RD281 - 2009 Commercial Activities Inventory Report


Executive Summary:
The Governor and his administration remain committed to serving the needs of Virginia’s citizens through a state government that provides services in the most efficient and effective manner possible. The administration has conducted many initiatives and implemented several enterprise-wide business function reengineering projects that are achieving increased efficiencies and cost reductions. All have included public-private partnerships and outsourcing to private entities in accordance with the Virginia Public Procurement Act.

The Commonwealth of Virginia delivers its services in a variety of ways, including state employees, outsourcing, public-private partnerships, or a combination of these. The Competitive Government Act defines state employees as all persons employed by the Commonwealth to provide services, including both salaried and wage employees, and all persons engaged to perform work for or to provide services to the Commonwealth. This report reflects the delivery of services by the executive branch of state government for fiscal year 2009.

In implementing the provisions of this legislation, the Governor directed the Secretaries of Administration, Finance, and Technology to (i) develop a methodology for updating the inventory of commercial activities previously developed by the Commonwealth Competition Council; (ii) provide guidance in determining functions that should be performed by state employees because they are inherently governmental in nature, and those that may be suitable for cost comparison analyses; (iii) determine which commercial activities are suitable for consideration for outsourcing at the agency level and which should be the subject of enterprise-wide approaches; (iv) provide guidance to agencies and institutions in making realistic and fair cost comparisons for contracting with the private sector; and (v) recommend such other actions as may be necessary and appropriate to procure the services, and develop the required reports.

In addition, in keeping with the requirements of the legislation, the Governor identified the sale of state owned surplus property as an area to improve in order to increase government efficiencies. Two contracts with private auctioneers were let (February 2007) to assist in selling to the highest bidder all surplus heavy equipment (trucks, chain saws, graders) from the Virginia Department of Transportation, State Police, Fleet, Game/Inland Fisheries, Forestry, and James Madison University. All equipment is transported by the auctioneers and sold by the contractors. State agencies must only complete a spreadsheet of those items sold and send the reports to the Department of General Services (DGS). Also, two recently signed contracts with two Web site hosts will allow for a faster and less expensive manner to sell surplus agency fleet cars. An estimated $1.7 million in cost avoidance (avoiding driving the vehicle or surplus to an auction site) is realized and $1.7 million in revenues has been generated in which 75 percent was returned to agencies. The details of these initiatives and the success they generated will be submitted to the Governor and House Appropriation and Senate Finance Committees by October 1, 2009.

The information presented expands upon the 205 commercial activities identified in the 1999 inventory compiled by the Commonwealth Competition Council and includes all activities of the executive branch of state government. The former commercial activity topics will now be identified as service areas. This conforms to the naming structure for the state budget.

During the 2009 fiscal year, there were almost 700 services being provided for Virginia’s citizens by the executive branch. Removing the 171 services that are considered pass-through grants and/or inherently governmental services, there are 520 services that contain some form of commercial activities. Efforts are underway to determine which of these services, or portions of these services, are considered inherently governmental, meaning that only the state workforce should deliver the service. The General Assembly and Governor have authorized over 105,800 classified employees in the executive branch to provide its services. Recognizing that in many cases there is a need to supplement the executive branch workforce, over 10,500 individuals have been employed by the state agencies and institutions as wage employees during the 2009 fiscal year. In addition, the Commonwealth spent $8.8 billion in contractual services which reflects an increase of almost 11 percent over fiscal year 2007 totals.

Details on the analyses done to develop the list of services and the delivery mechanisms for the executive branch are reflected on the attached five reports:

Report 1: delineates the services of the executive branch of state government that contain some form of commercial activities. This is a more comprehensive listing of services provided than in the 1999 inventory. Once the decision is made to study the service in depth and the outcome is known and implemented, it is intended that the activity will be moved to a completed list of services. As services are studied, the inherently governmental aspects of each will be identified and moved to a list of inherently governmental services. These two additional lists will be included in the information available on the Web.

Report 2: lists the pass-through grant funding services which have been removed from the activities of state government identified in Report 1.

Report 3: arrays expenditures in salaried and wage information for the 2009 fiscal year.

Report 4: arrays salaried and wage employment statistics and contractual services for the 2009 fiscal year.

Report 5: reflects expenditures in contractual services for the 2009 fiscal year. This information will be available on the Web sites of the Commonwealth Competition Council at http://www.egovcompetition.com.