Friday, December 4, 2009

Chalk one up against outsourcing

Earlier this week a letter to the editor appeared in the Courier Times in which the author stated their objections to the possibility of support staff functions being outsourced to third party vendors. According to Colleen McLaughlin of Feasterville, "Once you have committed to outsourcing, it is extremely expensive to regain control of the part of your business you have allowed another entity to control. The level of service and cost, in the long run, trend in the wrong directions, with the cost going up and service going down."

Although I respect Ms. McLaughlin's opinion, I don't agree with her unsubstantiated conclusions that outsourcing will necessarily lead to increased costs and loss in quality of services. Her statements are based solely on opinion yet she presents them as if they were facts.

If you read the comments below the online edition of the Courier Times, one reader posted the following observations:

There are no facts in this letter. Colleen you cannot make assertions without backing it up. I am sure if you google it you will find pros and cons on both sides. Anyway this is not about giving jobs to any foreign firm. The firms that do this are companies that usually rehire 80% of the original employees. The board needs to be very careful about going down this path. But the Union has to be very careful about letting the board investigate outsourcing costs. These firms are desperate for SD business and will offer very reduced rates in this recession. Once the savings are public it is hard to stop boards from doing it. Especially in NSD where the budget is out of control and thy are facing more cuts in the 2010 budget.

Not sure I can say it better than that, so I won't.

You can read Ms. McLaughlin's letter in its entirety by clicking here.


JS said...

I usually side in any cost cutting matter, but the outsourcing of services must be tread upon lightly.

Though there are no hard facts in the letter I agree with the premise.

The trend makes sense that the initial cost savings seem good, then eventually costs will go up because there is no longer the leverage of reversing course and taking things in-house again. Maybe service won't drop, but it tends to not increase. So you'll have higher cost trends, stagnant service and no choice but to keep outsourcing due to the prohibitive costs it would take to bring that service back in house.

I don't want the same mistake made with the new high school to haunt us here. Take the tantalizing deal of immediate savings that will end up costing us dearly down the road.

acs said...

JS, Not really true on contract pricing anymore. It was a valid concern maybe 20 years ago but competition in this is fierce now. After 3 years you go back out to benchmark unit cost and labor with market and either reset up or down (usually down) and if not satisfied you go out for bids again with other providers.

William O'Connor said...

In the case of janitorial services there are a number of companies that are available, so there is competition in the marketplace. This leaves Neshaminy in a relatively good place if we need to consider other options down the road. It's not like we're stuck with the only other game in town.

csld said...

My question is this requarding this company or any of the others .I notice that these companies state that they clean desks and windows etc.My question is what happens when furniture needs to be moved or a toliet gets clogged or a child throws up or there is an event going on ?This is when these companies start getting costly because there is nothing in these proposals that I see that includes these services and this is what Ms Mclaughlin is trying to say.

JS said...

I know Mr. O'Connor might not have the details now, but is this bid for ONLY Mon-Fri custodial services? If it is the savings will be far less because there is a high school that is utilized heavily on Saturdays.

Even if you take sports out of the question you have Saturday detentions, SAT's, Plays, Musical, Gym Night, etc. I'd say out of the 40 week school year that at least the High School is open 38 Saturdays for actual school groups that don't have to pay usage fees. Some of those events (Gym Night, Home Coming, the musical) require Sundays as well and multiple personnel.

Are items like that (and what csld brings up) in the contract?

csld said...

Not according to what I read on the nneshaminy site under bids ,the proposal just states that they must clean desks on so many days aweek and windows and walls.Pretty much they are a cleaning service which is why they are called janitorial and not custodians.They will be charging extra for the after school events and also for the children that get sick during the school year and for the teacher that would like to have a desk moved.How about building checks is the district going to forgo that and risk vandalism and who will be called when there is a problem with one of the buildings wont they charge for all these services that are not included in that proposal.In my opinion once the district has to pay for all these other services there goes that 9 million dollar savings.Being a Neshaminy employee I know what these men and women do everyday ,the resident don't realize what they do during the course of the day.William and I wrong about this.

acs said...

I am sure district employees do work above and beyond. That is the value of inhouse workers who are vested in the district. Again the board is not the bad guy here. Taxpayers have no money and the board can only raise taxes somuch anyway.This option now is very atractive on the surface and now due dilligence needs to be done to see if savings are real and how it would work. By the way the baord can insist that the firm extend offers to every current employees as long as the passthe new standards which by the way are better than what we do today under union contracts.
The other issue is what services are really needed under contract?
It is really much easier to force a vendor to comply then actual district union employees. Also easier to force firings for performance.

JS said...

ACS I have to call you on this statement "as long as the passthe new standards which by the way are better than what we do today under union contracts".

If you are referring to background checks and finger printing that is already standard District hiring policy for EVERY position. Even high school kids who used to work during the summer cleaning had to do it.

Did you mean something else?

acs said...

JS, I was going by this:
"It should be noted that each Pritchard Industries' employee would be required to pass an FBI finger printing test, PA State Police check for criminal record and the PA child abuse check before being permitted to work in the District"
As well as someone in the know told me that this and mandatory drug screening was more than is currently required in the union contract.
Is this not correct?

JS said...

Drug screening is not done now, but all of those other parts are done by anyone seeking employment.