Democracy Tree: For-profit sharks swarm public sector pool

by Amy Kerr Hardin

Aramark cited privatized food services as a major growth area in its fourth quarter 2014 report, specifically in the lkeysucrative North American sector — “As reported sales were up 7% and operating income was up 24%. Sales growth in the Education and Sports, Leisure and Corrections sectors were particularly notable as new business wins came onboard throughout the year.”
The private food and custodial vendor’s spotty track record proved to be of little deterrence, as schools, corrections facilities, and DSCN0444-150x1501sports venues eagerly signed contracts in the hope of jiggering their bottom line — often with frightful, unintended results.
The public sector pool is teeming with profiteers, feeding on the ignorance of leadership found in Republican-led states. And now they’re ready to wring profits out of the custodial market too.
Move over Aramark, there’s a new kid in town poised to make a killing on public sector contracts. The Blackstone Group, parent company to GCA Services, a private custodial contractor, hauled-in a 2014 profit of $4.3 billion — up 24 percent from the previous year. CEO Stephen Schwarzman netted a cool $656 million, earning him the rank of 39th on the Bloomberg Billionaires Index. (Two months hence, Schwarzman has moved to the 36th position.) Another top executive with the firm, Jon Gray, raked in $205 million.

GCA was acquired by Blackstone two years ago. Subsidiaries operate under a number of local and regional names, including: ABS, Acme Building Maintenance, Dependable Building Maintenance, National Building Maintenance, SBM Maintenance, Southern Building Services, Sunstates and TGH.
The company has a checkered history matching that of its competitor, Aramark. There have been instances where GCA failed to conduct basic background checks and hired sex and drug offenders to work in public schools. As reported by AFSCME:
“GCA Services placed two custodians with drug and sex offense criminal records in schools. One of the custodians, in Tennessee, was charged with the rape of a 16-year-old student in a closet on school property during school hours. It was later discovered the employee had a criminal record for aggravated battery, assault and theft of property. Another, in Texas, was a registered sex offender who was found in a school locker room dead, with his pants down and a bag over his head.

A GCA official said about the incidents, “You have to understand, we hire a lot of people. I think a couple of incidents with 20,000 employees is a pretty good batting record.”
Lack of background checks on workers is just the tip of the corruption iceberg. Among other GCA offenses are:
• employee theft
• breach of contract resulting in filthy schools
• exposing students and staff to dangerous cleaning chemicals
• understaffing
• violations of federal labor laws and OSHA rules
• inadequate employee compensation
• hiring undocumented workers
• intimidating workers attempting to unionize
• surveillance of union activities
• deceptive contract practices
UPDATE: One student and two staff members in Ann Arbor Public Schools suffered chemical burns from contact with toilet seats at a GCA facility.
An Invitation for Corporate Corruption
A recent in-depth analysis on the privatization of janitorial services finds that educational facilities account for nearly 32 percent of the sector, with industry revenues expected to hit nearly $65 billion by 2018 — clearly a market ripe for the picking.
One Day in the Life of GCA
New Jersey’s Kean University announced intentions to outsource custodial and grounds services to GCA. Fifty-four full-time employees will lose their jobs at which they had earned between $25 and $67 per hour. They will be replaced with workers earning $22 an hour, with no guarantee of full-time employment.
Had university officials done their homework, they would have realized that their projected savings may come at too great a cost. Case in point — also in recent news was a story about Chesterfield County Schools, near Richmond, Va., where a recently inked GCA contract has become a hard lesson for school officials. The vendor’s employees are leaving school doors unlocked and lights left on overnight. The GCA turnover and understaffing problem is alarming. The company has failed to comply with reporting on their background checks for new employees. The Richmond Times Dispatch reports:
“In one case, a woman who doesn’t work for the service recently returned a full set of school keys to Lloyd C. Bird High School because she said the custodian had been ‘thrown in jail.’
“The restrooms are becoming a health hazard. There is ‘gunk’ (for lack of a better word) on the fixtures, in the sinks and toilets, and on the floors,” according to a written review of the service at her school by L.C. Bird Principal Laura Hebert. “There are not enough custodians during the day to keep up with the normal wear and tear on the building in addition to any unforeseen issues that arise.
Michigan schools have been increasingly on board with privatization (some employ GCA, Ann Arbor of note), but that trend seems to be leveling off. The Mackinac Center for Public Policy, a champion of all things privatization, reports that nearly half of Michigan’s schools have contracted out their custodial services to private vendors — a number up sharply from just over a dozen years ago when under 7 percent outsourced their janitors. Yet the trend line for privatization is flattening, even the Mackinac Center admits this may indicate a point of saturation. In the report, Michigan School Privatization Survey – 2014, the rate of privatization is slowing for good reason.
It could be that school support service privatization has topped out. In other words, there may come a time when all the districts that could contract out for quality services while simultaneously saving money have.
While we have the Mackinac Center under the microscope, it’s worth noting that they recently spanked the Michigan Education Association over the union’s privatization of custodial services, but truly, that’s simply not an apples-to-apples comparison against the state’s public school system.
Proponents of the virtues of privatization too often characterize those who question the wisdom of the practice as wholesale condemning it. But no, it is the vampiric relationship of corporate interests that taint the picture — soiling the honest desire to save taxpayer dollars.
Even the Mackinac Center knew when to call it quits — or at least they did a generation ago. Found in a dusty 1997 issue of Mackinac Center’s magazine, the Michigan Privatization Report, they advised public and private sector leaders on when to abandon a failed janitorial contract. From the article:
“Contracting out by government to private companies carries the same risks and benefits that private businesses assume when subcontracting to outside firms. For example, a private company might contract with a janitorial service because it believes the service can clean at less cost and higher quality than the company’s in-house janitors. The company in essence transfers to the janitorial service payroll costs including wages, Social Security, unemployment insurance, Medicaid and benefits. If the janitorial service fails to properly clean the building or if the company fails to pay the negotiated price, the contract may be breached and become a matter of litigation.”
There ya go — from the Mackinac Center itself.

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