Developing a Business Case for Privatization

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Developing a Business Casefor Privatization

• Presentation to theSoutheast Evaluation
  Association
• February 2, 2006

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Walter Sachs Staff Director, Contracts Office of
Contracted Client Services (850)
921-8983 walter_sachs_at_dcf.state.fl.us

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Business Case Analysis (language from last
years proposed legislation) ...requiring
agencies to do a business case analysis
specifying the requirements for the analysis
requiring that an agency submit the proposed
business case with the agency's legislative
budget request...
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Privatize" means any process aimed at
transferring the responsibility for a service, in
whole or in part, from the agency to the private
sector such that the private sector is solely and
fully responsible for the performance of the
specific service. An agency may not privatize a
service, as defined, without specific authority
provided for in general law, the General
Appropriations Act, legislation implementing the
General Appropriations Act, or a special
appropriations act.
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"Outsourcing" means the process of contracting
with an external service provider to provide a
service, in whole or in part, while the agency
retains the responsibility and accountability for
the service. The agency shall develop a business
case describing and analyzing the function or
service proposed for outsourcing. A business
case is part of the solicitation process and is
not a rule subject to challenge under section
120.54, Florida Statutes.
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• Center for Efficient Government
• Promote best business practices in procurement
  and contracting
• Allow state agencies to focus on their core
  missions
• When validated, contract for services that can be
  more effectively provided by the private sector

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• Center for Efficient Government
• Assist agencies with compliance, including, but
  not limited to, developing and updating business
  cases and solicitation documents, supporting
  contract negotiations, contract drafting, change
  management, performance measurement, and contract
  management
• Develop standards, processes, templates, and
  guidelines for use by agencies
• Create and maintain a database of new and
  existing state procurement initiatives

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• The business case must include, but need not be
  limited to
• a detailed description of the service to be
  outsource
• a description and analysis of the agency's
  current performance of the service
• a rationale documenting how outsourcing the
  service would be in the best interest of the
  state, the agency, or its clients

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• A cost-benefit analysis describing
• the estimated specific direct and indirect costs,
  savings, performance improvements, risks, and
  qualitative and quantitative benefits involved in
  or resulting from outsourcing the service
• a detailed plan and timeline identifying all
  actions that must be implemented to realize
  expected benefits.
• the agency head shall verify that all costs,
  savings, and benefits are valid and achievable

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• A statement of the potential effect on
  applicable federal, state, and local revenues and
  expenditures.
• describe the effect on general revenue, trust
  funds, general revenue service charges, and
  interest on trust funds
• describe the potential direct or indirect effect
  on federal funding and cost allocations

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• A plan to ensure compliance with public-records
  law, including a plan for
• Providing public access to public records
• Ensuring the confidentiality of records
• Meeting all legal requirements for retaining
  records
• Transferring to the state, at no cost, all public
  records in possession of the contractor upon
  termination of the contract

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• A transition and implementation plan for
  addressing changes in the number of agency
  personnel, affected business processes, and
  employee-transition issues.
• the mechanism for continuing the operation of the
  service if the contractor fails to perform and
  comply with the performance standards and
  provisions of the contract
• identification of all resources, including
  full-time equivalent positions, which are subject
  to outsourcing

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• A listing of assets proposed for transfer to or
  use by a contractor
• a description of the proposed requirements for
  maintaining those assets by the contractor or the
  agency
• a plan for disposing of the assets upon
  termination of the contract
• a description of how the planned asset transfer
  or use by a contractor is in the best interest of
  the agency and state

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CFEG Projects as of January 2005 1. Mail
Services (Enterprise-wide) - Currently in Stage
3 2. Mental Health (Department of Corrections) -
Currently in Stage 2 3. South Florida Evaluation
and Treatment Center (Department of Children
Families) Currently in Stage 2 4.
Economic Self-Sufficiency (ESS) Modernization
Partnership Model with Insourced/
Outsourced Eligibility Determination (Department
of Children Families) - Currently in Stage
2 5. Fleet Management (Enterprise-wide) -
Currently in Stage 1 6. Lottery Field Service
Operations - (Florida Lottery) Currently in
Stage 2