Government Outsourcing Escalating at Historic Rate

         Budget constraints have resulted in huge shifts in perspective for public officials throughout the country.  Many government organizations that once fought privatization have now done an about-face.  While the federal government is talking about in-sourcing, public state and local entities are willing to consider outsourcing all types of services.  As a result, the public sector marketplace has become a major focus for thousands of firms that never considered selling to state or federal government in the past.

         State and local governmental entities have outsourced technology services, audits, infrastructure construction and more.  But now, public entities are privatizing thousands of operational activities.  Outsourcing throughout the country includes motor vehicle inspections, turnpike toll booths, fee and fine collections, shuttle service operations, the operation of state parks, and various prison services.  No government activity is exempt if a case can be made that taxpayer dollars are better spent by outsourcing.  This trend is expected to continue for the next several years.

         Newer types of outsourcing initiatives being embraced in various states include the following:

• Contracting miles of roadway maintenance;
• Privatizing bus routes and various types of transportation services;
• Allowing private providers to conduct inspection services;
• Contracting with brokers to oversee a statewide operation that provides all temporary and contract employees; and
• Privatizing all human resources-related services.

         In other parts of the world, government outsourcing is even larger.  Some countries have adopted a wholesale approach and outsource almost everything.  Cities and counties are also becoming "big players" in the world of outsourcing.  One of the most extreme examples is the small town of Maywood, Calif.  The city actually outsources every service provided to residents.

         Whatever a company produces or provides, governmental entities probably purchase it.  Companies may want to look into government outsourcing and determine if this is a marketplace worthy of consideration.  It is large, potentially lucrative and not likely to go away.

State Budget Committee

         Perhaps no other standing committee has been in the spotlight more than the state Budget Committee, chaired by Senator Luke Kenley (R-Noblesville), one of the general assembly's chief budget negotiators.  The committee, which meets throughout the year to oversee expenditures on various capital projects, met in early July and heard about savings that could be realized by local schools and universities if they were on the state's health care plan, although this would likely result in higher premiums being paid by school and university employees.  Currently five schools in the state have voluntarily joined the state's network.  Stay tuned for more info in the coming months as this issue is debated.

         View the full list of study committee topics.

         Committee meeting dates, agendas and minutes will be accessible online.

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         As executives look to improve their standing with consumers, they also need to consider their role and relationship with government.  When it comes to providing services, as well as understanding the regulatory and oversight of commerce and industry, executives who run successful organizations realize the importance of having a proactive partnership with government.

         If you have questions about Indiana legislation, regulation and procurement opportunities and how they could impact your business, please contact one of the professionals in the Ice Miller Public Affairs Group.

Attorneys
John Hammond
Thomas John
Lacy Johnson
Bob Kuzman
Mark Shublak
Jack Thar

Practice Group Specialists
Lesa Dietrick
Anne Doran
Carl Drummer

         Our diverse public affairs team has the experience your company or organization needs at the local, state and federal levels.  Members of our staff have served in the executive, legislative and judicial branches, including serving as legislative staff aides to several governors, as well as serving in the Indiana and Illinois state legislature.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.