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Privatization to come under scrutiny
Senator: Panel to examine results of outsourcing

By Bill Cotterell
Democrat Political Editor
Dec. 02, 2004

The new head of a Senate oversight committee said Wednesday that her panel will take a hard look at how privatization is consuming an ever-increasing share of state spending and eliminating government jobs.

Sen. Nancy Argenziano, whose district includes eastern Leon County and tens of thousands of state employees, wants to find out whether the state is being savvy about hiring private companies to do government work and "is it really cheaper, and is it really better?"

"How do you outsource something to a company and say, 'We don't know what our needs are, but go ahead and do it'?" the Dunnellon Republican asked. "Sometimes the concept looks very well, but the implementation really stinks."

Members of the Senate Governmental Oversight and Productivity Committee agreed with Argenziano's concern that the Legislature has surrendered an important part of its regulatory role after allowing the executive branch to outsource state personnel and computer functions.

She wants the committee staff, as well as analysts from the Auditor General's Office and the Office of Program Policy Analysis and Government Accountability, to bring the committee examples of privatization successes and failures.

Argenziano has particular concerns about the state's nine-year, $350 million contract with Convergys Corp. for handling payroll, benefits, recruiting and other personnel functions. The state's biggest privatization project, affecting about 900 state personnel jobs, has run about two years behind schedule and been plagued by glitches.

"It looks like the senator is prepared to unscramble this egg and maybe cook some new ones," said Mark Neimeiser, chief lobbyist for the American Federation of State, County and Municipal Employees.

Hiring private companies to help the government dates back about 20 years, but Gov. Jeb Bush has aggressively pursued it. The state now spends $23 billion on contract services, nearly four times as much as its $6 billion employee payroll.

Privatization "has become a growth industry," OPPAGA interim director Gary VanLandingham told the committee Wednesday.

He acknowledged that it "can produce a lot of benefits if it is done well" but said the state too often fails to assess what's needed before negotiating a contract, resulting in delays or cost overruns.

It's also difficult for the Legislature to hold private companies accountable - "more difficult than calling up an agency head and saying, 'We don't want to see this happen again,'" VanLandingham said.

Sen. Gwen Margolis, D-North Miami Beach, said the committee should set standards for outsourcing state work and prescribe methods for monitoring those services. She said agencies should have to report to the Governmental Oversight and Productivity Committees.

"When I go to find out how a privatized program is working, nobody knows," Argenziano said. "I'm amazed that 41 percent of a $57 billion state budget is in contract services. We should have more accountability for that."

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