School Board Sweeping Chesterfield's Custodians under the Rug...

Public Comment Transcript 

My name is Brenda Stewart from the Matoaca District.

This single sheet of paper labeled “cost analysis of outsourcing 28 schools” has several columns of numbers on it and apparently serves as the basis for moving forward with the request for proposal to outsource $5 million of custodial services at 28 schools.  The paper does not reveal how many custodial jobs will be eliminated; does not report what cost factors are included in or are excluded from the current cost shown.  Apparently documents with unexplained data from unknown sources pass for decision documents to support multi-million dollar contracts in CCPS.  Outsourcing by all levels of government is not a new process but is a practice that has been around for decades.  There is however a process but it has not been followed for this project.  To ignore the proper process is to be irresponsible with public funds. I could find no evidence that the multitude of questions that should have been asked before these decisions were made were ever asked or properly answered.  My research (referenced a large notebook) and my experience in contracting confirms the lack of discipline in the CCPS process.  You will likely be making a very expensive mistake to proceed without the proper examination of processes and adequate documentation to support this decision.  Important questions to be asked and fully answered:

1. Where is the documented analysis that justifies the initial outsourcing of 8 schools?
2. Did you examine the current operation for efficiencies before deciding to outsource? Internal management reform is one of the most efficient, cost effective solutions.
3. Why are you moving forward now without a decision paper documenting at least the results of the pilot thus far?
4. It appears you did not consider the in-house cost of administering this contract.  Transaction costs should not be ignored – they can be the tipping point from cost saving to a loss. Monitoring these contracts is essential.
5. Have you looked at the extent of change in wages and benefits for the workers involved? Poverty is not cheap.
6. Do you know where the cost savings is coming from…reduced wages and benefits or increased efficiencies?  With no documentation there is no evidence that you fully understand the economic and social impact of firing your current custodians and contracting with a huge out of state company who will siphon revenues from our local economy. Is it really necessary to transfer wealth from this community to highly paid executives with multi-million dollar compensation packages?
7. Have you considered the risk of contracting? Low-balling in this type of contract is a real, identified risk that can result in a higher cost for lower services instead of savings.
8. Stability in the workforce is often a problem with contracts. When and how did you consider the social good, good will, and loyalty to your veteran employees compared to the lack of properly documented, anticipated savings?  Are you really comfortable in firing your lowest paid employees in order to give raises to other employees (some which I had mentioned previously are already being paid at well-above the market)?
9. Where is the analysis of the impact of the impact of this decision on the local economy?  Studies have found that unless there is real innovation that leads to greater efficiency or higher quality, communities will see a net negative effect on the wider social and economic levels.  The public should have been informed on the expected impact of this outsourcing decision on the workers, the community and businesses before you decided to move forward.

School leaders and the School Board should take a broad, thorough, and careful look at all anticipated benefits against the cost and potential problems identified in the literature.  From the documents I have seen, CCPS has not followed a process.  Failure is unacceptable and there is much that must be corrected before proceeding.

I am calling upon the School Board to require appropriate accountability from the Superintendent in this matter.

Prepared by:  Andy Hawkins, Assistant Superintendent of Business & Finance

Date:  March 17, 2015

Response:

During the fall and winter of 2013 the Financial Services team was assigned the task of exploring the concept of outsourcing several areas throughout the district.  They were mail services, warehouse operations, and custodial services.  As a part of exploring the possibility of outsourcing of custodial services we calculated CCPS’ current cost per square foot and we met with selected vendors and conducted research with other school divisions throughout the State/nation and searched for independent studies of this topic to determine its viability (see attached).   Once it was determined that custodial outsourcing was viable, we met with the industry leader in Virginia, GCA Services, and they visited several of our schools and submitted a estimate of the cost for their services.  The Financial Services team compared these costs to our current cost of operations.  We also met with our Facility Department management team to determine if we could restructure the department enough to provide equal or better savings to the division.  We soon realized in this evaluation, that with the School Board’s legal responsibility to the Virginia Retirement System (approximately 15% of each custodians wages must be sent to the VRS) and our commitment to the health insurance program (a very rich plan in comparison to the market place) that it was not possible to restructure the department to achieve the savings that outsourcing to a private vendor could achieve. 

The results of this operation were reported to the Superintendent and to the School Board.  The decision was made to pilot the custodial services to 8 schools for the FY15 school year, with continuous review of the results achieved to determine if a 3 year phase-in program would be appropriate.  Under the leadership of the Assistant Superintendent of Business & Finance, CCPS engaged the County Procurement Office to work with our Facilities Department to develop a Request for Proposal (RFP) and submit it to the marketplace.  This was completed during the spring of 2014 and this RFP generated a response from 16 firms.  An evaluation team was established consisting of the Facilities Department Director, the Assistant Director of Custodial Services, a Custodial Services Zone Supervisor, the Cosby High School Director of Student Activities, and the Assistant Superintendent of Business & Finance.  This team independently reviewed the responses received from the RFP and ranked the vendors.  Of the 16 vendors that responded, the evaluation team interviewed the top 4 firms and then selected its top choice (GCA Services) for contract negotiation. 

After successful contract negotiation, GCA Services began their contracted services on July 11, 2014. 

Initially, GCA Services struggled to meet the deadlines of cleaning, stripping, and waxing approximately 1.0 million square feet of flooring within the time frame allowed and in conjunction with the ongoing activities at each school.  To assist with this transition, GCA Services brought in staff/equipment from throughout Virginia, Kentucky, and South Carolina to meet their deadlines, while also hiring permanent staff for these buildings.  Coordination of these efforts were daily challenges during this period of time, but as of the first day that teachers reported to work, all of the floors had been properly stripped, cleaned and waxed.  All of the classrooms were back in place and new permanent staff hired.  Through the fall of 2014 GCA Services experienced approximately a 30% turnover rate of staff as the company was refining its staff to meet the needs of CCPS.  As a result, there were occasional temporary issues with the quantity and quality of services rendered.  The Assistant Superintendent of Business & Finance, the Facilities Department Director, the Custodial Services Assistant Director, and the school Principals worked closely with GCA services to immediately correct these concerns and put procedures in place to prevent reoccurrence.  As of this date (3/17/15), it has been determined that the outsourcing of custodial services has been an overall success for CCPS and now it is embarking on the second phase of this project which will entail the outsourcing of approximately 28 schools for FY16 and the remainder in FY17.  The County Procurement Office, Facility Services Department, and the Financial Services teams have once again prepared an RFP for all schools and has submitted it to the marketplace.  The vendor proposals are due back to the County Procurement Department by the beginning of April of 2015.  These proposals will be independently evaluated by an evaluation committee and top performing vendors will be interviewed and a top firm will be selected.  It is anticipated that this firm will be selected by mid-May for contract initiation on July 1, 2015.  Once these results are known, the School Board will be notified of the results.  

On Mon, Mar 16, 2015 at 11:59 AM, Carol Timpano wrote:

Andy,

I have attached a transcript of Mrs. Stewart's comments and questions from the last school board meeting. I feel you already have most of the answers to this already so can you provide these so that we can try to close the loop with her? I appreciate your help with this.

_____________________________________________________________________________________________

There have been other questions raise by Ms. Stewart and Rodney Martin during the budget community meetings that I would like to address:

Q: Have you looked at the extent of change in wages and benefits for the workers involved? Poverty is not cheap.

Q: Do you know where the cost savings is coming from…reduced wages and benefits or increased efficiencies?  With no documentation there is no evidence that you fully understand the economic and social impact of firing your current custodians and contracting with a huge out of state company who will siphon revenues from our local economy. 

Q: Is it really necessary to transfer wealth from this community to highly paid executives with multi-million dollar compensation packages?  Stability in the workforce is often a problem with contracts. 

Q: When and how did you consider the social good, good will, and loyalty to your veteran employees compared to the lack of properly documented, anticipated savings?  

Q: Are you really comfortable in firing your lowest paid employees in order to give raises to other employees (some which I had mentioned previously are already being paid at well-above the market)? 

Q: Where is the analysis of the impact of the impact of this decision on the local economy?  Studies have found that unless there is real innovation that leads to greater efficiency or higher quality, communities will see a net negative effect on the wider social and economic levels.  The public should have been informed on the expected impact of this outsourcing decision on the workers, the community and businesses before you decided to move forward.

CCPS Response:  The top priorities of CCPS are:

A.  Safety and security of the students and staff.

B.  Provide a quality education to assist our students to be productive citizens in our community.

C.  Be good custodians of taxpayer funds.  

CCPS is joining most private businesses and an ever increasing number of public institutions who have recognized the savings that can be achieved through outsourcing of certain areas.  During my tenure we have studied the outsourcing/elimination of the warehouse function, mail service, grounds maintenance, copier/printer services and custodial services.  In the future we will also study the outsourcing of maintenance operations, transportation, fleet maintenance, and food services.   The advantages/disadvantages of each will be fully vetted and outsourcing will occur if it is determined that we can get the same amount and quality of service to our students as we currently receive at a lower cost.  CCPS does not exist to be a job placement center.  It's primary function is to provide a quality educational experience for all of our students.  To that goal, the School Board and CCPS administration are looking at all areas to insure that the maximum amount of funds are placed directly into the classroom.

Q:  In the current Custodial Outsourcing Request for Proposal (RFP) the term "should" (instead of "shall") is placed in most areas of the RFP when discussing CCPS requirements of potential vendors.

CCPS Response:  The CCPS administration, the School Board Attorney, and the School Board Chair reviewed this RFP in detail and had INCLUDED the word "shall" in all sections of the RFP.  When our complete draft was submitted to the County Procurement Department, the word "shall" was replaced in most instances with the word "should" since it was their opinion that by having the word "shall" in the solicitation may suppress vendor interest/competition.  

The RFP is a solicitation of bids.  It IS NOT the final contract.  Just because it says "should" in the solicitation does not mean that CCPS will sign a contract that doesn't enforce certain areas that we find nonnegotiable.

Q:  Have you considered the risk of contracting? Low-balling in this type of contract is a real, identified risk that can result in a higher cost for lower services instead of savings.

CCPS Response:  We have considered the risk of contracting and low balling.  That's why it was important to have conversations with current long-term clients of GCA Services both in the Commonwealth of Virginia and nationally.  We spoke with many of their current school division clients and GCA was given very positive performance and contracting reviews.

Please let me know if there are other questions or concerns.

Andy