Florida Reforming Its Privatization Efforts

Florida Reforming Its Privatization Efforts
May 1, 2004

On March 11, Florida Governor Jeb Bush signed an executive order directing the state's Department of Management Services to create a "center of excellence" authorized to conduct a statewide evaluation of Florida's outsourcing efforts. The new Center for Efficient Government is also empowered to "identify opportunities for additional outsourcing initiatives, and oversee execution of future outsourcing projects."

In a report issued in June 2003, the Governor's Inspector General found problems statewide with contracting. The report said agencies "often don't have in writing [exactly] what they're trying to accomplish, saving money or improving service."

The audit report went on to add that government employees negotiating the contracts "often lacked training or experience to pick the appropriate vendor or write the best contract." Once the contract is in place, state agencies may have little authority to oversee services or determine if the state is getting its money's worth. The report also revealed "there is no clearinghouse across state government that maintains records of vendor performance to insure that a bad vendor doesn't win a second state contract while failing at the first."

As Inspector General Derry Harper wrote, "As documented in almost 500 audit findings over a three-year period, controls over contracting [in Florida] are in a state of disrepair."

Mission and Goals

In response, Bush has created the Governor's Center on Efficient Government. Its mission is "to be the enterprise-wide gateway for best business practices in outsourcing in order to improve the way state agencies deliver services to Florida's citizens." In other words, to standardize how the state identifies and awards contracts for privatized government services.

The Center has three initial goals:

  • Develop statewide outsourcing standards and a business case template applicable to any proposed outsourcing project;

  • Review existing outsourcing plans within state agencies to ensure compliance with Center standards and business case, execution of effective contract language with vendors, and implementation of successful change management; and

  • Propose for the Governor's consideration by July 1, 2004 an initial list of specific outsourcing projects and initiatives that can be developed over the next three years.

Bill Simon, secretary of the Florida Department of Management Services, said "technological progress has also made the timing right for an outsourcing revolution."

Initiatives Underway

Florida has been at the forefront of privatization for years. The past three administrations have supported several initiatives, and Bush has been an ardent supporter of privatization and results-based government.

"If we can find a better way to send out payroll, handle purchasing, get licenses renewed online, provide medical services in public institutions ... and we can save money and add value to services, I will look at it," Bush has said.

Dozens of privatization initiatives are currently underway in Florida, many started and completed under Bush and his team. Some of the current state privatization initiatives include:

  • Aramark employees now serve food to state prisoners;

  • Barton Protective Services employees collect fees on the state's tollways;

  • Health Management Systems Inc. administers Medicaid billing;

  • Accenture workers staff the desk that state employees call to get help with their desktop computers; and,

  • Private companies clean state buildings.

Despite the success of these initiatives, the administration has come under fire for failing to approach privatization strategically. Each initiative has been the "flavor of the day," lacking a replicable decision-making matrix, standards, or procedures. No process has been developed for identifying future opportunities or conducting privatization studies.

Gary Van Landingham, interim director of the Legislature's Office of Program Policy Analysis and Government Accountability, said, "It's hard to tell how things are working and whether privatization is achieving goals the policy makers were trying to reach. In some cases it's been planned well and worked well and in some cases it hasn't. There's just a lack of common business analysis."

When asked in a recent interview to speculate on services that shouldn't be privatized, the governor paused and answered, "corrections officers. ... I think police functions, in general, would be the first thing to be careful about outsourcing or privatizing. This office. Offices of elected officials ... and major decision-making jobs that set policy would never be privatized."

Bush's caution notwithstanding, Florida currently contracts with five private adult correctional facilities and numerous juvenile facilities.

The creation of the Center for Efficient Government signals a commitment to privatization in Florida. But more importantly, it also signals a serious commitment to providing the best services at the best cost for Florida taxpayers. The standards, processes, and framework that will be created over the next few months likely will serve as templates for other states to use. In fact, the Center itself should serve as a model for other states to follow.


Geoffrey F. Segal is the director of privatization and government reform policy at Reason Foundation. He is serving as an advisor to the Center for Efficient Government. His email address is geoffrey.segal@reason.org.