Facing a revenue shortfall that could trigger budget cutbacks, Gov. Terry McAuliffe is turning his eye to contractor labor. …Through the second executive directive of his administration, McAuliffe is ordering his secretaries of administration, finance and technology to dive into the details of a swath of contracts….He wants a review of all IT full-time equivalent positions in state government, including contractors and state employees. State government saw an increase in more than 100 contingency IT contractors from 2012 to 2013, at an added cost of $17 million to the state, according to his directive issued today. That contingency labor is apart from larger IT contracts and projects, for example Northrop Grumman’s massive contract with the Virginia Information Technologies Agency to modernize and run the state’s vast computer network. The secretaries are also to report by Oct. 1 with a cost-benefit analysis of insourcing versus outsourcing contracted jobs with consideration of the costs and benefits of hiring full-time state employees….
With about two-thirds of America’s new transportation construction “public-private-partnerships,” design-build P3s have been highly praised over the last decade. Contractors, politicians and financiers have been claiming that tiny slivers of private money bring efficiency to the formerly public process of highway building, spurring innovation and freeing taxpayer dollars for other key needs. But as Randy Salzman discovers, P3’s benefit to taxpayers is questionable. … A great deal of the media praising public private partnerships in transportation projects comes from sources that have a self-interest in promoting them….
An independent strategic review by an financial advisory firm, Lazard, Frères & Co. LLC, has recommended that the federal government not divest the Tennessee Valley Authority. TVA said it is pleased the report “supports TVA’s financial and operational plan.” The utility engaged Lazard to assist in analyzing financial data for the Obama administration’s strategic review of options for addressing TVA’s financial situation, including the possible divestiture of the utility. The Lazard report “concluded that the business model with TVA’s financial and operational plan is the best current option for the citizens of the [Tennessee] Valley and others,” TVA noted….The high level of complexity associated with a possible divestiture “would likely lead to a costly, multi-year process to execute any such strategy, during which time TVA would experience organizational disruption and which would result in an uncertain outcome,” the report said. The complex network of TVA stakeholders would add to the difficulty of divesting TVA “in a manner that creates value for all parties,” Lazard said. …TVA released the Lazard report on June 4 as part of a mandatory Form 8-K filing with the Securities and Exchange Commission. The 8-K document is available on the TVA website.
Study findings: TVA should not be sold; analysts reject Obama’s call to privatize utility
Source: Dave Flessner, Chattanooga Times Free Press, June 5, 2014
Selling TVA wouldn’t yield much for American taxpayers, but it could prove costly for Tennessee Valley residents and the region’s economy and environment, according to an outside financial review of America’s biggest government utility. In $1 million study prepared for White House budget planners, Lazard Freres & Co. said if TVA had to earn the financial returns of private utilities, electricity rates would jump by 13 percent. At the same time, dismantling its power and nonpower programs could hurt TVA’s recreation, economic development and environmental programs.
Unions fear a ‘New Deal’ sell-off
Source: Kevin Bogardus, The Hill, March 11, 2014
Labor unions are going on the attack against a proposal buried deep in President Obama’s budget that they charge is a move to privatize the Tennessee Valley Authority …. But while the utility is now self-financing, the government could pocket a hefty profit by selling its stake. Obama proposed studying that option in his last two budgets, angering a trio of major labor unions that have thousands of members at TVA facilities. …… In this year’s budget, the administration said it “continues to believe that reducing or eliminating the federal government’s role in programs such as the TVA, which have achieved their original objectives, can help mitigate risk to taxpayers.” That language was included over the strenuous objections of labor unions, which approved a resolution at the AFL-CIO convention in September urging Washington to reject all efforts to privatize the TVA.
TVA to meet with budget officials over privatization
Source: Eric Snyder, Nashville Business Journal, May 20, 2013
Executives with the Tennessee Valley Authority will meet with officials from President Obama’s administration this week to discuss privatization of the utility, WPLN 90.3 FM reports. It will be the first face-to-face meeting between the groups to discuss a possible sale of TVA since the idea was floated in Obama’s budget proposal earlier this year.
Shocker: Republicans Fight Obama Plan to Privatize the Hugely Popular, Cheap Energy Source of the TVA
Source:Gar Alperovitz, Thomas Hanna, AlterNet, May 19, 2013
US electricity giant rejects privatisation plan
Source: Ed Crooks and Stephanie Kirchgaessner, Financial Times, April 29, 2013
The head of the Tennessee Valley Authority, the US government-owned electric company and a pillar of Franklin D. Roosevelt’s New Deal, has rejected an Obama administration plan to explore privatisation….But in an interview with the Financial Times, Bill Johnson, who took over as chief executive of the TVA in January, said the authority “isn’t broke” and could fund the investment it needed while staying in the public sector. His comments reflect an upsurge of support, led by typically pro-privatisation Republicans from Tennessee, for retaining government ownership of one of the largest electricity companies in the US…
Politics can obscure history’s reasons
Source: Edward Lotterman, Bismark Tribune, April 28, 2013
If you like irony, the kerfluffle about the Obama administration’s proposal to privatize the Tennessee Valley Authority provides plenty… Stalwart congressional Republicans like Richard Shelby of Alabama and Bob Corker and Lamar Alexander of Tennessee, who are all for small government, free enterprise, and lowering the national debt are decrying this move…
So why are GOP congressmen from the region now all opposed to its sale?
The simplest answer is that under private ownership, without an implicit federal guarantee of its debts and faced with the same requirements to pay state and federal taxes as any other private corporation, electricity rates would go up and TVA employment would go down. That would be politically unpopular. It is a case of “I’m against big government except when big government benefits me and my constituents.” Cynics may say that it also reflects the fact that the guiding principle for the GOP right now is “whatever Obama is for, we are against.”…
The Tennessee Valley Authority: Dammed if you don’t / Barack Obama mulls privatising America’s biggest public utility
Source: Economist, April 27th 2013
Eighty years ago Franklin Roosevelt signed a law creating America’s biggest public utility. The Tennessee Valley Authority (TVA) was charged with delivering cheap hydropower to the rural South, which it did by damming the Tennessee river (see map)…. Privatising the TVA would end the perception of an implicit federal debt guarantee. (A similar implicit guarantee for Fannie Mae and Freddie Mac, the federal mortgage-financiers, ended up costing taxpayers untold billions.) Divestiture would also free the TVA to raise more capital than the $30 billion debt cap allows—though, as the bond spike earlier this month hinted, it would probably pay steeper interest rates….
Role reversal: GOP attacks Obama plan to sell Tennessee Valley Authority, icon of New Deal
Source: Matthew Daly, Associated Press, April 16, 2013
Chicago’s ill-fated 75-year lease of the city’s 36,000 parking meters for $1 billion to a Morgan Stanley-led private consortium is Exhibit A for bad public contracting. …. But though the Chicago deal is widely regarded as a failure, there are important lessons to extract from this and other poorly structured public-private partnership (P3) deals. These lessons are especially important if we want to ensure these deals don’t lock us in to a carbon-based, unsustainable future. Governments need to keep in mind that the decisions we make on how to build and finance our infrastructure impact our ability to respond to looming economic inequality and climate-change problems that threaten all our well-being….The Chicago deal isn’t the only contract that has clauses working against sustainability goals. A P3 that created HOV lanes on the Washington Beltway in Northern Virginia forces taxpayers to reimburse the investment consortium (comprised of Australia-based Transurban and Texas’ Fluor Corporation) when “too many” commuters carpool….
Eno created its Public Private Partnership (P3) working group in 2012 to provide a better understanding of limited availability and the use of P3s as a potential project delivery method. Led by former U.S. Secretaries of Transportation Mary Peters and Norman Mineta, Eno’s P3 working group brought together industry leaders and experts to identify barriers to the increased use of P3s and to outline approaches for overcoming these barriers.
In Partnership Financing: Improving Transportation Infrastructure Through Public Private Partnerships, the group studied both successful and unsuccessful P3 projects nationwide in an effort to identify lessons learned for policymakers, legislators, and officials interested in using P3s to deliver transportation infrastructure projects. The working group identified patterns in the challenges that localities have faced when using P3s and developed recommendations for federal and local policy to enable greater use of P3s as an infrastructure delivery mechanism in the future.
…Appendix 1: Existing and Currently Proposed DBFOM Projects….
…Appendix 3: Summary of Case Studies
The following is a summary of the six case studies that were used to develop the policy recommendations for this research paper. The case studies are not meant to be exhaustive analyses of projects nor do the six used provide complete examples of lessons for the entire country. However the cases underscore specific lessons learned and offer valuable insights as to how each project was able to overcome specific barriers, or how projects failed to surmount obstacles. The main body of the text of this report highlights the lessons learned, while this appendix provides more detail to the interested reader. The following cases are included:
Case 1: The Port of Miami Tunnel and the I-595 Express Lanes
Case 2: Denver Eagle Transit P3
Case 3: The Commonwealth of Virginia (multiple projects)
Case 4: California – SR-91 and SR125
Case 5: Trans-Texas Corridor
Case 6: The Ohio River Bridge….
Report: Keys to Successful Public-Private Partnerships
Source: Daniel C. Vock, Governing, May 28, 2014
Flexibility, public engagement and predictability help attract outside money for infrastructure, experts say….
Source: TheNewspaper.com, May 21, 2014
Red light camera vendor uses a spreadsheet to calculate profit based on engineering deficiencies such as short yellow time.
Redflex Traffic Systems uses a special spreadsheet to calculate precisely how much profit a city can expect from red light cameras on an intersection-by-intersection basis. WTKR-TV reported about the “violation calculator” that Redflex used to provide the city of Chesapeake, Virginia with the dollar figure it could expect after signing a contract with the Australian firm.
The violation calculator is a more refined version of the criteria red light camera companies have always used. In 2001, a team of attorneys in San Diego, California used a court subpoena to obtain a copy of the confidential site evaluation performed by vendor Lockheed Martin (which now operates as Xerox). The decisions on where cameras were installed were based on finding high volume, downhill approaches where the yellow time was less than 4 seconds (view document)….
….Under Virginia law, it is illegal to base the compensation for a red light camera company on the number of tickets issued or the amount of money collected. During the proposal process, Redflex asked Chesapeake officials to explain the legality of the city’s expectation not to ever have to pay for the camera program through a cost neutrality clause….
Former Hampton City Schools spokeswoman Ann Stephens-Cherry is criticizing the way Hampton City Schools handled outsourcing its custodial program to a private company, GCA Services Group. The School Board voted on a budget plan Wednesday evening to outsource custodial services at “market wages and benefits” to the company in an effort to save the division $2 million per year. But many custodians said they were dissastified with the amount of information they were given at a February meeting regarding the outsourcing.
Hampton School Board weighing options on how to outsource custodial services
Source: Austin Bogues, Daily Press, February 20, 2014
Hampton school division custodians are closely watching a proposal that would outsource their work to a private company. Hampton school administrators met with custodial workers Wednesday to answer questions about their future. At issue is a proposal before the Hampton School Board to outsource its custodial program to a private company, GCA Services Group. … Hellman said the school division is looking at a cooperative agreement with Isle of Wight to “ride” — or join — its contract with GCA Services Group, meaning it wouldn’t have to solicit bids from other companies. … School Board members have to decide between options for outsourcing the custodial duties. They could contract a plan that matches employees’ current pay and benefits, or they could select a plan that pays market wages and benefits. … The Hampton school division employs 214 full-time and part-time custodians. The average custodian for Hampton city schools earns about $11 an hour, according to Ruth. …
Source: SAFEbuilt, March 2014
There are many myths about the complex subject of privatization. This feature article highlights the common misconceptions of privatization, and the potential benefits, as they relate to the “new normal” environment for local government.
Using the analogy of a lemonade stand, SAFEbuilt, a private provider of community development services, helps to squeeze out truth from fiction.
City of Troy, Michigan
Kiawah Island, South Carolina
City of Roswell, Georgia
Powder Springs, Georgia
Bay Village, Ohio
Source: Business Wire, February 20, 2014
ABM, a leading provider of facility solutions, announced its ABM Building Services business has been selected by the Franklin City, VA Public Schools to implement a district-wide energy and facility improvement project through ABM’s Bundled Energy Solutions program. The project is expected to improve the district’s energy efficiency and indoor air quality, comfort and lighting conditions, enhancing he overall learning environment for students, faculty, and staff. In addition to improved facility conditions, Franklin City Public Schools is expected to save more than $1.8 million in energy and operating costs over the next 15 years based on current energy prices. …
William & Mary announced Monday its intent to award the management contract for university dining services to Sodexo, Inc. … As part of its winning bid, Martin said, Sodexo is providing $5 million in improvements to dining areas on campus over the term of their agreement. … The five-year contract, which will be signed and finalized in the coming weeks, will go into effect as of July 1, 2014. There will be options for an additional five years, Martin said. Beginning immediately, and for the remainder of the current contract, the Sodexo transition team will work closely with William & Mary and Aramark management to ensure a smooth transition, she said. …