RD29 - Annual Report of the Commonwealth Competition Council

Executive Summary:
The Commonwealth Competition Council was established by the Virginia Government Competition Act of 1995 to examine and promote methods of providing a portion or all of select government-provided or government-produced programs through the private sector by a competitive contracting program. The Council has developed an institutional framework for a statewide competitive program to encourage innovation and competition within state government.

As state and local governments struggle to provide services to an ever-demanding public with inadequate financial resources, continuous improvement, outsourcing, and privatization of government functions are becoming increasingly necessary. Taxpayers expect their government to deliver products and services commensurate, at least in their own minds, with what they pay in taxes. The problem is how to pay for these services without breaking the bank or raising taxes.

Many government positions mirror private sector jobs, or in government jargon “commercial” activities, such as payroll, check preparation, etc. HB1043 (2004) requires the Governor to biennially conduct an enterprise-wide examination of the commercial activities that are being performed by state employees to ensure that these activities are being accomplished in a most cost-efficient and effective manner. The examination is to consider at least three commercial activities as the Governor may identify. The Secretary of Administration is to report on the initial examination to the Governor and the Chairs of Appropriations and Senate Finance by January 1, 2006, and thereafter every two years. In addition, the bill provides for the Secretaries of Administration, Finance and Technology to develop a methodology for updating the list of commercial activities established by the Commonwealth Competition Council and to provide guidance to state agencies in outsourcing efforts. The Competition Council staff has worked extensively with the Secretary of Administration in the regard. The plan is on target for the 2006 reporting date and calls for an Internet-based survey that maximizes the use of technology and existing databases.

The use of different accounting systems often hampers comparisons between public and private service provision. One of the biggest obstacles to conducting a reliable, fair, and effective analysis of government initiatives has been developing a user-friendly methodology for an apples-to-apples comparison of government and private industry. To combat this obstacle, several years ago the Competition Council created a PC-based cost comparison program called “COMPETE.” It computes the full cost of a government activity and provides a unit cost that can then be compared with business costs for the same unit.

As Virginia prepared for the 21st century, practicality dictated the development of more productive but less costly government operations. Decision support tools were needed to assist management in their quest for increased productivity and cost-effective performance. A compelling need for change in Virginia government was also rooted in the reality that recent growth of government required extraordinary management.

Providing value to the customer – the taxpaying citizen of Virginia – was the driving force behind the creation of the Commonwealth Competition Council in 1995. Value is made up of three components: full price or cost of the function, quality and quantity of the function, and desired level of customer service satisfaction. Innovation, continuity, and training are key elements of the processes advocated by the Competition Council. Competition is a tool to get continuous improvement and cost savings. It also eliminates obsolete processes and redundant layers of bureaucracy.

The Council provides a variety of decision support tools for government managers as well as a transparent process affording both the public and private sectors the required degree of neutrality. A complete suite of decision support tools for government managers is available on the Competition Council website at http://www.egovcompetition.com. The detailed “how to” information in the eGOV toolkit empowers managers and employees at all levels to define, measure, analyze, improve, and control their operations.

During 2004 the Council undertook a review of the following:

• Debt collection
• Telecommunications audit
• Change in the color of vehicles
• Employee suggestion program
• Commercial activities inventory
• Authorities in Virginia

A brief synopsis follows on the outcome of these six topics.

State agencies and institutions continue to follow the Governor’s direction and guidance on carrying out their missions in an efficient and effective manner. The Commonwealth Competition Council assists state government officials in this important initiative. The Council is fortunate that its 15 members form a unique collaboration of legislators, executive branch leaders, and business leaders from the private sector, including two members who serve on the Small Business Commission. After almost a decade of service to state government, Virginia continues to be a leader in efficient and effective government. See Appendix A for legislative citations.

During the last year, the Council has continued to provide guidance and direction to not only Virginia state agencies and institutions, but many other states seeking advice and counsel in privatization and outsourcing issues. Virginia, through the Commonwealth Competition Council, is constantly called upon by other states seeking ways in which to make their governments more efficient and effective. One of the guiding principles of the Council is to encourage state government leaders to be innovative in the manner in which services are delivered. While much has been accomplished, there is much still to be done. State agencies have seen their budgets and staffs reduced. This results in government officials becoming more efficient and effective in the delivery of their services. Many services have been streamlined, and some eliminated as not being perceived as a core function of government.

The Commonwealth Competition Council continues to provide assistance to state agencies and institutions as it carries out its mission to serve as a catalyst for change to help state government work better, cost less, and get the results Virginia citizens expect in the 21st century. Effective government benefits all citizens of the Commonwealth and provides value for their tax dollars. The citizens, government employees, and businesses are all direct beneficiaries of the Commonwealth Competition Council’s innovations and programs.