Thinking It Through

For administrators at Great Valley School District (GVSD) in Malvern, Pa., outsourcing is a “been there, done that” story. “We’ve outsourced our transportation since the district was formed in 1969,” says Charles E. Linderman, RSBA, GVSD’s director of Business Affairs. “We’ve had our current contractor for 15 years, and the drivers look and feel like GVSD employees. That’s the misconception of outsourcing: Administrators think they’re giving the service away and the employees don’t care about our parents and students. That’s not really true.”

Rio Rancho Public Schools (RRPS) in New Mexico similarly has been outsourcing — food service — since the district’s inception in 1994. “We’ve been with our current contractor for the last 16 years,” says Randy Evans, RSBO, RRPS’s executive director of Finance. “In my opinion, contracting takes a lot of pressure off something that is an important part of our school day but isn’t part of our mission. To let somebody who has food service management expertise manage that area is well worth it to us.”

“We started outsourcing our custodial services in 1994,” says Terry Thetford, FMA, Facilities director at Forest Grove School District (FGSD) in Oregon. “It was a cost decision.” He continues, “Our first provider did not have a tight contract, and it reached the point where we were losing the service level more than we were losing dollars as our budget got tighter and tighter. We switched providers and have been with the same firm since.”

After some trial and error, these administrators have worked the kinks out of their contracted services and have established successful relationships with their providers. So, who better to rely on for information about both the outsourcing process and contract management? Here are 10 things they recommend thinking about in terms of the outsourcing process.

1.  Think help. Bill Gerichter, president of Tons River, N.J.-based Edvocate Inc., recommends hiring someone to guide you through the process. “Find someone who can assist with the analysis to ensure the numbers are close to what the end result will be,” he says. “You want someone who knows how management companies work and can see that what is accomplished is in the school district’s best interest.” His firm offers seven levels of assistance, two of which include understanding your district’s culture to determine needs, concerns and expectations, and measuring and benchmarking current operations.

2.  Think research.
“Do as much as you can from an investigative and analysis perspective prior to going to the general public,” says Gerichter, “in order to determine if it’s a sound decision without the conflict of the politics that will naturally occur once the decision is announced.”

3.  Think standards. A vendor may offer to provide a set of standards. “That’s a good place to start,” says Thetford. “But, generally speaking, a vendor will set it up in a way that benefits him most. You still have to go through the process of fitting them to your standards and culture. Some school districts have higher expectations, and some have lower. Plus, the vendor’s standards are going to be a little ambiguous. You must narrow it down so there’s no wiggle room, as opposed to discovering later that something isn’t right.”

As you’re creating your standards, think in terms of what’s important to the service being outsourced. For example, Linderman has standards for a certain amount of drivers, who have to have a specific driver’s license and background checks; timeliness of the drivers; a maximum age for buses; and how many breakdowns are allowable.

Then, provide the standards to the vendor so that, when you roll the program out, expectations are aligned and you can follow up to see the terms of the contract are being met.

4.  Think cost accounting. Standards are easier to measure if you methodically attend to the process of cost accounting, which allows you to compare bids against your in-house cost, as well as to evaluate costs as they rise, says Thetford.

For example, you have a bathroom with three toilets, three urinals and three sinks. Each element is assigned a unit time required for cleaning it. Total those up and put them on a spreadsheet according to how often they are to be cleaned, so you can see how many man hours are required. “This allows me to know what the contractor is doing and how much time it takes,” says Thetford. “If the work isn’t getting done, maybe the wrong person is doing it.”

5.  Think operational improvement. Gerichter notes that administrators often don’t consider the operational improvements to be gained by outsourcing. For example, they may have a dysfunctional organizational model or they may be understaffed. “Outsourcing can allow school districts to have more staff, realign work shifts and deliver more appropriate levels of service back to the program,” he notes.

6.  Think current staff. It’s difficult to advocate laying off your current staff in favor of outsourced staff; indeed, some communities won’t stand for it. Conversely, you can’t force the contractor to hire your current staff. But you can create an agreement with the contractor that your staff will be considered. “Because there’s a lot to be said for consistent person-to-person contact during the transition period,” says Linderman, “and because the contractor wants to establish a successful relationship with you, he will do everything possible to keep your staff.”

Thetford agrees, noting that existing staff is trained and evaluated to the new contract standards. Through time, some staff members retire or accept new positions elsewhere, and staff who don’t meet the standards are eliminated. “Gradually, you’re able to backfill with contract staff and move from paying $18 to $20 per hour to $12 to $13 hour,” he notes. “You end up with better staff performance and the contractor makes a profit.”

7.  Think over and above standards. At FGSD, off-contract services are permissible and billed over and above the contract. For example, if the athletic director needs custodians to set up for an athletic event, it is supplemented with additional staff and additional hours. If the regularly scheduled staff was used for these extra services, then not all regularly scheduled tasks would be completed, the cleaning standards would be diluted and it would appear as though the contractor wasn’t doing a good job.

8.  Think caution. If a vendor gives you a price that doesn’t seem reasonable because it’s lower than other bids, it probably is unreasonable. “They’ll meet standards,” says Thetford, “but if it’s a standard to be met every day, it’ll soon be met every other day because the vendor doesn’t have the man hours to do it every day. This is called skip cleaning. Before long, you’ll have a filthy building.”

Evans agrees, recommending caution if the vendor promises you the moon the first year. “We don’t see a lot of other food service companies bidding against ours,” he says, “because they know they’d have to do something pretty drastic to make improvements, which would be difficult. And, if a bidding firm did promise a $250,000 profit, I’d be concerned that they might do things that would reduce our program’s quality.”

9.  Think references. Evans recommends ensuring the firm you choose has a good track record by checking its references.

10.  Think expectations. Thetford suggests aligning everyone’s expectations with what you’re going to deliver in terms of service to avoid disappointment.

Each school district has its own intangibles and variables, making outsourcing an individual decision. “Weigh all your options,” Linderman cautions. “Don’t jump into it for the sake of jumping into it, but do move forward if there are substantiated reasons, such as financial or labor.”