State Contracting on the Rise in Florida

Reason’s Annual Privatization Report 2008 documents the latest on state contracting in Florida, a privatization leader since the early days of former Gov. Jeb Bush‘s administration. The 2007 annual report of the state’s Council on Efficient Government–originally formed as the Center for Efficient Government by executive order under Bush and intended as a “one-stop shop” for contracting best practices and competition guidelines at an enterprise-wide level–found a significant increase in state outsourcing projects since 2001. Prior to 2001, a total of 16 outsourced projects were reported by state agencies, but from 2001 to 2005, the state initiated an average of 25 projects annually. In all, the report identified 289 projects currently being outsourced, with a lifetime value of over $5.5 billion. The CEG report also found that:

  • 71% of the outsourced projects have total expenditures less than 10 million dollars; 29% have total expenditures more than 10 million dollars; and 10% have total expenditures more than 50 million dollars.
  • Five agencies (Department of Juvenile Justice, Department of Children and Families, Department of Corrections, Agency for Persons with Disabilities and the Department of Management Services) accounted for 79% of all outsourced projects. Twelve agencies (36%) reported no outsourced projects.
  • 40% of the outsourced projects identified by agencies provided services not previously provided by state employees.
  • Cost-benefit analyses were not completed for 92% of the projects reported. The business case development process overseen by CEG requires agencies to submit some cost-benefit related data, but not necessarily a rigorous cost-benefit analysis.
  • There are opportunities to improve inclusion of performance metrics for outsourced projects. Currently, 21% of agency-outsourced projects either do not have performance metrics or information on performance metrics in the current contract. However, the report notes that many of these contracts were negotiated prior to a state statute requiring performance metrics to be integrated into contracts. The CEG will be working with agencies to bring existing contracts into compliance.

Also, earlier this year the CEG released its review of three large, controversial state outsourcing projects: MyFloridaMarketPlace, People First and Project Aspire. Starting in early 2000, the state began an effort to upgrade and modernize its core operational software and IT infrastructure, specifically its accounting, cash management, procurement and human resources functions. At that point, these systems ran on five separate tools. By late 2000, several initiatives began to address portions of the upgrade plan, though the CEG notes that they were implemented separately without a cohesive integration plan for how each system would interact with one another. The end result was three separate projects: MyFloridaMarketPlace for procurement functions, People First for human resource functions and Project Aspire for accounting and financials. All three programs required significant modifications with a number of custom enhancements and each has had significant implementation challenges. For a detailed summary of the CEG findings and lessons learned from the implementation of these initiatives, see APR 2008‘s State and Local Update. For more on state-level privatization, see Reason’s privatization research archive.