Democrats Doubt Privatization Will Save State Money

Press Release from the Tennessee House and Senate Democratic Caucuses, Aug. 18, 2015:

Study points to exaggerated claims of savings when jobs outsourced

NASHVILLE – A plan to outsource management of state university buildings, prisons, state parks and National Guard armories is unlikely to result in significant savings to taxpayers, Democratic leaders said.

“Whether you agree with privatization or not, the point here is that there is expectation of good government,” Senate Minority Lee Harris said. “To that end, we recommend this process be open 30 days, that it be fully transparent, that any proposal with regard to prisons and armories consider not just cost savings but also public safety, and finally, that potential bidders should not be allowed to write their own final request for bids.”

Gov. Haslam has a track record of privatizing state services in ways that end up costing taxpayers more, citing the privatization of the state’s motor pool, which cost $300,000 more than market rates from rental car companies, state Rep. Mike Stewart said.

“If you look at his history of privatization, there’s really not a good policy reason for it, unless you have a problem with the idea of public employees,” Rep. Stewart said.

Democrats pointed to a study by University of Memphis Professor David H. Ciscel, which looked at the 2012 outsourcing of custodial workers at Tennessee Technical University.

“The savings were minimal,” Ciscel said. “But it really was the end of the civil service status of custodial employees.”

See below for complete remarks from Sen. Harris.


State Sen. Lee Harris represents District 29 in Memphis and serves as Senate Minority Leader. Follow the Senate Democratic Caucus on Twitter at @TNSenateDems.

State Rep. Mike Stewart represents District 52 in Nashville and serves as House Democratic Caucus Chairman. Follow him on Twitter at @RepMikeStewart.

Statement of Senator Lee Harris to Press Regarding Governor’s Privatization Proposal

I heard about the RFI when it was reported in the media. Since that time, I have heard from several leaders in the state with concerns and issues. As a consequence, Mike Stewart and I decided to convene this press conference to try to respond to some of those concerns. This is a very short agenda. But, I do have a few statements that people would like to make and after that we will take any comments or questions from the press. With that said, the following folks will make short statements in this order and then I will conclude: Representative Mike Stewart, House Caucus Chairman; Dr. David Ciscel, University of Memphis; and Tom Smith, Lead Organizer for UCW. I would encourage each you to make very brief remarks, so we have time for any questions.

I’m not sure if privatization will work. That’s one of the points of this call. But, the other point of this call is to try to present some minimum expectations as we go forward. Whether you agree with privatization or not, the point here is that there is expectation of good government. Thus, I want to recommend to the to Governor that he consider adopting several practices to make this process fair, open, and responsible.

Recommendation #1 Any Process Related to Private Contracting of State Services Should Be Held Open for 30 Days

Thus, the current RFI for the Governor’s office only holds open the process for 10 days. That is far too short. It may eliminate the opportunity for a robust process and for other potential companies to enter the fray. Even if a longer process doesn’t actually lead to more bidding, by shortening the time-frame to respond, the proposal looks bad, corrupted. We should try to be fair in state contracting and appear fair.

Recommendation #2 Any State Records Related to State Contracts Should be Open to the Public, not Confidential

The size of this RFI is sweeping. Because of the size of the RFI and the potential size of the state contracts that may come out of it, there will be a desire for details about the process. Just saying “Trust me” will not do, in this case. The public deserves an opportunity to examine every aspect of this process. Nothing should be hidden from public oversight and we should deliver on our promises of transparency.

Recommendation #3 Any State Contracts Impacting Prisons or Our National Armory Should Also be Judged Not just on the basis of purported cost-savings, but also on the basis of any/all public safety ramifications.

As it currently stands, the RFI sets up a state contracting process that treats contracts to do maintenance work at the college campuses the same as work done at our prisons. Those two assets are not the same and a responsible process should acknowledge the differences. Just last month, eight prisoners were wounded in a stabbing attack at the Northwest Correctional Facility. Also, last month, a guard was attacked at the Riverbend prison in Middle Tennessee. Suffice it to say, there have already been serious public safety challenges in our state and I’m fearful that private vendors will be even worse at meeting our safety needs. In fact, on this point alone, the Governor should consider going back to the drawing board to make sure that we don’t initiate a process that compromises public safety.

Recommendation #4 The RFI and RFP should be written by the state or other neutral or non-bidding party

I understand from folks I have talked to that eventually the process will bring in outside vendors and potential bidders to participate in crafting the bidding process. Any state contracting process should be merit-driven. It won’t be if you invite the foxes to watch the hen house. Equally unfortunate, the appearance of a neutral process would be lost if this happens. We should not set up a process where potential bidders draft their own RFP. This process should be fair to all. The only way to do that is for the RFP to be conducted by the state or by another non-bidding party.