Archive for the ‘Outsource Watch’ Category

Did universities make a strategic error when outsourcing bookstores?

Wednesday, July 15th, 2009

Several years ago, USF contracted out the management of its bookstore to Barnes and Noble, like many universities. At the time, many faculty and staff were concerned about how the outsourcing would affect staff who had worked at the bookstore, and whether the promises about better service and a self-sustaining business model would hold true.

Well, now we know: we got snookered. We’re not alone: Penn, Harvard, Boston U., Brandeis, Case Western, Columbia, Indiana University, Ohio State, Texas A&M, and others dot the list of campuses who have outsourced bookstore management. But all of them bought into a model of university bookstores that had close to monopoly control over student book purchases. The world was starting to change; the increase in publisher short-discounting and the development of used-book markets made it harder for universities to see much margin in operating the bookstore, so many (including USF) leased the operation to others. As one community-college dean explains, internally-operated bookstores send extra revenues into the institution’s operating budget, while an outsourced operation often relies on rent for revenue.

And less than 15 years after this wave of outsourcing began, the assumptions behind that model have fallen down around everyone’s ears. Students do not rely on university bookstores, many of us receive requests from students about the book lists for semesters that start several months down the road, and a new Florida law will shortly require the online publication of all required books for courses at least 30 days before each term begins. While many students are still stuck using campus bookstores because of the financial aid voucher, that will probably be the next target of leverage by student activists and possibly the Obama administration. If we are not at the beginning of the end of the college bookstore monopoly, we’re probably less than 10 years away.

There are other directions to take. Patrick Murray-John of the University of Mary Washington has argued that universities should give up their bookstores, or rather turn them into book marts/collection facilities — essentially taking the function and logistics currently used to package preordered books and using it to let students order from anywhere to be delivered to the college bookstore, which will then package it in a way that the current experience for preordering students is identical. Then, he asks, what else could a college use the bookstore space for? Something other than branded merchandise, he suggests…

But that possibility, and others, is foreclosed if the contract with Barnes and Noble, Follett’s, or the like. Depending on the length of the contract, universities and colleges may just have outsmarted themselves, locking themselves into relationships just as the model has to change once more.


Outsourcing in Florida

Sunday, July 5th, 2009

As public-agency budgets around the state tighten, we’re likely to hear a push for more privatization both inside and outside higher education. But this isn’t a new call, either in Florida’s state government or in higher education nationally. In the last few years, UFF members participated in a downtown Tampa protest of a city privatization effort, and USF student protests helped the USF uniformed police (represented by PBA) gain a contract even after the university first tried appeasing students by outsourcing some security operations to AlliedBarton.

While outsourcing is part of a repertoir that both Democrats and Republicans have used, Jeb Bush’s administration is the political tenure in Florida most closely associated with outsourcing. Bush’s record on privatizing public services is mixed at best. In 2004, Lucy Morgan reported on an auditor’s finding of rampant conflict of interest in the awarding of the statewide PeopleFirst contract. At the end of Bush’s second term, reporter Joni James wrote a critical review of the Bush privatization record. From James’s article:

For every success Bush can point to – cheaper Florida Lottery overhead, better third-party Medicaid collections – there has been an embarrassing misstep and sometimes corruption. And undermining the privatization push is a stunning lack of information about how well it has performed in the past eight years. Audit after audit, including some from Bush’s own inspector general, concluded that the savings or other benefits of such private deals were often impossible to deduce because the contracts written early in Bush’s administration lacked clear parameters.

Privatization continues in the state, with new scandals, including claims of a “rigging of the process” by one prison system vendor and allegations of conflicts of interest (with one administrator allegedly pushing to have his friend hired by one vendor). USF’s staff is represented by AFSCME Local 3342, and the national AFSCME keeps a watch on privatization: see their list of Florida stories here.

There are commonly two public arguments made in favor of privatization or outsourcing, and one private motive on top of that (at least for elected officials). The two common arguments in favor of privatization are that a specific function is the core of a private vendor’s competence and outside the competence of government; and that a private vendor can do the same job more cheaply. The private motive is that outsourcing public-agency work often provides business to companies who can thank the officials authorizing the outsourcing by campaign donations or other support (which can shade into bribery, kickbacks, or side hirings, as has been alleged in Florida).

As noted in the Joni Jones column, often privatization does not save money for agencies, because to do so, the vendor must reduce the pay of employees (from the pay and benefits of public employees) sufficiently to provide the vendor’s desired profit margin and any additional savings the public agency expected. Earlier this decade, Florida International University tried to outsource its janitors, but when the janitors successfully organized as private employee, the vendor asked for more money to cover the (decent) pay and benefits, and FIU realized it was cheaper to bring the janitors back in as university employees. USF has outsourced staff jobs in some cases in the past decade, most visibly the outsourcing of the bookstore’s management to Barnes and Noble. A blog entry later this month will discuss issues related to university outsourcing more specifically.