THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Thursday, September 8, 1994 TAG: 9409070126
SECTION: NORFOLK COMPASS PAGE: 18 EDITION: FINAL
SOURCE: BY JON GLASS, STAFF WRITER
LENGTH: Long : 107 lines
NORFOLK SCHOOL officials are promising savings of several hundred thousand dollars as they enter final negotiations on a new contract with a private company to manage custodial services.
``I guarantee you it will be substantial savings,'' School Board member Joseph Waldo said last week.
Over the proposed three years of the new contract, Waldo said, enough money should be saved to air-condition a couple of schools, at about $200,000 each.
Waldo's projections are based in part on an internal audit released last month showing that the district's first contract for private custodial service in 1989 contained language that enabled the company - Chicago-based ServiceMaster - to profit at the school system's expense.
Waldo and other school officials vowed to negotiate from a smarter position this time around.
``If there's anything we've learned from the ServiceMaster contract,'' Waldo said, ``we've learned to sharpen the pencil. The study shows us we still have a lot to learn.''
School officials scrambled unsuccessfully to approve a new contract last month before the district's five-year agreement with ServiceMaster expired Aug. 31. Instead, they negotiated an extension, allowed under the contract.
``We want to be assured that privatization is best for the school system - that's what we've been grappling with,'' said School Board chairman Ulysses Turner.
The School Board met in closed session last Wednesday to consider the recommendations of a five-member committee that had selected three top contenders from six companies that submitted proposals. Both Turner and School Board member Robert Hicks sat on the committee.
The committee ranked ServiceMaster second, behind Marriott Management Services Corp. A Virginia Beach firm, E.L. Hamm & Associates Inc., was ranked third.
During the 90-minute executive session, the School Board authorized Superintendent Roy D. Nichols Jr. to begin negotiations with one of the three companies. School officials declined to say which one.
The board's legal counsel, City Attorney Philip Trapani, said Virginia's procurement law allows the negotiations to remain private at this point because releasing information now would ``destroy the confidentiality'' of the companies that supplied proposals.
The School Board is expected to award a contract at its meeting later this month.
Norfolk schools hired ServiceMaster in the hope of saving money through private management of its custodial services. Custodians remain employees of Norfolk schools but are managed by ServiceMaster.
Since 1989, the school system has paid the company about $5.3 million to oversee its custodians and to provide cleaning equipment and supplies.
But the three-month audit, completed by internal auditor Darren Padilla, cast doubt on whether the school system actually saved any money, Nichols said last week.
Last November, sparked in part by janitors' complaints about ServiceMaster's management style, the school system's department of business and financial support services issued a memo outlining savings of just over $1 million during ServiceMaster's contract. The memo said 76 positions had been eliminated.
But Nichols last week said he wasn't convinced $1 million was saved. In calculating the estimated savings, Nichols said, the business office relied on ``questionable assumptions,'' including the projection that the number of custodial positions would have continued to increase each year under an in-house operation.
``It was purely speculative,'' Nichols said. ``We're not sure we could substantiate that.''
In addition, of the 76 positions claimed to have been eliminated, the internal auditor could substantiate only about half. Nichols said that overall pay has been reduced but that the reductions may have resulted because new hires earn less money than senior employees who left.
Padilla identified more than $130,000 in ``avoidable costs'' built into the ServiceMaster contract. A formula in the contract, for example, enabled ServiceMaster to get paid based on ``full-time equivalent'' employees, which included a combination of full- and part-time employees. In practice, it allowed ServiceMaster to continue getting paid for unfilled positions, as long as the FTEs remained at a certain level.
``Had we structured the contract differently, we could have come out better,'' Nichols said. ``There was a financial incentive for them to do the job with as few employees as possible. The school system didn't benefit from that.''
Nichols said he thinks the relationship between ServiceMaster and school officials overseeing the contract may have become too cozy.
``I've come to the conclusion that our people became so close to the ServiceMaster team that we began to view them as some of our own and we began to accept their information without going back and verifying it,'' Nichols said. ``Some common business practices that should have been followed weren't. It created a potential for abuse, but we have no evidence abuse occurred.''
After complaints from janitors and some school staff, the Virginia Beach School Board last month voted to cancel its $1.4 million custodial contract with ServiceMaster after one year. Superintendent Sidney Faucette also said the firm had not created the savings the school system had hoped for. ILLUSTRATION: Photo
Joseph Waldo
``We still have a lot to learn.''
Roy Nichols Jr.
Isn't convinced $1 million was saved.
KEYWORDS: NORFOLK SCHOOLS by CNB