Delegate Chris Jones to make, to prevent disasters like this occurring in the future,’ McAuliffe said. While the project has cost Virginia millions, it has also served as a motivating factor for reform, part of which includes House Bill 1886 (HB 1886), a new piece of legislation McAuliffe signed into law while announcing the settlement.” [Sub required]

32) Virginia: After a troubled experience with GCA Services in outsourcing custodial work, Chesterfield school officials claim tighter vetting of the new contractor is producing results. “Earl Fisher, assistant director for facilities, said SSC’s custodial crews will operate from a detailed list of tasks to be performed daily, weekly, monthly and annually. He said communications with the company have been good. Compared with GCA, ‘It seems like this time it’s a lot better,’ he said.”

33) WisconsinLawmakers pass a budget that eliminates prevailing wage on local projects. “The budget also includes changes to the state’s prevailing wage law. An amendment, based on a proposal from Sen. Frank Lasee, R-De Pere, added to the budget exempts local government projects from the prevailing wage and establishes the federal prevailing wage as the standard for state projects.”

34) Think Tanks: This Thursday at noon, the Project on Government Oversight (POGO) will be holding a Twitter chat “to help craft some solutions for a better, more accountable government. What are your experiences with or questions about government transparency and accountability? Tweet us!”

Legislative Issues:

1) National: Transportation and transit funding is expected to move onto the Senate floor this week, with a possible showdown between Republican lawmakers backing another short term patch (possible until December), and Democrats wanting a six-year funding bill. The existing stopgap expires July 31. “Democrats said they would only support another patch if Republicans warm to the idea of using tax repatriation to fund a multiyear bill.” [Bloomberg BNA, July 9, 2015; sub required]. A tax holiday “is favored by many on the Right who like low taxes. But the Joint Committee on Taxation, Congress’ nonpartisan tax experts, estimated that the legislation would lose the Treasury $118 billion over a decade.”

2) NationalSen. Sherrod Brown (D-OH) discusses his new charter school accountability and transparency bill. “‘Charters were envisioned to be incubators of innovation working alongside neighborhood public schools,’ said AFT President Randi Weingarten. ‘But they have largely failed to live up to that vision because many lack accountability, transparency, or a voice for teachers and parents.’

3) National: David Sirota of IBT raises questions about a bill just passed by the Senate that would enable school district financial consultants to be paid with funds intended for disadvantaged children.

4) National: Some are concerned that military commissary privatization may not be dead, since it could be resuscitated at the House-Senate conference negotiating table.

5) NationalTransportation Secretary Foxx throws cold water on Republican plans to privatize air traffic control, saying the system is working well. “Shuster was expected to unveil the air traffic control privatization measure last week, but the bill’s release was delayed and no announcement of a new date to reveal the legislation has been made.”

6) New Jersey: A bill to put a three year moratorium on the establishment of new charter schools draws a howl of protest from a charter school administrator. Newark’s School Advisory Board has thrown its support behind the legislation last month. [S 286]

7) PennsylvaniaA Luzerne County Councilman pushes “managed competition,” saying it’s not outsourcing. “Council Chairwoman Linda McClosky Houck challenged Bobeck’s labeling of the practice as managed competition during the work session. ‘I’m pretty sure that is what you call outsourcing,’ she said. ‘I would totally disagree,’ Bobeck responded. Paula Schnelly, head of the American Federation of State, County and Municipal Employees (AFSCME) representing several county unions, was not at the work session but reviewed an audio recording of Bobeck’s comments and also questions the ‘managed competition’ term. ‘From a union perspective, we don’t see what he’s proposing as anything but outsourcing and privatization,’ Schnelly said.”

8) Pennsylvania: As the budget impasse continues, Brian O’Neill speculates that a deal on liquor privatization may be in the offing—or not.