Update: Upcoming Outsourcing Issues. September 29, 2014


1) National: A report released last week by the Institute for College Access & Success says that former students of for-profit colleges account for nearly half (44%) of all federal student loan defaults. “For-profit colleges also continue to have a much higher average default rate than other types of schools: 19.1 percent, compared to 12.9 percent at public colleges and 7.2 percent at nonprofit colleges.” Among other steps, the Institute recommends cracking down on default rates through administrative actions and an upcoming rulemaking.


2) National: The Immigration and Customs Enforcement office of DHS has issued a Request for Information for a 1,262 capacity detention facility in Houston. “ICE intends to release a Request for Proposal (RFP) for this requirement in approximately 60-120 days and anticipates full performance for the requirement to begin by April 1, 2016.”


3) National: Corrections Corporation of America announces an expansion of the intergovernmental agreement covering an immigration detention facility CCA will lease in Dilley, Texas. The 2,400 capacity facility will be constructed over the next seven months. “Congressman Henry Cuellar had a lot of questions about the facility and is waiting for answers from Immigration and Customs Enforcement.” Immigrant rights groups responded that such facilities are “inhumane, unnecessary, and a waste of taxpayer money.”


4) National: The National Labor Relations Board has ordered the U.S. Postal Service to give the American Postal Workers Union unredacted information on outsourced transportation contracts. “Pursuant to a Memorandum of Understanding which is incorporated into the current contract, the Postal Service may not renew its private 15 contracts if the Union demonstrates that it can perform bargaining unit work at the same or lower cost.”


5) National: Mark Ames of Pando Daily continues his exposé on the Reason Foundation with a close look at Robert Poole’s longstanding advocacy of privatizing everything. “Poole was particularly interested in finding ways to privatize America’s police departments and its criminal justice system.”


6) NationalGordon Lafer digs into the goals and strategy of the charter school industry. He reports that “a new type of segregation” is at hand. “The charter industry seeks to build a new system of segregated education—one divided by class and geography rather than explicitly by race. (…) The US Chamber of Commerce, the American Legislative Exchange Council (ALEC), Americans for Prosperity and their legislative allies are promoting an ambitious, two-pronged agenda for poor cities: replace public schools with privately run charter schools, and replace teachers with technology. [Sub required]


7) National: Tim Shorrock looks at potential contractor profits from the war on ISIS. “Under its terms, 21 companies, led by Booz Allen Hamilton, BAE Systems, Lockheed Martin and Northrop Grumman, will compete over the next five years to provide ‘fully integrated intelligence, security and information operations’ in Afghanistan and ‘future contingency operations’ around the world.”


8) National: Accenture, the outsourcing and consulting company, reports 9% quarterly growth in the health and public services sector. Says “we continue to deliver double digit growth in [health] consulting and outsourcing.” The federal government’s Affordable Care Act enrollment system “has cost about $2.1 billion so far, according to a Bloomberg Government analysis of contracts related to the project.”


9) National: Cintas, a significant government contractor in uniform rental and sales and custodial services, will release its Q1 2015 earnings and have a conference call at 5 PM ET today. [Webcast]. Cintas recently released its annual report, showing over $4.5 billion in annual revenue, $3.2 billion of which came from uniform rentals. Among the risk factors it cites in the report are the “possible effects of union organizing activities, failure to comply with government regulations concerning employment discrimination, employee pay and benefits and employee health and safety.” The company says it will “continue to vigorously oppose any unionization campaign,” and that “unionization campaigns could be materially disruptive to our business and could adversely affect our consolidated results of operations.” [2014 Proxy]


10) National: A GAO report released last week says the Federal Bureau of Prisons “is behind schedule activating all six new institutions—the process by which it prepares them for inmates—and does not have a policy to guide activation or an activation schedule that reflects best practices.”


11) NationalPolitico reports that the National Urban League “is stepping up its advocacy in support of the Common Core with new radio and TV spots narrated by CEO Marc H. Morial.” In July, Black Agenda Report reported that “the National Urban League got a $1 million check from now-doomed Corinthian Colleges after president Marc Morial wrote a favorable op-ed in the Washington Post. Morial then joined Corinthian’s board of directors, a sinecure that is worth between $60,000 and $90,000 a year in cash and deferred stock.”


12) National: The Post Office regulator “requires that there is an officer specifically designated to represent the public’s interest present at all proceedings.” The chair of the commission says this could be useful at other agencies.


13) NationalThe Daily Beast’s Jay Michaelson reports on a wealthy but low profile network of the religious right, The Gathering. “The Gathering is a hub of Christian Right organizing, and the people in attendance have led the campaigns to privatize public schools, redefine “religious liberty” (as in the Hobby Lobby case), fight same-sex marriage, fight evolution, and, well, you know the rest.” Funding has also been raised “via the Faith-Based Initiative program, USAID, PEPFAR and other multibillion-dollar [government] programs.”


14) California: LAZ Parking, a major privatizer of municipal public parking facilities, is found guilty of retaliation against a worker after he complained about unpaid wages and denied rest breaks. “At the state level, Castro’s decision is also notable due to the fact that it is one of the first issued under a new retaliation pilot program of the California Labor Commissioner.”


15) California: An editorial in the Sacramento Bee says a review of red light contracts shows that the “programs are more about making money than making roads safe.” The paper concludes, “what is certain is that red-light cameras are a massive redistribution of wealth, from the pockets of drivers into the coffers of government and out-of-state companies. The revelations about Redflex’s actions to win a contract should prompt Sacramento officials to re-evaluate whether they could achieve the same goal by extending yellow lights at dangerous intersections without having to pick the public’s pockets.” The paper ran a story recently that said “Sacramento County sheriff’s deputies and California Highway Patrol officers accepted free meals worth thousands of dollars” from Redflex.


16) California: The League of California Cities reports on the use of a “public private partnership” to redevelop a former air force base into a park. “When the state eliminated redevelopment funding, Irvine’s challenge grew greater still. City leaders tackled the problem with a multi-departmental plan and partnership with private developer, FivePoint Communities.”


17) California: A San Mateo judge has ordered a Silicon Valley billionaire to reopen his private road for public access to Martin’s Beach. The decision “will impact the whole coastline.”


18) CaliforniaPoll shows overwhelming support for Prop 47, which would be an important tool for sentence reduction. “Proposition 47 would require a misdemeanor sentence instead of a felony for certain drug and property offenses. It would not apply to offenders with prior convictions for serious or violent crime or to registered sex offenders. (…) Asked about the importance of the vote on this measure, 42 percent say the outcome is very important to them.”


19) IllinoisThe Chicago Reader’s Ben Joravsky looks into how privatization led to the current controversy about filthy schools in the wake of outsourcing to Aramark. “Think of it this way: hiring a janitor is more than just cleaning schools. It’s a way of directly investing in a community while providing a service that people need. Boss Daley knew this. Apparently, his son forgot it. I’m not sure Mayor Emanuel ever learned it at all..”


20) Indiana: The Indiana Toll Road, once touted as a national model for “public private partnerships,” declares bankruptcy. The bankruptcy planning was complicated by a rush of new investors in the toll road’s debt, mostly hedge funds, who bought debt from banks seeking to offload it as quickly as possible. The state has struck a deal to have a say on the sale plans of the Cintra/Macquarie operator, which has the right to run the road and collect tolls though 2081. A judge will review the agreement this week. A leading state lawmaker says any new owner would have to respect the 2006 agreement, including on toll rates [Sub required]. Standard & Poor’s shifts the blame from Wall Street (which aggressively put the deal together at the height of the credit bubble) by saying the project’s failure “may be the result of an overaggressive capital structure that shifted too much risk to private investors” (emphasis added), and sponsors a reassuring briefing for P3 industry players soon after the bankruptcy announcement. A question is whether the privatization industry may now seek to shift risk onto the public by pushing for more public subsidies to be included in the financing of poorly structured “public private partnerships.”


21) IndianaCandidates for the Indiana school board debate HB 1321, “a new law which allows IPS to hire charter companies or independent management teams to run low-performing schools.” Samantha Adair-White, an incumbent and candidate, says “HB 1321 is not for IPS. Our kids are not for sale.” The bill was signed by the governor in March.


22) LouisianaLSU settles its major financial disputes with the entity that took over Shreveport and Monroe hospitals when they were privatized. “The Biomedical Research Foundation had never previously run a patient care facility when it took control of the Shreveport and Monroe hospitals.”


23) Michigan: As day-to-day control returns to the mayor and city council, the proposal to privatize Detroit’s parking department is likely dead. “For now, the city will work within the parameters of its current parking plan, which includes limited deals with outside operators. (…) Complicating matters, [Emergency Manager spokesperson] Nowling said, is that the current parking plan includes an option for creditor Syncora Guarantee Inc. to enter a long-term lease to operate and collect revenue from the city’s Grand Circus parking garage.”


24) Michigan: An Aramark prison worker is being investigated on suspicion of engaging in a murder plot to kill an inmate. Recently, another Aramark worker was accused of smuggling drugs into a prison.


25) Missouri: Employees express concern over the state’s plan to privatize the Cottonwood Residential Treatment Center in Cape Girardeau. “‘We were really blindsided by that one,’ said Candy Ank, a psychiatric technician at Cottonwood. ‘It’s not what we fought for.’ Under the plan, all of the facility’s employees will lose their jobs. (…) Some employees are even being encouraged to open their homes to young patients and work as ‘professional parents’ who are paid a daily rate to care for the children as they receive outpatient therapies.”


26) New Jersey: Toll plaza managers avoid the privatization of their jobs before 2019, but take a hefty pay cut. “The agreement affects about 300 unionized supervisors. Unaffected are about 1,000 toll collectors, who still must negotiate their next contract, said Kevin McCarthy, president of the AFL-CIO Locals 194 and 196.”


27) New York: New York City renewed its contracts with Corizon prison healthcare despite the contractor’s being warned four times about its practices by state investigators. “Discussions were held between high-level officials at the NYC Health Department and a number of the largest NYC hospitals and health centers to encourage them to respond to every RFP for health services for people incarcerated in city jails issued since 2004. In spite of this, there were no large NYC health centers or hospitals who responded in the, at least two, RFP processes since 2004.” For profit corporations entered the New York prison healthcare system in 1996.


28) Ohio: The Cincinnati Enquirer reports that “the region’s largest school bus company, First Student, has been chronically understaffed this school year, leading to major delays in transporting students. It blames a shortage of qualified drivers and special needs buses. Some parents say the situation is beyond aggravating because their children have had to wait two hours at times to board the bus heading home from school.” This has been going on for five weeks.


29) Ohio: Three of Cincinnati’s downtown parking garages have been privatized to an LAZ Parking real estate subsidiary.


30) Oklahoma: The state board of education delays a decision on rehiring CTB/McGraw-Hill for a two year, $2.8 million no-bid testing contract. “‘I’m not going to vote to give another $3 million to a failed vendor,’ board member Leo Baxter said. ‘When you take your car into the same guy twice and he screws it up both times, you go somewhere else. You don’t take it back to him and let him screw it up a third time.’”


31) PennsylvaniaToday is the deadline for finalists to submit bids on the massive bridge replacement project. Some are concerned that, as in Missouri, complicated litigation could arise if there are disputes over contractor performance. “Pennsylvania officials hope to avoid that by insisting that all bridges be replaced instead of just renovated, said [PennDOT secretary] Schoch. If a contractor supplies the whole bridge, he said, there will be no room for argument if something goes wrong. At least one researcher is unconvinced by this reasoning. ‘It’s ridiculous,’ said Ellen Dannin, a former professor at the Penn State Dickinson School of Law who has written frequently about problems with privatization. ‘People tend to get ornery when there are large amounts of money involved.’”


32) PennsylvaniaA state-owned liquor store that Gov. Corbett wanted to privatize generates a record level of sales. “‘Taxes and store profits are returned to Pennsylvania’s General Fund, helping to pay the cost of essential services such as education, health care, infrastructure and public safety,’ PLCB Executive Director of External Affairs Stacy Kriedeman said.”


33) Tennessee: Durham School Services busses have had six crashes in just over a month in Shelby County.


34) WashingtonSeattle school district considers charter schools. “School board member Sue Peters says the board received a memo this summer informing them of an upcoming state deadline for SPS to become an authorizer of charter schools. ‘And I’m not interested in pursuing it,’ she says”


35) Revolving Door NewsGov. Markell nominates James Collins to become the next Chief Information Officer of the Delaware Department of Technology and Information. “Prior to joining the Department of State, Collins implemented large-scale computer technology projects as a senior consultant with Peregrine Systems, an enterprise software company, and MAXIMUS Inc., a leading operator of government health and human services programs around the world.”


36) Think Tanks: Advocacy Advance releases a new guide that discusses the pros and cons of “public private partnerships.” Among its notable features: a section on “Considerations for Biking and Walking Advocates.” The guide recommends ensuring that P3s are multimodal; getting biking and walking facilities included early on in any contracting process; making sure biking and walking facilities can be included later on in a corridor; and “be prepared for a discussion of user fees and how biking and walking pays for itself.”



Legislative Issues:


1) California: The Orange County Fair Board says it will back legislation to block the privatization of fairgrounds properties. “The board members didn’t delve into specifics of the legislation’s contents or how it would move through Sacramento lawmakers, but asked that Western Fairs Assn., a lobbyist group, provide help as well.”


2) Ohio: The executive director of the Correctional Institution Inspection Committee has had her job reinstated, despite the fact she had been placed on administrative leave for insubordination. Chairwoman Shirley Smith, a state senator, said Joanna Saul was “insubordinate for refusing to follow directions for distributing recommendations about changes to the state’s contract with Philadelphia-based Aramark Correctional Services.” The state is working with Aramark, which has been fined $272,000 for contract violations, to improve its performance. Smith has been at loggerheads with other committee members.

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