State: Much of the business of state government has gone private

That's because Gov. Jeb Bush and the Florida Legislature have left ideological footprints on Florida government that will long outlast his term in office -- even if he serves another four years.

He has chosen, in some cases through long-term contracts, to turn over dozens of state functions to private businesses. Along the way, he has forced hundreds of state employees to choose new state jobs, the private sector or the unemployment line.

He also has attracted thousands in campaign contributions to Republican causes from companies competing for a piece of the multimillion-dollar privatization pie.

Bush's privatization (he prefers the term outsourcing) efforts have yielded mixed results.

Some social service contracts have ended with lawsuits and recriminations.

But others, like hiring a former Arthur Andersen consulting subsidiary to revamp computers at the Department of Business and Professional Regulation, have drawn praise. Though the state auditor general found that the contracting process was flawed, the system itself has gained recognition for making government more responsive to the public.

To the union representing the state's more than 120,000 employees, Bush's privatization moves are dangerous, unproven and mean-spirited.

"I think he just wants to destroy the ability of government in Florida to interfere with business or to regulate business," said Doug Martin, spokesman for the Florida office of the American Federation of State, County and Municipal Employees.

Some academics and many business professionals think differently.

"A lot of people portray this as an antiworker thing; I view it as an antimanager thing," said Ronald Utt, senior research fellow for the Thomas A. Roe Institute for Economic Policy Studies at the Heritage Foundation. "Places in the world who have aggressively pursued this kind of arrangement have benefited."

The idea of letting private companies compete for government work is not new. Cities, counties and states have long contracted for everything from lawn maintenance at public buildings to running county jails. Bush's predecessor, Lawton Chiles, worked with the Legislature to give private companies control of several state prisons.

But Bush has undertaken some of the most aggressive outsourcing of state services in the nation. Among the largest:

The Department of Business and Professional Regulation awarded a nine-year, $69-million contract to former Arthur Andersen subsidiary Accenture.

The company has revamped the licensing agency's computer system, undeniably making it easier to access for the public and the regulated industries. But critics have questioned whether the new system, which splits cost savings 60-40 between the state and Accenture, was necessary. The state auditor general determined that the licensing agency failed to perform a proper feasibility study before awarding the work to Accenture so "it is not clear that alternatives to the outsourcing . . . had been fully considered."

Accenture has donated $25,000 to the state Republican Party during the runup to next week's general election and nothing to Democrats, according to state records.

Last year, the state awarded Aramark, a huge Philadelphia food services company, a five-year contract to manage inmate feeding in most of the state's prisons. The contract, which pays Aramark nearly $60-million, has already led to more than $100,000 in fines against the company for problems with the new program. The company acknowledges a bumpy start, but says service is now running smoothly.

Aramark gave $25,000 to the state Republican Party during this election cycle, and nothing to Democrats.

But the biggest, most ambitious effort by Bush is the privatization of the state's personnel offices.

The seven-year, $280-million deal puts a Cincinnati company, Convergys Corp., in charge of nearly all of the state's personnel work. Job applications will go through Convergys. So will the advertisement of vacant jobs, and administration of leave time and enrollment in benefit programs like health insurance.

Cynthia Henderson, secretary of the state Department of Management Services, said the old system, in which several state agencies had their own personnel departments, was duplicative and inefficient.

When it became clear in 2000 and early 2001 that the state would have to replace the computer software operating that system, it made sense to look at whether private industry could centralize personnel work, and do it cheaper than the state.

"The truth is, they (private companies) are better at technology purchasing for human resources than we are in state government," Henderson said. "That's what they do."

Convergys, a company best known for its work in handling national billing for major wireless phone companies, won the job with a contract that could save the state as much as $173-million during its seven-year run.

Convergys and Henderson believe much of those savings will come by centralizing personnel operations.

Today, for example, a state agency with a job opening advertises that opening in a newspaper or trade magazine. Applicants send their resumes to that agency, where they are reviewed and filed by a personnel specialist who considers that person for an interview.

That will change when Convergys takes over in May.

At that point, prospective employees will find a list of openings for state agencies on the Internet. Resumes and applications for specific openings will be sent through Convergys, which will refer them to the proper agency for the actual interviewing and hiring.

But a single resume could be a fit for dozens of job openings, and Convergys will have the ability to get that resume seen at several state agencies. Duplication will be eliminated, and much of the process will take place on computer, rather than with paper.

It all sounds good. But critics, including state Comptroller Bob Milligan, say that the process that led to the contract really wasn't fair to the state employees now doing the work.

"From the beginning, they looked at a centralized system to outsource under this contract, not a decentralized system the way it is now," said Milligan, the Republican comptroller who is leaving office as state government is reorganized. "If the state had been given a chance to reorganize and gone to a centralized process it might have saved even more money than this contract."

Henderson said state government, including Milligan's office, was given a chance.

"I totally reject that," Henderson said. "If there was a disadvantage from the state side, it was that no state agency really had the resources to be able to achieve these savings."

Partly because of Milligan's concerns, there was a time when it appeared the Convergys deal might be delayed or killed. Though Henderson's agency had an agreement with Convergys in the fall of 2001, the concept of privatizing personnel services had to be approved by the Legislature.

But in February, members of the Senate balked at the pace of the plan and Bush withdrew it from consideration. Convergys went to work.

The company, which already had a full roster of qualified lobbyists, had hired another one -- Richard Heffley. He is a friend of Bush who also worked as a consultant to the Republican Party of Florida.

Within weeks, the deal was back on.

Heffley, who was appointed to the Florida Elections Commission by Bush, did not return a phone call for comment on his efforts for Convergys. The other primary lobbyist for the company, Marvin Arrington, died near the end of the legislative session.

While it may have hired some well-connected lobbyists, Convergys itself is a minor player in the campaign contributions game.

Though the company split $4,500 among nine candidates in the last election cycle (seven Republicans and two Democrats, including McBride running mate Tom Rossin), Convergys made a single $500 contribution to Bush through the last reporting period of this election cycle.

It gave nothing to McBride, who would be bound to the Convergys contract if he should win Tuesday.

While it would appear that Bush has tied state government to the private contractors far into the future, McBride spokesman Alan Stonecipher said it was no sure thing that the Democrat would be forced to live with decisions made by the Bush administration.

"Basically, he (McBride) is opposed to privatization, especially if the cost savings can't be demonstrated. In most cases, these have been done by the Bush administration for philosophical reasons, not for any proven savings," Stonecipher said. "McBride would aggressively examine each of these contractors' performance under the contracts."

That's probably not enough to stop the changes in the offing for the 800 or so people who now handle state personnel functions.

Henderson said they will all either be offered a job with Convergys or given a chance to transfer to another state agency. Some may even get a raise from the deal, but there are no guarantees that the current state employees won't lose salary or benefits.

"There is not a salary guarantee, that's correct," Henderson said. "But we have found that the options for most of them will be better."

Union leaders who represent the 800 employees who would be affected by the Convergys deal are doubtful.

Two weeks ago, in the ballroom of an Orlando hotel, a small group from the American Federation of State, County and Municipal Employees gathered for a seminar called "Practical Tools to Fight Privatization."

Leaders from the union, the single biggest contributor to Democratic causes nationwide, encouraged members to be proactive.

Wearing buttons that said "Privatize Jeb!," the workers heard inspirational words from union experts who make the case that privatization costs more in the long run because it takes better, and more expensive, management to ensure that private contracts don't go awry.

They also heard an ominous forecast for the future.

"Nonthinking folks think one of the ways to solve the fiscal crisis is to privatize, but they are wrong." said Michael Messina of the department of research at AFSCME International. "Still, if you are not facing this yet, you will be."

-- Times researcher Caryn Baird contributed to this report.

The big deals

With the approval of the Florida Legislature, the administration of Gov. Jeb Bush has aggressively courted private companies to take over jobs once done by government employees. Here is a look at the companies involved in some of the biggest deals.

Convergys Corp.

HEADQUARTERS: Cincinnati.

STATE CONTRACT: Seven years, $280-million to take over most personnel functions.

CURRENT STATE EMPLOYEES AFFECTED: Approximately 800.

OTHER CLIENTS: Convergys is the world's largest provider of billing for wireless telephone services.

INTERNET SITE: www.Convergys.com

Aramark

HEADQUARTERS: Philadelphia.

STATE CONTRACT: Five years, approximately $60-million in the first year, to feed state prison inmates.

CURRENT STATE EMPLOYEES AFFECTED: Approximately 500 kitchen workers were moved into security positions, offered transfers or left the department.

OTHER CLIENTS: Aramark provides everything from food for prisoners to child care. It operates food services at dozens of arenas, and hundreds of schools and prisons nationwide.

INTERNET SITE: www.Aramark.com

Accenture

HEADQUARTERS: Hamilton, Bermuda (with 110 offices in 47 countries).

STATE CONTRACT: Nine years, estimated $69-million for computerizing the licensing and information functions of the state Department of Business and Professional Regulation.

CURRENT STATE EMPLOYEES AFFECTED: Approximately 360 employees who handle customer calls will find new jobs, transfer to new agencies or leave state government.

OTHER CLIENTS: Accenture is a consultant to hundreds of governments and private businesses.

INTERNET SITE: www.Accenture.com

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Lucy Morgan

From the Times state desk