At the June 23, 1999 meeting of the Commonwealth Competition Council, Senator Emmett W. Hanger, Jr. was elected chairman of the Council replacing Otis L. Brown whose term expired on June 30th.  Mr. Brown had served as chairman since the Council was created in 1995 and received a certificate of appreciation from the Council for his devoted service to the Commonwealth.  Dr. Earl H. McClenney, Jr., was elected vice chairman replacing Senator Walter A. Stosch who will continue serving on the Council.
 
 

In the June 1999 issue of Competition Watch, a significant section of the newsletter was devoted to how government officials can structure and negotiate public-private partnerships from strength.  The feature column in this issue discusses the results of the U.S. General Accounting Office (GAO) report of six federal public-private partnerships.
 
 

"As federal agencies find themselves under budgetary constraints with increasing demands to improve service, the importance of making the most effective use of capital assets grows.  To do this, federally-owned buildings and land should be strategically acquired, managed, and disposed of so that the taxpayers' return on the investment is maximized.  To maximize returns on buildings and facilities, federal agencies are increasingly interested in managing them in a more businesslike manner, including exploring the formation of partnerships through contracts or agreements between the federal government and the private sector."

The report describes the key elements and related experiences from six federal partnerships representing three agencies:

• The National Park Service within the Department of Interior.

• The Department of Veterans Affairs.

 
• The U.S. Postal Service.

The GAO found the following common elements among the projects that appeared to be key to their implementation:

Catalyst for Change

Governmentwide management reforms, as well as fiscal and community pressures, compelled the agencies to look for new ways to effectively manage their buildings and facilities.  In the agencies reviewed, those factors led them to consider partnerships as one way to better manage certain properties.

^a Business plans may identify issues that require legislative action.

Source: GAO analysis of selected federal building and facility public-private partnerships.
 
 
 

¹ Refer to the Council's "Privatization/Competition Manual" for definitions and examples of alternative financing mechanisms.
 
 

Virginia is the first state to contract with a private laboratory by awarding a $9 million, three-year contract to Bode Technology Group, based in Northern Virginia, to analyze DNA collected from blood samples.

Before privatization, Virginia had a backlog of 200,000 blood samples that needed to be analyzed. With Bode Technology the backlog is estimated to be eliminated within three years.

In the first 10 months of privatization, as many crimes were solved as had been solved in the state program's first five years. Bode Technology uses a new testing process which allows profiling on much smaller pieces of DNA. While the cost of privatization is substantial, the ultimate savings cannot be calculated. The head of the Division of Forensic Science is quoted as saying that "if you prevent future crimes, that saves countless dollars to law enforcement."
 
 

With the Commonwealth Competition Council now offering training on the basic elements of employee stock ownership plans (ESOPs), the following article from the National Center of Employee Ownership is an indication of the value of employee ownership as an effective concept in government privatization programs.

More and more companies are turning to ownership to lure employees at all levels. Low Inflation and global competition make it difficult to attract and retain people just with cash, so companies are looking to employee ownership as an attractive addition to compensation.

Employees are taking note of the employee ownership phenomenon and are asking for more ownership. While stock options have received the most press, employee stock ownership plans (ESOPs) actually cover more employees and, in general, provide benefits equal to or sometimes greater than most stock option plans.

ESOP companies and their employee owners share significant tax advantages. If a company is willing to share ownership, it will get and keep better employees who will work more effectively and help the company make more money which in turn increases the value of employee owner ESOP accounts. The evidence shows that when companies share ownership, and treat employees like owners, they do make more money, so that everyone can come out ahead.

The most sweeping employee ownership legislation written since the establishment of ESOPs was recently introduced in the U.S. House of Representatives. The legislation is H.R. 1462, "The Employee Ownership Act of 1999."

The bill's goal would be for 30 percent of America's corporations to be owned and controlled by their employees by 2010 and would establish a new category of business, the Employee-Owned and Controlled Corporation, or EOCC.

"PRIVATIZATION  IS  A  TOOL  THAT  CAN  HELP  PUBLIC  OFFICIALS PROVIDE  ESSENTIAL  SERVICES  IN  A  COST-EFFECTIVE MANNER.  INTRODUCING  COMPETITION  AND  PRIVATIZATION  TO  GOVERNMENT SERVICES  REQUIRES  REAL  COST  INFORMATION.   PRIVATIZATION INCREASES  COMPETITION  AND  COMPETITION  INCREASES PRODUCTIVITY."