Robert A. Archer
Roy Page 

Individual notices of the meeting were sent to those who have asked to be notified of all Council meetings and notice appeared in the Virginia Register as well as on the Commonwealth Calendar on the Internet.

Senator Hanger presided over the meeting.  In accordance with § 2.2-2621 D of the Code of Virginia, a quorum was present.

Public Comment

None.  The public was invited to feel free to be recognized by the chair during the meeting should something come up that they wanted to address the Council.

Senator Hanger said that he enjoyed the work of the Competition Council because there is so much positive that is done.  The negative side is that the Council is constantly stepping on someone’s toes, but this is something the Council must be very aware of and recognize that when this happens the Council needs to do this as delicately as possible but yet still hoping to accomplish our end goals of providing and promoting efficiencies in state government.

Council remarks

Ms. Travers said that the work of the Council on the minority certification program and its report to the Governor, General Assembly, and Small Business Commission has resulted in the Governor’s Executive Order 29 calling for equal opportunity in state procurement.  The Governor stated that it is the policy of the Commonwealth to make sure that small businesses and businesses owned by women and minorities receive every opportunity to compete for the Commonwealth’s expenditures for goods and services.  She said that the executive order calls for each Cabinet Officer and head of each state agency and public body to prepare a written program aiming to facilitate the participation of small businesses and businesses owned by women and minorities in their procurement transactions.  The first annual report is due August 15, 2002.  The Chairman commended Ms. Travers as chair of the Council committee and Dr. McClenney, Mr. Page, and Mr. Lee for their exceptional work in this area.  It was noted that this study was a result of one of the projects identified in the November 2000 strategic planning session of the Council.

Minutes

The minutes of the April 30, 2002, meeting were approved with the change of the time of the meeting from 8:30 a.m. to 10 a.m.  The minutes will be filed with the permanent records of the Council.  In accordance with § 2.2-3707.1 of the Code of Virginia, the Commonwealth Competition Council will begin posting its minutes on the Internet.  At the 2002 session of the General Assembly, legislation was passed requiring all boards, commissions, councils, and other public bodies in the executive branch of government and subject to the provisions of the Freedom of Information Act to post minutes of their meetings on the Internet. Draft minutes of meetings are to be posted as soon as possible but no later than ten working days after the conclusion of the meeting.  Final approved meeting minutes are to be posted within three working days of final approval of the minutes.  This legislation also addressed agencies that promulgate regulations, but this part of the language is not applicable to the Council.     

Election of officers

In accordance with § 2.2-2621 D of the Code of Virginia, the Council is required by law to annually elect its chairman and vice chairman from among its members.  Senator Hanger and Dr. McClenney were unanimously re-elected as chairman and vice chairman, respectively, for the 2002-2003 fiscal year. 

Senator Hanger said that he appreciates the work that the Council is involved with and the Council has some real opportunities over this next year to work with the administration to do some significant things for state government.

Strategic Planning

At the last meeting of the Council, it was agreed that the Council members would review the following listing of Council initiated possible projects and be prepared to prioritize them for work in the 2002-2003 fiscal year.  

      Proposed Project  Inventory                        

      1      Unsolicited proposals

      2      Extension of not-for-profit study

      3      Geographic information systems

      4      Performance contracts for energy

      5       Next level “Compete”

      6      Enhancing value of certification of small and minority business

      7       Pilot project for Staunton regional VDOT ability to work under more flexible guidelines

      8         Comprehensive Services Act effectiveness

      9         Commonwealth financial services (debt collection)

      10         Review and realign mental health central operations

      11         Electronic creation of records and archiving

      12         Community mental health and social services

      13         Equipment trust fund, surplus and disposition (libraries)

      14         Central review panel to analyze suggestions for improved government operations (incentive based suggestions)

      15         Facilities management (grounds maintenance)

      16         Review potential savings for child support enforcement system

      17         Commonwealth printing and correctional enterprises

      18         Review building and construction inspection processes

      19         Review approaches to central stores, warehousing, trucking and delivery     

      20         Commonwealth unpaid revenues (part of No. 9)

      21         Medicaid drug formulary

      22         Maintenance service contracting

      23         Beyond “the Authorities” study

      24         Program to cause agencies to “self-review” for privatization (competitive government)

      25         Virginia energy acquisition and savings services (centralized)

      26         College & university police force elimination

      27         Commonwealth enterprise authority

      28         VDOT traffic control statewide (lane marking)

      29         Custodial services

      30      Food service

      31         Correctional benchmarks

      32      Blank

      33         Bookstore operations

      34      Toll collections

      35         Smaller engines

Mr. Bomersheim briefly explained each of the projects.  No additional projects were added to the list for consideration at this meeting.  The Council members voted to determine their top six priority of projects that will best be accomplished in the 2002-2003 fiscal year timeframe with the awareness that these projects will need to generate savings/revenue for the Council to be in existence in the 2004-2005 fiscal year.   

Mr. Pocalyko expressed thanks to the staff for their good work in this and he said that this is not a new list but one that has been in development over his two years on the Council.  He noted that in the current economic environment and the national economy and the whole spectrum of corporate scandals that have hit since the last Council meeting in April, that as he listened to Mr. Bomersheim catalogue the list, there are several things the Council has dealt with:   regional disparities in economic differentials, specifically revenues and costs which are a large part of what we have been seeing.  We have dealt with the privatization issue of corrections costs which was on the front pages of the Post this past week.  Energy commoditization economics which were the heart of the Enron scandal.  The extent of the authorities study in which other economic variables taken off book hedge on public finance which is exactly the heart of several of these issues and the extent of cash funding in four projects of the catalogue in which the public sector equivalent mathematically of options expensing or expensing capital expenditures vs. non-amortized expenses in the private sector.  What we are doing is literally the public sector front cutting edge of exactly what is getting all the corporations in trouble today and he noted that the Competition Council was there first.

The Council was reminded that the funding for the Council is changing.  Beginning July 1, 2003, the Council will be special funded and have available for its operation ten percent of the savings generated during 2001-2002.  The Auditor of Public Accounts (APA) will play a role in the future funding of the Council based on action from the 2002 General Assembly.  In April of each year the APA will certify to the Comptroller the total new savings realized by state agencies in the preceding fiscal year as a result of Commonwealth Competition Council recommendations.  The Comptroller will then transfer not more than ten percent of such savings to a nonreverting special fund account for support of the Council’s operations.  The Appropriation Act further states in Item 62 that the Council is authorized to receive, retain and authorize expenditures from nonreverting funds as a result of long-term, as opposed to one-time, savings recommendations on projects initiated by the Council.  These funds are to accrue savings at a declining rate over five years, beginning with ten percent and declining two percent per fiscal year.  The total transfer is not to exceed the appropriation line item.  The funding for the Council for the 2002-2003 fiscal year is general fund, with the special funds becoming effective for the 2003-2004 fiscal year.

Senator Hanger said that the project inventory is a continuing planning tool and that if other opportunities come up, the staff is available, and if it is the will of the Council, additional opportunities will be undertaken. 

Delegate Louderback asked if legislators serving on the Council present bills this year before the General Assembly that can fall under one of these categories, can we in some way designate that as a savings related to the work of the Council because of the inspiration brought together by this Council.  Senator Hanger said he thought that would be entirely appropriate, and that at our last meeting of the year if there is any legislation that is known, that the Council formally endorse such legislation.  Mr. Pocalyko said he was more concerned with the other circumstance of the legislative mandate that provides Council time but does not provide a direct revenue savings which, therefore, takes away from our ability in the out years to fund this Council.

Of the continuing projects already begun, it was suggested that these projects be eliminated from the voting today.  For information, several projects are actively underway.  Letters have already been sent to the Office of the Attorney General on debt collection with several recommendations.  A meeting is being planned and debt collection is well on its way.

A telecommunications audit is also being pursued based on an unsolicited proposal.  The Council has agreed to partner with the Department of Information Technology (DIT) and is working on a draft Request for Proposal (RFP) to be issued by DIT on such an audit that has the potential of savings significant dollars.  Past audits have resulted in other states and private sector saving as much as $100-$200 per employee.  This audit would be done at no cost to the Commonwealth.  The contractor would be paid a percentage of the savings implemented.

Maintenance service contracts is proceeding with the Department of Planning and Budget (DPB) taking the lead in this.  Several meetings have been held; two competitiors are submitting past RFP that can be used to develop a state RFP.  Potential 25% savings.

Delegate Louderback told the Council that his bill, HB1214, in the 2002 General Assembly resulted in the centralization of the state’s employee suggestion program under the Department of Human Resource Management, and that this was a direct result of a recommendation of the Commonwealth Competition Council. His legislation provided for the system to be designed to protect the identify of the individual making the proposal while being evaluated for implementation by a state agency; publicize the acceptance of proposals and financial awards to state employees; and include a re-evaluation process that individuals making proposals may access if their proposals are rejected by the evaluating agency.  The re-evaluation process must include individuals from the private sector.

This program of providing financial awards to state employees who propose procedures or ideas to reduce state expenditures or improve operations has been in existence for sometime, first as a centralized program, and then the decision was made several years ago that the program be decentralized.  Mr. Bomersheim said that the number of employees receiving incentives for their suggestions while the program was decentralized has fallen below what occurred when the program was centralized, and Delegate Louderback’s bill returned the program to a centralized program under Human Resource Management to increase participation and attention to this important program for state government.  Delegate Louderback stated that employees need to be kept motivated for suggesting ideas of doing things more efficiently and the small investment in this program permitted under the guidelines of the state can return significant returns. 

Mr. Bomersheim said that one of the discussion points presented was that the Competition Council may wish to consider offering a supplemental recognition to the individual that submitted the most outstanding or the greatest suggestion as determined from all suggestions.  The supplemental award would be something to get the attention of state employees.  Delegate Louderback moved, seconded by Mr. Pocalyko, that all options be explored by staff to help develop a recognition program to recognize the top person making a suggestion and perhaps give special recognition.  The motion was unanimously approved. 

The complete listing of projects on which the Council voted is available.  On motion of Mr. Pocalyko, seconded by Dr. Smith, and unanimously approved, the following top eight projects receiving the most votes were selected as this year’s priorities and that the staff begin development of work plans:

The Council members were asked to advise the staff if they have interest in being sponsors for these projects.  Those expressing interest will be contacted for individual project meetings.

Fall conference

A copy of Governor Warner’s July 23, 2002, letter to agency heads was provided in the meeting folder.  In that memorandum he asked that each agency head be personally accountable for monitoring his agency’s expenditures to ensure that only the most essential items relating to the core services of the agency be funded.  This action was effective immediately and will continue until further notice from the Cabinet Secretary or the Governor.  In light of the financial crisis facing the Commonwealth, the fall conference planned by the Council for 300-400 state and local officials in November was discussed.  The conference was being planned to showcase best practices and benchmarking with guest speakers coming from around the country.  Dr. Marshall Bailey advised the Council that he felt there were three options for consideration in this regard:  cancel the planned three day conference; reschedule the three day conference to fiscal year 2004 when funding would be available for travel; or reformat to a one day conference with corporate sponsorship.

The Council had made a request to the Secretary of Administration for a part-time position to assist with the conference, but the request was not approved with the suggestion that the Council secure funding from outside state government for this position.

A discussion was held on the financial impact and source of funding if the conference were rescheduled to 2004 as the Council would be under special funding at that time.  Mr. Pocalyko also spoke of a concern of private funding for a conference.  He felt that if companies other than the Council were principal sponsors, the tone of the conference might be somewhat directed toward the sponsors goals, objectives and political agenda and not necessarily that of the Commonwealth.  He reminded the Council that this was discussed early in the discussions of a possible conference and who the Council would permit to be contingent sponsors with the Competition Council.  He felt that if the Council could not afford it, the Council should not have the conference. 

Dr. Smith moved, seconded by Mr. Marquez, that the conference be rescheduled for fiscal year 2004 and that the primary sponsor be the Commonwealth Competition Council.  Dr. Bailey advised that although his sabbatical with the Council ends September 30, he would provide free assistance to the Council for the conference after his retirement.           

Delegate Louderback said he understood Mr. Pocalyko’s position about the perceived sponsors; but when you talk about retooling government, delaying some things can be beneficial,but when you are looking for ideas he felt that delaying the conference would be the wrong decision.  He agreed with Mr. Brown that the decision may not have to be made today. 

The chair stated that he would entertain a motion to table the motion to the next meeting or an amendment to the main motion or a substitute motion that would permit the Council to cancel the planned three day conference for this year but that we would explore other options for a shorter conference this year and/or a three day conference next year.  This would leave the options open.

Dr. Smith moved the substitute motion that the Council cancel the three day conference in this fiscal year which will end June 30, 2003, and that the Council leave open the possibility of other actions this year within budget or a three day conference in 2004.  Delegate Louderback seconded the motion, and it unanimously passed.

There being no further business from the Council or the public, the meeting adjourned at 3:50 p.m.

                                                                        Senator Emmett W. Hanger, Jr.

                                                                        Chairman