Every
once in a while, a columnist needs to eat humble
pie.
Two
weeks ago I argued that Virginians shouldn’t even
be thinking about raising taxes until they had fully implemented the
recommendations of the Wilder Commission on
government effectiveness and efficiency. (See “Anybody
Want a Used Prison,” August
25, 2003
.)
In
particular, I contended, the state should take a
private-sector approach to managing its scattered real estate
holdings.
By
failing to note how the Warner administration was
following up on the recommendations of its own
commission, I may have created the impression that
nothing was happening. If I’d made one more phone
call -- to Sandy Bowen,
Virginia’s
secretary of administration -- I would have learned
that a lot is going on behind the scenes. Indeed,
the Department of General Services is only
days away from formally engaging an
outside contractor to implement the Wilder
Commission’s recommendations on real estate
operations.
Bowen’s
secretariat, traditionally a quiet backwater of the
executive branch, has become a crucible of change in
the Warner administration. As is evident from a
perusal of the Wilder Commission’s final report,
the greatest opportunities to make state government
operate more efficiently require changes in the
administrative processes of government: procurement,
information technology, real estate operations and
the management of inventories and receivables.
It
can be dull, eye-glazing stuff, but reforms could
add up to hundreds of millions of dollars a year.
Bacon’s Rebellion has chronicled the state’s IT
reforms (see Joyce
Wise Dodd
’s
“Bringing VITA to Life,”
August
25, 2003
)
but many changes fall within Bowen’s bailiwick.
Bowen, former chief lobbyist for the Virginia Chamber of Commerce, has been content to operate
largely out of the public eye. But she’s in charge
of implementing far-reaching reforms.
“As
we looked at how state government does its business,
it was obvious that we could do it better,” says
Bowen. The root problem is that state government
does not function at an enterprise level. It’s
organized around dozens of agencies, each of which
manages its own administrative processes. Many of
those tasks could be more efficiently handled
centrally. “We cannot afford the inefficiencies
and the money it costs to operate in multiple little
buckets.”
The
administration has been “mining best business
practices in the private sector and bringing them to
state government,” Bowen says. But you don’t
reinvent government with a snap of the fingers, she
warns. Government and business don’t work by the
same rules. Furthermore, recent budget cuts have
limited resources to handle complex new projects. Rather than
tackle all the Wilder Commission recommendations at
once, Bowen’s team took on major projects in
sequence. The top priority was reforming
procurement, where the Wilder Commission estimated
the most money could be saved – 10 percent of
state procurements, or up to $500 million annually.
Bowen
made her deputy, James T. Roberts, the point man on
procurement reform. Early on, Roberts focused on eVA,
an electronic procurement initiative started during
the Gilmore administration, that was still in
“start-up hell” when Warner took office. Then he
set about leveraging the state’s buying power.
Through the Virginia Partners in Procurement
program, the state now is bundling the purchasing
data of its various agencies and using its
aggregated buying power to negotiate more aggressively with
vendors. Roberts expects to generate savings of $25
million to $30 million a year.
In
late spring, coinciding with his appointment as
director of the Department of General Services,
Roberts turned his attention to real estate. Agency
heads typically determine their needs for office
space in isolation
from one other. Furthermore, because they make major
real estate decisions only episodically, they rarely
have the background to negotiate the best deals.
Richard
Sliwoski, director of engineering and buildings, has
been visiting other states to study best practices.
Meanwhile, this summer, Roberts and his team interviewed six
major firms and framed a scope of work. “We’re
on the cusp” of getting an outside contractor on
board to help manage the state’s real estate
portfolio, Roberts said early last week.
When
that finally happens, though, don’t expect a lot
of fanfare. Says Roberts: “We haven’t spent much
time on the marketing and P.R. side of this."
So,
at long last, the Commonwealth will have a system in
place for better managing its leases, disposing of
surplus property, co-locating state offices, and
making complex lease-buy decisions.
But
as I pointed out in my column, there's more to
managing a real estate portfolio than finance. The
state is a major producer and consumer of energy for
purposes of heating, air conditioning, ventilating
and lighting its facilities. Like any company, the
state needs to control its energy costs.
I
still question how well the state can fulfill this
mission: The management structure is hopelessly
fractured. Real estate operations fall under Bowen's
secretariat. Energy conservation programs are
subsumed under the Department of Mines, Minerals and
Energy reporting to Secretary of Commerce and Trade
Michael Schewel. And steam-generating power plants
report variously to the prison system and individual
colleges and universities.
Do
not construe this as a negative commentary on the
Warner administration or state employees, both of
whom are doing some
creative work. The issue is how to align the people
who manage the state's real estate portfolio with
those who manage its energy spending. The business
and investment decisions of the two are entwined;
the people in charge need to be talking to one
another.
Finally,
on the issue of taxes, I'm not backing off -- even
if the Warner administration isn't letting the
Wilder Commission recommendations sit on the shelf. As
Steve Haner points out in his column this week (See
"Our Cup Runneth
Over," September 8, 2003), it looks like
state finances are improving. As savings kick in
from the administration's re-engineering efforts,
Virginia could find itself debating in a year or two what
to do with the state surplus.
The
Warner administration deserves kudos for
contributing to that surplus by squeezing tens,
maybe hundreds, of millions of dollars a year of
"waste and inefficiency" -- which pundits
said didn't exist -- from state government. Let's
apply those savings, not new taxes, to education and
other priorities.
--
September 8, 2003
|