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This Week’s Privatization Scan 09-30-13

Update: Upcoming Privatization Issues. September 30, 2013

1) National: As Affordable Healthcare Act exchanges begin accepting sign-ups tomorrow, anticipated IT,pricing, and operational glitches may lead to finger pointing between contractors and government agencies. The Atlantic Wire asks “Who’s to Blame for Obamacare Exchange Glitches?” Conservative opponents of ACA are already seizing on the issue, while others say they will be manageable. Companies like Maximus and Xerox have concluded multimillion dollar agreements with states to operationalize the system.

2) National: Center for Media and Democracy launches OutsourcingAmericaExposed, a web resource “devoted to helping taxpayers identify the corporations seeking to privatize public assets and services in their communities.” Lisa Graves, executive director of CMD,  says “across the country, for-profit companies are engaged in a hostile takeover of our schools, roads, prisons, drinking water, and even local government itself. CMD’s Outsourcing America Exposed project will give taxpayers the tools they need to identify these privatizers and profiteers, their eye-popping salaries, and the raw deals contained in their contracts that puts taxpayers on the hook, and it will tell taxpayers how they can take back control of public assets and public services.’” Sodexo and the Geo Group are the first corporations profiled.

3) National: Politico takes a close look at online charter company K12 Inc.’s business model. “K12 has also figured out a way to make money from the struggles many students experience with its online curriculum. Here’s how it works: K12 bills $280 to $415, payable with public education funds, for every student enrolled in a regular math class at one of its virtual academies, company documents show. Kids who have trouble can enroll as well in a remedial program that K12 developed, known as Math Lab. K12 bills an additional $420 per student, also payable from public funds, for each student in Math Lab.” Politicoalso reported on the poor performance of cyber schools. “As new state report cards coming out now make clear, there’s one thing they’re not so good at: educating kids.”

4) National: Rep. Duncan Hunter (R) pushes for the privatization of the Pentagon’s main battlefield intelligence network in Afghanistan after concerns about its vulnerability arise. “Members of the Army’s top brass steadfastly have defended D-Sigs, which has been in the works for more than a decade, as a giant leap in battlefield intelligence collection. It has presented to the media soldiers who operate D-Sigs and say it works great.”

5) National: The New York Times reveals failures by USIS in vetting national security personnel; looks into its contracting structure. Company managers directed USIS employees “to give quick final approval of background investigations without reviewing them for quality.” USIS was a government agency before it was privatized in 1996, supposedly to produce cost savings and efficiencies. The Office of Personnel Management is looking for another company to take over USIS’ $288 million support services role with it,according to the Wall Street Journal. [Sub required]

6) National: Corrections Corporation of America will hold an analyst day for investors and analysts on October 2 at the Grand Hyatt in New York. [CCA September 2013 Investor Presentation]

7) National: Republic Services, the private trash hauling company with numerous local government contracts, will hold its earnings conference call on October 31, 2013. Waste Management, another large public contractor for trash services, will holds its earnings conference call on October 29.

8) National: GAO issues a report on transit agency contracting, and a survey of public transit agency officials on contracting out public transit operations. “Transit agencies also cited some challenges to contracting, such as the agency’s loss of direct control over operations. Officials from national and local unions GAO spoke with said that while contracting may provide some short-term cost savings to transit agencies, in their view the savings are almost entirely from lower wages and benefits paid by the private companies to employees.”

9) National: Writing in the Washington Times, Danny Huizinga warns the U.S. not to follow Britain in privatizing its postal service. “If the United States were to privatize the postal service as Britain has done, the government would first have to invest billions of dollars into making the postal service appear as a viable, competitive business. This would likely be unpopular with both parties.”

10) National: Lawsuits targeting privatized military housing can proceed, federal judge orders. “The litigation will traverse relatively new legal terrain on two fronts, exploring evolving medical research into mold’s health effects and testing the limits of a recent push by the military services to privatize base housing. The defendant in the cases is not the government but Lincoln Military Housing, a Texas-based company that manages about 4,400 rental units in the region in a public-private partnership with local military bases.”

11) Florida: The privatization of the state’s prison healthcare system will be completed by mid-October. “Crews says his agency made sure all 3,000 employees received interviews with the two private management companies, Wexford and Corizon, chosen to run the prison health services and most employees were offered jobs.”

12) Georgia: Decatur County continues to debate whether to privatize its emergency medical services. “Commissioner Dr. David ‘Butch’ Mosely made an additional motion Tuesday night that passed unanimously, to instruct county administrator Gary Breedlove to request proposals for the privatization of the ambulance service and have those proposals to present to the commission by October 31.”

13) Illinois/Indiana: Each state will use their respective “public private partnership” laws to pursue development of the proposed Illiana corridor connecting the Chicago suburbs and northern Indiana. Requests for Qualifications will be released this autumn. [Sub required] On Friday, the planning agency for northeastern Illinois (the Chicago Metropolitan Agency for Planning) released staff recommendationsstrongly recommending against the construction of the new toll road, saying the proposed project is “broadly incompatible with the overall goals and recommendations” of the region’s master plan, and pointing to the $1 billion in subsidies that would be required to finance the P3. The CMAP Transportation Committee will meet October 4 to discuss the recommendations. [CMAP minutes of September 20 meeting; staff recommendations against Illiana]

14) Illinois: Chicago’s decision not to privatize its Taste of Chicago event three years ago pays off. The event went from a $1.3 million loss to a $270,000 surplus. “That’s a nearly $1.6 million turnaround in just one year for a lakefront showcase that, some feared, was headed for the scrap heap.” The reorganization and improvement under Mayor Emanuel was led by a public city agency, the Park District.

15) Illinois: Chicago pulls its application for a slot in the FAA’s pilot airport privatization program after its plan to lease Midway Airport falls through. Out of 10 slots in the program, only three were active as of August—Midway, Luís Muñoz Marín in Puerto Rico (which has already closed on a lease deal), and Hendry County Airglades Airport (in Clewiston, Florida, about 80 miles from Miami). [The Bond Buyer, September 30, 2013; sub required] The failed attempt to privatize Midway airport cost $3.5 million.

16) Michigan: Gov. Snyder to push ahead with privatized prison food. “Nick Ciaramitaro, legislative director for Michigan AFSCME Council 25, which represents the prison food workers, said he hasn’t been able to review the proposed contract with Aramark because state officials say it is still in draft form.” Nevertheless, the State Administrative Board has approved the three year contract with Aramark.

17) Michigan: Benton Harbor to outsource management of its cemeteries. “But not everyone is excited about that idea. About a dozen people were out Thursday morning protesting in front of city hall. They don’t want the city to privatize the water department, the department of public works or the two city cemeteries.”

18) New Jersey: Trenton teachers say Aramark’s serving breakfast to students in their classrooms is taking time away from instruction. Trenton Education Association “president Naiomi Johnson-Lafleur said it requires teachers to clean up after students and perform other duties outside of teaching. Janice Williams, the union’s grievance chairwoman, suggested that Aramark deploy more employees to the schools so that teachers don’t have to perform nonteaching duties. ‘Let Aramark spend some dollars,’ Williams said. ‘Trenton public schools have always served breakfast and has never had these issues.’”

19) New York: The financing plan for the publically-procured replacement of the Tappan Zee Bridge runs into trouble as the federal government tells Gov. Cuomo that it will only fund 33% of the project’s costs rather than the 49% he was looking for. The state may now have to seek loans to make up the gap, while its credit rating is under pressure. The project has been criticized for a lack of transparency in its financing and tolling plans.

20) New York: Attention turns to Orange County Executive Edward Diana, who is to deliver his budget proposal October 12. Diana has been trying to privatize the Valley View county nursing home, and “it will likely be the third year in a row he has proposed partial funding for the home, a strategy intended to corner legislators into selling Valley View to a private operator.”

20) Ohio: Shortlist of bidders is chosen for the Portsmouth Bypass road “public private partnership,” the state’s second P3. Teams led by Cintra Infraestructuras, InfraRed Capital Partners and Plenary Group may bid. A consortium led by Macquarie Capital was not chosen. [Sub required]

21) Oklahoma: Escape of prisoners from a van operated by a private company raises concerns. “I’m not going to comment on the policies of a private company,” says police official Louis Flowers. “Our policy in our department wouldn’t leave a prisoner in a van by himself or a transport van like that.”

22) Oregon: The Hillsborough school board and city council will hold a joint session tomorrow to discuss, among other items, whether to recruit for more charter schools. “At the Sept. 10 work session, board members Janeen Sollman and Adriana Cañas expressed reluctance to support charter schools, and the discussion momentarily became animated. Board member Wayne Clift pointed out that past boards were hostile to charter schools and said he supported a discussion about them. ‘Every time the topic “charter school” came up, a dark cloud descended on the room,’ Clift said Sept. 10, of past school boards.”

23) Pennsylvania: In the Public Interest’s Donald Cohen weighs in against liquor store privatization in the state. “Not only is liquor privatization bad for public health, it’s also a bad fiscal deal for Pennsylvania. The bill’s sponsors claim that the sale could generate $2 billion for state coffers. Other analyses reject those numbers as rose-colored projections but point to a more significant impact: the loss of annual revenue the state depends on. According to an analysis by University of Michigan researcher Roland Zullo, ‘Privatization would have resulted in an estimated $113 million less revenue for the Commonwealth in FY 2010-11.’”

24) Pennsylvania: The state’s Public Private Partnership Board approves three transportation projects. One is for hundreds of structurally deficient bridges; one is for private companies to attach wireless antennas and equipment on bridges and other public facilities; and the third is to replace the state’s Automated Permit Routing Analysis System. The P3 board is currently looking to hire a Statewide Transportation Assets Marketing and Sponsorship Consultant. Responses to the RFP are due October 10.

25) Pennsylvania: Freedom From Fracking conference holds a workshop on a liquid natural gas pipeline and plans to privatize the Philadelphia Gas Works. “We have a lot of fronts opening up here and it’s an exciting moment,” says Iris Bloom of Protecting Our Waters.

26) Puerto Rico: A Request for Qualifications from bidders for a public schools infrastructure improvement “public private partnership” is released by the Puerto Rico P3 authority and Puerto Rico financing authority. Responses are due October 8. [RFQ]

27) Puerto Rico: With Puerto Rico’s credit situation plummeting, Miguel Torres Díaz, secretary of the Transportation & Public Works Department, suggests using a “public private partnership“ to build the $1 billion PR-22 extension road. 

28) South Carolina: Outsourcing of Charleston’s trash bag distribution system leads to shortages and complaints. “Yet the Foodland, like the other four stores who signed up to help distribute bags under Charleston’s new system this year, says the contractor—WasteZero—can’t keep up with the demand. Stores ran out of clear recycling bags last weekend.”

29) South Carolina: Cindi Ross Scoppe, an associate editor with The State newspaper, weighs in on the question of whether private companies contracting with the state can use personal data for their own business purposes. “Even when we privatize state services,” says Ross Scope, “we have limited control over those businesses we pay to do the public’s business. Unless we specifically prohibit it as part of their contract, they’re free to do whatever they want with the information they receive in performing their contracted duties.”

30) Wisconsin: Ozaukee County may be moving toward privatized road maintenance systems. The Town of Saukville “have been critical of the amount they are charged for plowing by the Ozaukee County Highway Department, and are hopeful that turning to a private contractor will result in a financial windfall.” Bids are due October 9 and will be considered at the board’s October 15 meeting.

31) Wisconsin: As Green Bay bridge sags, Streetsblog notes that Gov. Scott’s misplaced preference for building new roads may be crowding out needed repairs of existing infrastructure

32) International: Regina, Canada, voters approve “public private partnership” option for wastewater treatment plant. “‘I think the story for tonight is a group of citizens came together to fight City Hall, and that’s something that’s supposed to be impossible,’ said Jim Holmes of Water Watch. ‘So, we didn’t quite make it but we did extremely well.’”

33) Revolving Door News: The Pacific Standard looks beyond the revolving door to networks of influence connecting government and business. Profile of Janine Wedel’s work on “flexians” and the Shadow Influence Project.

34) Revolving Door News: Carol Steckel, the state’s Medicaid director, leaves her $210,000 a year post to work for WellCare Health Plans of Tampa, Florida, a company that wants to run the state’s Medicaid system under Gov. McCrory’s plan to privatize the program. “That fishy smell is not your imagination working overtime,” says the Star-News.

35) Think Tanks: Brookings Institution analyst Clifford Winston has published a new article on the U.S. transportation system. Winston proposes more privatization of the system, though at first “modest, localized experiments.” Winston is a Searle Freedom Trust Senior Fellow at Brookings. The $100 millionSearle Freedom Trust also funds the work of the Reason Foundation’s pro-privatization transportation analyst Robert Poole.

36) Program Note: Education historian and schools privatization opponent Diane Ravitch will appear on Chris Hayes’ show on MSNBC this Friday.

Legislative Issues:

1) National: Senate Subcommittee on Surface Transportation holds hearing on private investment in public infrastructure. Hears from, among others, Robert Dove, Managing Director, Carlyle Infrastructure Partners; and J. Perry Offutt, Managing Director for Infrastructure Banking for the Americas at Morgan Stanley.

2) Florida: With Florida’s correctional system running a deficit, Senate Civil and Criminal Justice budget chief Rob Bradley (R) says lawmakers are unlikely to revisit prison privatization as a solution.

3) Indiana: As GTECH struggles to meet its targets for turning money over to the state from the lottery, Sen. Mike Delph (R-Carmel) will again try to move legislation to transfer oversight of the Hoosier Lotteryfrom out of the lottery’s jurisdiction to the State Gaming Commission. Delph “is uncomfortable with a private company having such control over the state’s premiere gambling operation.”