Commentaries
Will UNC Ever Take Privatization Seriously?

System uses criteria that inhibit ability to contract out services

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May 21, 1999

A new study by the Pope Center for Higher Education Policy finds that the UNC system uses criteria that inhibit its ability to contract out various services. These criteria, known as "outsourcing criteria/guidelines," apply to all UNC-system schools and were recently part of the Outsourcing Steering Committee's decision not to privatize residential housekeeping services at UNC-Chapel Hill. These criteria also guided the university's decision not to privatize various other services at UNC-CH, including heating, ventilating and air conditioning, ground maintenance and vehicle maintenance.

According to Jim Mergner, Associate Director of Utilities Operations at UNC-CH, "these criteria were in effect and were the basis of our studies in these areas. In all those [services] mentioned, they've come into play," he told the Pope Center.

But the criteria are flawed, according to George Leef, director of the Pope Center, because "the criteria have nothing to do with promoting efficiency. Instead the criteria focus on the relationship between the independent contractor and his workers, micro-managing that relationship in a way certain to make contracts with the university more costly than they would otherwise be," writes Leef in an analysis of privatization at UNC. This is a waste of North Carolina taxpayers' money.

"Consider the first criterion, which is that the contractor must offer to hire all incumbent employees who desire to continue in their work at their current wage or salary," writes Leef. "From the point of view of the university's employees, this is marvelous, but if you are a taxpayer interested in seeing the state universities run as efficiently as possible, this criterion is nonsensical. It amounts to the university saying, 'We won't allow any economizing on labor costs.'"

Leef goes on to criticize the seventh criterion, which stipulates that all incumbent employees must be hired at $7.75 an hour, because it prohibits the university from saving taxpayers money by hiring workers for less money.

The outsourcing guidelines "do not guide the university in finding out whether making or buying is more economical. Rather, they interfere with that process," writes Leef.

The Outsourcing Steering Committee in fact did not take bids from local contractors when considering the privatization of housekeeping services at UNC-CH. The Pope Center is now investigating whether the outsourcing criteria have influenced decisions not to privatize services at other UNC-system campuses.

 


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