Contracting Out for School Support Services

Contracting Out for School Support Services
October 1, 1999



Like every individual and organization on the planet, public schools are dogged by the most fundamental proposition of economics: Resources are scarce.

In the private sector, free competition among entrepreneurs results in the most efficient resource use and service delivery. But how can schools be sure they are using their available resources in the most efficient manner? Contracting out--privatization--provides an answer.

By partnering with private, for_profit vendors, school administrators often find they can improve the delivery of cafeteria services, maintenance, and pupil transportation (among other services), while freeing up resources to be used for the classroom. The competition for business among such vendors helps prevent schools from spending too much money for poor-quality support services and then scrambling for ways to find additional funds for higher priority educational needs.

But doing privatization right takes much more than simply making the decision to contract out. Most important, it should not be done for its own sake, but to achieve the goal of accomplishing more for less. The following nine points are a guide to help school officials successfully outsource support services.

1. Do your homework. The whole point of privatization is to get the most for your money, and if you do not pick the service provider that offers this--and make sure that it is delivered--you will fail. This means designing two systems: a bidding system that delivers the right provider, and a monitoring system that tracks vendor performance.

Also, administrators should become familiar with the literature available on school privatization to help them overcome the many financial, political, and contractual obstacles that often thwart such efforts. Thus prepared, it shouldn't take more than 15 seconds to explain why privatization is a necessary policy in your district.

2. Involve key parties. Alerting groups that will be affected by privatization--students, parents, teachers, and local public school unions--can be very beneficial. When constituencies understand they are part of the process, and their views are important, they will be more willing to work with administrators. You may wish to invite members of concerned groups to meetings or to tours of districts that have privatized the service you propose to outsource.

3. Make no grand promises. Discretion is the better part of privatization valor. Under no circumstances should you promise more than you believe can reasonably be delivered. Privatization is not a magical elixir, so don't be seen promoting it as such. If you make unrealistic promises, and privatization does not work, fewer people will trust your judgment the next time you attempt to contract out.

4. Issue Requests for Proposals (RFPs). An RFP is a request made by an organization--your school, for instance--for proposals from private contractors to perform a service. The RFP should contain a precise description of the service your district wants provided. You may wish to examine sample RFPs used by sister districts as models for your own privatization endeavors.

One of the reasons RFPs should be used in school districts, as opposed to a straight "invitation to bid," is that RFPs allow a greater emphasis on service quality, not just the cost. But a word of warning: Because RFPs allow greater discussion of the details, there is greater opportunity for favoritism and other unethical practices. Guard the process jealously.

5. Ensure a competitive environment. Perhaps the most important aspect of contracting out is ensuring competition among the vendors who are seeking a district's business. Aggressively advertise your desire to bid out a service or services. The more contractors who respond, the better. Also, make it clear that a three_year contract is just that. Some administrators get so comfortable with a particular contractor that they automatically extend the relationship without a formal re_bidding of services. That is an invitation to higher prices and lower quality work. Keep your contractor on his or her proverbial toes by re_opening the bidding process at the end of the agreement.

6. Ensure quality workmanship. Make it clear that the contractor's work will be inspected. For instance, in a transportation contract you may wish to enumerate exactly how many "surprise" and scheduled inspections you plan to make of the district's privatized bus garage. You also may wish to establish a complaint-handling procedure for students, workers, parents, and other citizens--and make sure you advertise its existence.

You will also want to cross_check any complaints you receive with larger surveys of parents and students. In some instances, union opposition to privatization has led to organized complaining, where labor leaders encourage their members to call officials with claims of poor service on the part of a specific contractor. A wider sampling of consumers of the service will yield a more accurate picture of community opinion.

7. Employ a skilled attorney. In today's litigious world, you cannot be too careful. The counsel of a skilled business attorney is a sound investment. Too many privatization deals have soured over poorly written and misunderstood contracts.

8. Make progress reports. Make periodic progress reports on the contractor's performance to date and share it with parties that have shown the greatest interest in the privatization initiative.

9. Do your homework__again! Successful contracting involves mastering many details. The more you prepare, the better off you will be should criticism or crisis arise.

Privatization is not a panacea. But, done right, it gives schools the opportunity to do more with less. It takes educators out of the food, janitorial, and busing businesses, and it puts professionals in charge. This frees up administrators to concentrate on every school's first mission: educating children.


Michael LaFaive is managing editor of Michigan Privatization Report, a quarterly publication of the Mackinac Center for Public Policy. For more information on privatization, visit the Center's Web site at http://www.mackinac.org.