PRESS RELEASE

For immediate release: January 26, 2006

State Report Indicat­­es Privatized Procurement Adds Millions to Cost of Goods

An independent audit of a new procurement privatization pilot program shows an increase of up to 15% in procurement cost to the State of Alaska. The analysis covers the first year of the two-year procurement outsourcing experiment authorized under HB 313 in 2003.

Two samples provided by Mikunda Cottrell in its November 25, 2005 report to the Division of General Services indicated 9% and 15% increases in cost as a result of using a private contractor to procure goods versus the cost of using state-employed professional procurement staff.

“According to the audit, the additional cost to the State of Alaska is between $1 million and $1.75 million by outsourcing state procurement functions,” said ASEA Business Manager Jim Duncan. “This clearly validates the ability of procurement officers to serve the fiscal interests of the state efficiently and effectively.”

The audit compared the performance of Alaska Supply Chain Integrators (ASCI) during the period July 1, 2004 to June 30, 2005, with the performance of state employees during the same period one year earlier. The first sample compared 167 examples of orders with identical stock numbers or item descriptions. ASCI procurement costs increased by 9%.

The second sample compared 61 examples of orders from the first sample having identical quantities. When comparing these orders, ASCI procurement costs increased by 15.75% over the work of professional procurement officers.

“ASEA and APEA/AFT are requesting the immediate termination of the ASCI contract and for the Legislature to put e-commerce tools in the hands of the state’s purchasing workforce,” said Bruce Ludwig, Business Manager of the Alaska Public Employees Association/AFT. “The report shows the State of Alaska gains nothing in this attempt to privatize state services.”

Currently, the Alaska Legislature is considering two bills, HB 257 and SB 160, which would extend and expand procurement outsourcing.

Copies of the Division of General Services Cost of Goods Analysis report are available from the AFSCME Local 52 website at http://www.afscmelocal52.org/goods-report1.

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Reber Stein, ASEA Information Officer, (907) 463-4978, This e-mail address is being protected from spam bots, you need JavaScript enabled to view it