Outsourcing Alternatives

For years, private businesses have hired specialty companies to handle the day-to-day tasks that need to be done, but are not directly related to their core activity. In addition to cutting expenses, these arrangements are supposed to allow employees to concentrate on their business functions instead of spending time and energy on things that will not generate income. Universities have also outsourced many services to save money and free their educators to educate. School districts, on the other hand, have been slower to accept this practice, but that seems to be changing. Is this a matter of catching up? Not necessarily, say both school officials and service providers.

Is It Right for You?

Judson Crane, director of purchasing for the Santa Rosa School District in Milton, Fla., says that outsourcing is the right answer for some districts, but probably not for everyone. “I believe, absolutely, that this is an option that should be looked at, but contracting out is not a panacea,” he says. “It is not going to be perfect for every school or district, but it has created a better and more professional situation for our district, especially in the area of food service.”

The Santa Rosa district has been outsourcing its custodial services for nearly eight years. Crane says that the district has also contracted out its food and transportation services for the past four years. “We are the only district in Florida that contracts out all three,” he says. “Most only contract out their food or custodial services.”

Tom Callahan, vice president of marketing and program development for Sodexho Marriott, says that outsourcing is far more widespread than most would recognize. “We (Sodexho Marriott) don’t see the outsourcing decision as a competition,” he says. “There’s a time and place for both self-operation and contracted services. Our overarching philosophy is to think ‘clients first,’ so we evaluate each opportunity based on our ability to deliver both short- and long-term benefits.”

Crane says there are a number of advantages to outsourcing, but the four major objectives are to reduce costs, gain greater expertise within the contracted function, reduce the number of employees (by attrition, not lay-offs), and relieve the school administrators of responsibility for non-instructional duties.

“Outsourcing allows the organization to gain expertise and capabilities economically without draining its limited resources,” Callahan says. “When properly executed, outsourcing brings competencies that support the primary mission of today’s schools -- the delivery of knowledge and understanding.”

Making the Decision

In a way, Callahan explains, all schools outsource some activities. He says that most schools find it practical to outsource highly technical services or resource-intensive support functions. These can include custodial services, building maintenance and repairs, grounds management, transportation, procurement and warehousing, IT support and food service management. It could also include staff development, calling in substitute teachers, or being involved in purchasing coops.

Before 1993, individual schools in the Santa Rosa district made their own decisions about how to manage their custodial staffs. Crane said that some contracted out part of the work, while others used either all in-house staff or had their own contracts with service companies.

Crane says that, although cost savings were a large part of the reason for the decision to contract out custodial services, the district also wanted to establish consistency in the way services were being managed, and to increase the expertise of the management of those services. “Besides, the contractors can afford to have better equipment and are capable of providing training for the people who work with them,” he says.

Crane admits that the transition period can be hard on current employees but, giving them the option to stay, either on the district’s payroll or by accepting employment with the contract service provider, can make things go easier.

Callahan agrees, saying, “Employee relations is always the most significant hurdle. It’s a fear of the unknown that is supported by rhetoric broadcast by those most resistant to change. The reality is that most service providers want to work with and through the existing work force. Working together, we will help each individual to improve his or her skills and reward him or her with improved opportunities for promotional advancement, higher wages and recognition for the greater expertise.”

Making It Work

What things need to be considered before contracting? “You have to find a good fit for that school or district,” says Callahan. He explains that usually means finding a company with capabilities that match the current and anticipated needs of the district or school.

From the educational institute’s perspective, Crane sees backing and cooperation from the district as a big factor. “Support from the district administration and school board is essential,” says Crane. “Second, the person in charge of food services need to be behind any contracting out of that service. Of course, the administration and board need to be convinced that there is an advantage and need for the contracting. And, finally, it is best to have the purchasing professional involved in the administration of bids, etc.”

Crane adds that he has found it to be helpful to establish a hierarchy or chain of command that suits the district. In the Santa Rosa district, each of the three outsourced services has a district-employed contract administrator who works with the service company’s local manager.

Some contractors want to take over all of the management responsibilities, Crane says, but, at least for his district, it is important to have a contract administrator who is employed by the district in that upper-management position. “The very most important individual is the manager who the contractor provides, because he or she has to be very competent. But the next most important is the contract administrator. During the first years of contracting, that person is very busy and involved. He or she is the person responsible for keeping the contractor on task,”says Crane. "After the contracts have been in place, and things settle out, there are fewer difficulties. It could even be possible, at some point, to have a contract administrator in charge of more than one area of service.

“Currently, when we have a problem, the contract manager must handle it instead of the principal or me. Now we have a management person to run the operation, and my level of involvement, as director of purchasing, is in the contracting,” he explains. “It is more efficient.”

Crane says that he feels many schools will find outsourcing their services to be beneficial. In fact, he points out that there is proposed legislation in Florida that would encourage each school to look at contracting services in an effort to cut costs and improve efficiency. He has prepared a Website for those interested in management service contracts, which lists major objectives, factors to consider and details of the district’s current contracts. It can be found at

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Jerry Enderle is editor of School Planning & Management magazine.

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