Competition Watch
Commonwealth Competition Council - P. O. Box 1475 - Richmond, Virginia 23218 - Vol. 5, No. 2 - September 2000
Twenty four x Seven Assistance
The Commonwealth Competition Council web portal provides 24-hour support, 7 days a week, to individuals interested in entrepreneurial government and continuous improvement in their organizations. An e-Gov entrepreneur's toolkit is available to answer your questions and to provide assistance. http://www.vipnet.org/ccc
A best practice site featuring the best practices from Virginia government agencies and institutions highlights what can be done to achieve continuous improvement. You can search this site by type of agency (corrections, mental health), search word or by the innovative indexing system.
The Commonwealth Competition Council appreciates the work of the state agencies and institutions who submitted their best practices for your use. This site was made available through a public-private partnership with the Virginia Information Providers Network (VIPNet) and web mistress Peggy Robertson.
E-government
Virginia is leading the way in e-government. Electronic government, or e-government, is one of the hottest trends changing the way governments deliver services. E-government refers to making information available in a digital form, providing online transactions to citizens, and using electronic commerce tools for government procurement and bidding.
For example the Virginia Department of Taxation has initiated a public-private partnership with American Management Systems (AMS) of Fairfax, Virginia. This five-year, $122 million contract, to implement benefits-funded systems is expected to net the state $50 million to $60 million annually in additional revenue.
Virginia is seeing the benefits first hand:
A study by Chicago based Anderson Consulting, Vision 2010: Forging Tomorrow's Public-Private Partnerships, argues that as governments increase their reliance on the private sector to provide IT services, public-private contracts will move away from traditional contract arrangements. Specifically, initiatives financed primarily or solely by the private sector will become more common. Companies will provide web portals or application-specific solutions at no cost, generating revenues with transaction fees charged to governments or directly to users.
One point to remember is that e-government starts with analysis of needs and ends with the implementation of a proper contract. Additional information on analytical tools to assist government managers in the process can be found at the Commonwealth Competition Council web portal at http://www.vipnet.org/ccc.
Public-Private Partnerships
New relationships between public and private sector agencies, commonly referred to as public-private partnerships, have begun to form around the United States. These partnerships offer state and local governments unique challenges and benefits.
Traditionally, privatization has meant the shedding of assets, services, responsibility, or some other facet of service delivery by the public sector, allowing the private sector to take over by design or default.
Recent trends in public-private partnerships are changing all this. A recent report on public-private partnerships by the Urban institute and the Lila Wallace-Reader's Digest Fund, Partnerships for Parks, highlights many of the issues and trends in this growing field.
What sets public-private partnerships apart from other forms of privatization is the unique relationship between public and private sector agencies. Under a public-private partnership both parties maintain an active role in service provision, forming a true partnership in which both parties come to mutual decisions on how best to serve the community.
Typically, each sector has an equal number of members on the partnership's board of directors. This allows public agencies to maintain significant control over services while simultaneously gaining many of the benefits found in the private sector.
The primary advantage of public-private partnerships is the ability to strengthen assets and minimize liabilities. By selecting the "right" partner, a public agency can overcome public-sector shortcomings and provide overall better service. As the Urban Institute's study recommends, public-sector agencies need to match their liabilities with assets from the private sector and their assets with the private sector's liabilities.
Virginia resources are in place to help you form the deal that works for the public, a public agency and the private sector. This is a 24 x 7 resource that is available when you need assistance in formulating a public-private partnership. Immediate help can be found at http://www.vipnet.org/ccc/egov7/html.
Public School with Private Money
The students arriving at the new Niagara Falls High School this fall will get a lot of education and a lesson in the power of public-private partnerships. The new $80 million institution is the first New York-run school to be privately built without any increase in the property tax.
Using a "lease back" arrangement, the Honeywell Corporation and private investors built the school and will lease it to the school district for 30 years at a cost of about $4.8 million per year. After 30 years, the ownership transfers to the Niagara Falls school system.
The unique arrangement required a special act of the state Legislature to address the traditional bond process used for school construction. The Legislature exempted the district from a law requiring public projects to have separate contractors for general construction, electrical work, plumbing and heating. That saved the district about $9 million. The building is the direct result of harnessing the power of public-private partnerships.
Seat Based Computer Management
Virginia and several other government agencies are preparing contracts allowing them to buy desktop computing on a "per seat" basis. These contracts, often called seat-management programs, allow Virginia and other government agencies to pay for their computer needs in the same way you buy electricity or other utilities.
It works this way. You take everything that could possibly be associated with doing work on a desktop computer and package that into one service, from one source, for a fixed price. A single vendor supplies, maintains, and replaces desktop computers and software; provides help desk and training services, maintains and manages the network; and can offer Internet access. Pricing is based on the number of users receiving computer resources.
Although in their early stages, Virginia state government organizations expect the technique, which eliminates ownership of desktop-computer hardware and software and reduces IT staff workload, to dramatically cut IT expenses and improve service levels.
Governor Gilmore recently announced that three companies had been selected to negotiate Virginia's first statewide "seat management" contract to outsource desktop computers and their related software, hardware, maintenance and help desk support. The contract will cover an estimated 600,000 desktop computers across state agencies, local governments, and educational institutions. On September 15 the Unisys Corporation entered into a master contract to provide these services to state agencies, institutions of higher learning, and localities.
Virginia's seat management initiative started in January 1999 when the Department of Transportation started a one-year pilot program providing computer services to 1,500 PC users in the agency's headquarters and three district offices through a seat management contract. Halifax Corporation, based in Alexandria, Virginia, is supplying Compaq PCs, installing and maintaining them, and providing help desk services. Halifax will replace the computers every two to three years and dispose of the old machines.
One of seat management's biggest advantages is its ability to speed up procurement. Under the current procurement system you have to put in an order for new computers, and then they may take a month to arrive. After that, they are warehoused and then installed. With seat management, you can put in an order through the Internet and if it's a high priority, the computer could be here the next day.
The Workman Fund
Background: In the past decade, prison populations have escalated dramatically. Inmate idleness and the inherent potential for violence have demonstrated the need to involve inmates in meaningful programs, which enable them to become productive citizens before they return to society.
No longer satisfied with simple "warehousing" inmates, many states have forged partnerships with private companies to create productive jobs which provide inmates with marketable skills while in prison. These prison-based enterprises-linking education and training with real world jobs are called Private Sector Prison Industries (PSPI).
Overview: Today PSIP operate in twenty states and involve firms which range in size from small private companies to large international corporations. The products and services generated by these enterprises reflect the mainstream economy, including jobs such as data entry, electronic assembly, welding, machine operation, contract packaging, and telephone reservations.
Private sector jobs in prisons have demonstrated that they produce tangible benefits for everyone. Last year, for every dollar earned, the 5,000 inmates employed in these operations returned an average of 33 cents, in the form of taxes, family support, victims' compensation, and room and board payments.
However, the PSPI concept is still largely untried in the business community. The typical business owner or executive must be persuaded that inmate employment can be both feasible and financially beneficial.
The Workman Fund was organized as a 501 (C) (3), a not-for-profit foundation in 1990. The Workman Fund encourages the expansion of private sector prison industries by supporting selected companies which provide training and employment to inmates.
The fund provides venture capital, in the form of debt or equity, to qualified private sector applicants. Such applicants must first contract with a correctional agency to train and employ a predetermined number of inmates.
PSPI Benefits: In general the PSPI public-private partnership will create a level playing field for all stakeholders. Inmates generate services that enable them to make a contribution to society, help offset the cost of their incarceration, compensate crime victims and provide family support.
It reduces prison idleness, increases inmate job skills, teaches inmates the value of competition and improves the prospects for a successful transition to the community upon release.
The private sector is provided a readily available workforce. Some of the risks are overcome by the correctional facility providing manufacturing space and other overhead costs at reduced rates to the private companies involved in the program.
Virginia taxpayers would benefit from inmate contributions to room and board to partially offset taxpayer support. Deductions are also made from inmate wages for family support, victims' compensation and taxes.
Contact: Mr. Fred Braun, President, The Workman Fund (913) 651-7949
The Council Welcomes New Members
Governor James S. Gilmore, III, announced the following appointments to the Commonwealth Competition Council:
Roy Page of Lorton
Michael N. Pocalyko of Oak Hill
Secretary of Administration G. Bryan Slater of Richmond
The Senate Committee on Privileges and Elections has announced that Senator John C. Watkins was appointed to the seat vacated by Senator Walter A. Stosch. The Speaker of the House of Delegates appointed Delegate Allen L. Louderback to the seat formerly held by Delegate Kathy J. Byron.
Council Staff Change
Al Roth, Deputy Director of the Commonwealth Competition Council, retired in July after an exemplary public sector career which included work with New York State, Commonwealth of Pennsylvania, and the Commonwealth of Virginia. Best Wishes, Al for a great retirement.
Phil Bomersheim and Peggy Robertson will continue to assist you with any inquiry, project or requirement.