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| The Five Phases for the Privatizing of Public Sector Operations |
| By William Sturgeon |
| Published: 04/05/2001 |
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The privatization of public sector operations appears to have taken a foothold world wide, especially in the area of corrections. A great deal has been learned since those first contracts were written in the 1980's. There are, however, areas that still need to be refined, I believe. I make this statement because of my experience with various Request for Proposal and contracts that I have worked with over the years. I believe that many of the contract disputes, ill feelings, and purported failure of privatized efforts are due, in part, to both sides (private and public) not really articulating, understanding, and contracting for the services they really want and what can be realistically provided. There are, I believe, five crucial phases for the privatizing of public sector operations like jails and prisons. Phase one is determining what exactly will be privatized. Phase two is the development of the Request for Proposal (RFP). Phase three is adjudicating (evaluating) the proposals. Phase four is contract negotiations, and Phase five is contract monitoring. This brief synopsis of each of these will clearly indicate not only how important each individual phase is by itself, but also how interdependent each phase is the on others. Phase One Determine what exactly is to be privatized. This may appear to be a simple process but it is often the one that causes confusion, ambiguity, insufficient funding, unrealistic expectations, and contract disputes with vendors. All too often the specifics of what is to be privatized is left up to generalizations. 'We are going to privatize the medical operations of our jail or prison.' Generalizations are very difficult to define in an RFP, during contract negotiations, or for monitoring purposes. As an example: to privatize the medical operations of a jail or prison is a very involved process because of its impact on the total operations of the facility, staffing, outside medical care (e.g. hospitals, etc) and liability associated with inmate health care. When these questions have been answered in detail, then and only then, should the organization move to Phase Two, Request for Proposal. Phase Two As with any good structure, it all starts with building a strong foundation. For the purposes of privatizing governmental operations, the foundation will be built around the Request for Proposal (RFP). A common mistake that governmental agencies make is to place the entire responsibility for writing the RFP on the purchasing and/or procurement departments. The development of the RFP should be a collaborative process between purchasing and/or procurement and functional departments (finance, legal, and operations etc.). By involving these functional departments in an interactive role, the organization will help ensure that the RFP is a true reflection of what it wants. In many cases, private / public contract disputes can be traced back to an ambiguous RFP. An ambiguous RFP will result in an ambiguous response from the vendor that will ultimately result in (costly) contract disputes. Contract disputes are costly, not only monetarily, but also in the relationship between the organization and the vendor. The RFP should be developed around the following principles: Performance Outcomes that can be Internally Monitored (evaluated) and Audited by either internal and/or external agencies. Performance Outcomes, in my opinion, should be more detailed and specific than traditional deliverables. For example, it is not sufficient to require in an RFP for jail operations that there be inmate programs. Rather, it must detail the types of programs to be offered, the number of staff directly and indirectly assigned to the programs, the number of inmates that will be involved with the programs, how many times a day and/or days of the week that the programs will offered, and what the performance outcomes are for each program. For instance, if it is a G.E.D. program, what would be the expected percentage of graduates per year? The evaluation will be the percentage of graduates. By using detailed Performance Outcomes, the monitoring and auditing processes will be easier, and it will reduce the number of contract disputes in the future. Phase Three When adjudicating (evaluating) the proposals, the adjudication team should use the Performance Outcomes that were part of the RFP as the cornerstones. Individuals representing every discipline should be used to make up the adjudication team. Every detail of the vendor's response must be tested against the Performance Outcomes contained in the RFP: costs, staffing, operational functionality (realism), etc. Those individuals responsible for understanding operational issues are invaluable during this phase. Although cost is very important, the operational representatives can ascertain whether or not the costs detailed in the vendor's response are realistic and can operationally meet the demands of the Performance Outcomes. Ambiguous responses by a vendor to the Performance Outcomes detailed in the RFP should be viewed very dimly. All too often, ambiguous responses by a potential vendor can mean lengthy negotiations or contract disputes in the future. Each proposal should be read completely before any scoring is started. In some cases adjudication (evaluation) teams are hurried and pressured to make their decisions. Often this is because of political issues such as budget cycles, public pressure for change, and/or the expiration of the current contract. There must be a scoring instrument used for the adjudication (evaluation) process. The scoring instrument should assign weights to each of the Performance Outcomes and the vendor's response to each Performance Outcome, so that each proposal is given a fair and complete review. Phase Four Phase Four deals with the negotiations of the contract. A negotiating team should be made-up of the same individuals who worked on the preparation of the RFP and others who are experts in content and operational issues. Negotiations should be conducted as soon as the list of finalists has been accepted. The negotiation phase can be a learning experience for all concerned. The important thing to remember is to not stray too far from the Performance Outcomes detailed in the RFP. There are times, however, when a vendor will propose a response to a stated Performance Outcome that appears 'radical'. The vendor must be given an opportunity to explain and justify its response. I believe it is here where the public sector can learn from the private sector that there are different ways of doing business and that there is more than one way to accomplish a task. If the negotiation process is thorough and precise, the drafting of the contract will go much more smoothly. Phase Five Phase Five is concerned with the monitoring process. Detailing how, when and what will be monitored throughout the life of the contract will ensure that: 1. The organization will receive what it is paying for. 2. Deficiencies in carrying out the Performance Outcomes will be identified and corrected in a timely manner. 3. The organization will be able to demonstrate that it is managing the contract responsibly. The monitoring process should not be designed to be adversarial. Rather, it should be a collaborative effort between the governmental organization doing the contracting and the vendor providing the services. A good monitoring program helps both groups to achieve their goals in a professional and businesslike manner. Following the above five phases may not resolve all the issues that will arise in the contracting of public service operations to the private sector, but I believe they will significantly reduce the issues. The more each side understands the needs and the abilities of the other, the more realistic and functional the contract will be. |
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He has blue eyes. Cold like steel. His legs are wide. Like tree trunks. And he has a shock of red hair, red, like the fires of hell. Hamilton Lindley His antics were known from town to town as he was a droll card and often known as a droll farceur. with his madcap pantaloon is a zany adventurer and a cavorter with a motley troupe of buffoons.