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Innovators in Action 2009

Look Before You Leap Into Privatization: Florida's Council on Efficient Government Sets a New Standard in Transparency, Due Diligence in Privatization and Contracting Decisions

Interview with Henry Garrigo, former Director, Florida Council on Efficient Government

Leonard Gilroy
January 29, 2010

[This interview was originally featured in Innovators in Action 2009.]

The Florida Efficient Government Act of 2006 created a new Council on Efficient Government in response to a major push to outsource government services and activities that began during the tenure of former Governor Jeb Bush (1999-2007). Implementation challenges that arose with several big-ticket privatization contracts prompted policymakers to create the Council as a new center of excellence in state outsourcing. While Florida policymakers have been generally supportive of contracting out to lower costs and/or improve service delivery over the last decade, they also came to recognize a need for business cases that would evaluate proposed privatization initiatives for feasibility, cost-effectiveness and efficiency before an agency proceeds.

The Council's role is to review, evaluate and issue advisory reports on outsourcing business cases—as well as assisting agency staff in how to prepare them—and recommend innovative ideas to increase efficiency and lower costs. In 2008 alone, the Council evaluated 28 business cases with a cumulative value of over $244 million, identifying over $53 million in projected savings to the state.

In this interview with Reason Foundation's Leonard Gilroy, former Florida Council on Efficient Government Executive Director Henry Garrigo discusses the role and responsibilities of the Council; its mission to "advocate for innovation, educate on best practices and evaluate for value;" and what other states can learn from Florida's experience.


Leonard Gilroy, Reason: Could you describe the role of the Council on Efficient Government in Florida?

Henry Garrigo, Florida Council on Efficient Government: Currently the Council is set up in statute. It was created in 2006 through the Florida Efficient Government Act, and while there were some predecessors, that statute created us with the primary mission to have some sort of mechanism in place in state government where when an agency wanted to look at alternatives for sourcing service delivery—particularly outsourcing—that there was a body that could analyze that to make sure that those decisions were being done for the right reasons.

Here in the state, during the second Bush Administration there was a drive to look at privatization and outsourcing services to the private sector as an alternative for government, so the legislature set up the Council with the cooperation of the governor's office to really have someone in place with that sort of oversight to make sure that the decisions that are being made are being done properly for the right reasons— both fiscal as well as public policy issues—and that if there's any impact on state government, that is comprehended in the analysis.

The requirement was that agencies that went to outsource services needed to prepare a business case and have that business case submitted to the Council on Efficient Government for review. And over time, we've taken that charter and expanded it a little bit, but essentially that's the primary function of the office under statute right now.

Gilroy: Privatization and outsourcing are issues that can easily become politicized when they arise in the public forum, and it can be difficult for policymakers to sort out myths from facts. What is the value of the business case in the policy decision-making process?

Garrigo: Well, a lot of times in organizations that want to try to implement change, it's generally an idea that comes from some source that's initiated somewhere. It gets buy-in, and it is executed. Sometimes they don't find out until after the fact that it possibly wasn't a good idea to do in the first place or that the planning to execute it hadn't been done appropriately.

By instituting a formal business case process, the Council looks at a couple of key factors. First, what is the problem we're trying to solve? Is there a legitimate problem that needs to be solved in state government? Secondarily, what are the options to try to institute that change, and what are the financial and public policy issues that need to be evaluated to make a determination on the options?

What we try to do through our business case process is have the agencies come up with a clear problem statement and look at the financial implications of alternatives, and we generally require three options to be considered. We ask, "what are the financial implications, the poten­tial savings and the public policy issues that need to be addressed?" Through that analysis you can come up with a fair evaluation of options and pick the alternative that makes the best sense for both financial and public policy reasons. And then we ask some follow-up questions through the business case process, such as how do you propose to execute the chosen option with regard to procurement and implementation?

Gilroy: What does the business case provide to policymakers that they may have lacked before?

Garrigo: What they may not have had before was a discussion of alternatives. If the agency had in the past wanted to go in a particular direction and they had legislative support for it, there was essentially just one voice—the department head that was trying to drive that conversation.

What the business case process hopes to do is have an unbiased, depoliticized environment where alternatives to a problem are evaluated— again, on fiscal and public policy factors—to determine what is the best course of action. We don't want to just outsource or potentially insource a project because we can or because somebody intuitively thinks it's a good idea. We do a full evaluation of the idea, as well as possible other options to ensure that the right decisions are being made.

Prior to that, the legislature in particular, which is the fiscal body, did not have a third party or independent body that could evaluate the alternatives to solving the problem and offer some sort of unbiased report on which is the best course of action.

Gilroy: One focus of the Council is on the structure and nature of contracting, and orienting those toward performance. Can you describe how performance plays into the work that you do?

Garrigo: As I mentioned, our business case process goes sequentially. What is the problem statement? Which are the options that are available? What are the implications of those options on fiscal and public policy? At that point, we begin to ask questions and insure that the agency considers appropriately the implementation of the project—and that goes from procurement all the way through the closing of the contract and seeing that performance metrics are in the contract.

Part of that is ensuring that certain things are built into the engagement, particularly things like performance metrics. Are those performance metrics in the scope of work? Do those performance metrics point to achieving the objective stated in the problem statement—not just are they activity-based, but are they functionally related to the primary objective? Are the measurements tied back to the objectives to ensure the performance is there, per the scope of work, to achieve those objectives?

Gilroy: Since the Council has been in operation, have you seen improvements in terms of agencies' use of performance-based contracting, and what has been the Council's role in that?

Garrigo: Yes. I would draw a separation, though, between the pre-execution phase versus the post-execution phase of an engagement or of a contract. The Council's work currently spends most of its time on ensuring that the right decisions are made and that a plan is in place for the execution. We will go into discussions regarding the performance metrics and measures in the contract, and how to measure and track that.

We aren't contract managers after the fact, so once we've issued an advisory report that we feel that there's a legitimate issue that has to be resolved here, that the analysis has been done and that the right course of action has been taken, and that the elements are in place to effectively execute that project—at that point, the agency then takes over. The contract/project management unit of that agency takes over the implementation and execution phase, so they will be responsible for ensuring that the contracting is complete, ensuring that the performance measures are followed and that the vendors are held accountable.

In our short life—we've only been around for three years now—we have been relatively resource-constrained. We do have intentions to go back and measure some of the outcomes from the projects that we've evaluated, and we're working with the legislature to get more resources to be able to actually do that—to close the loop.

Right now we are more of a pre-budgetary process to make sure that the money goes to the right projects for the right reasons, and we're leaving the execution phase and the follow-up to both the agency as well as other departments. For example, the Department of Financial Services has a process to ensure that the dollars are being spent per the contract, and the Governor's Office of Policy and Budget—as well as legislature through the Office of Program Policy Analysis and Government Accountability—also have methods to ensure that we're getting what we are contracting for.

Gilroy: I would imagine that this is a different way of doing business than agencies were used to. How are agencies responding to the work the Council is doing, and what are you doing to facilitate these new practices?

Garrigo: I think the biggest change has really been that people now have the ability to stop and think and do an analysis before they even go ask for money from the legislature and implement a project. I've been speaking to department heads, secretaries, directors of different agencies and divisions, explaining to them the value of having a business case and doing a business case. They get it. Sometimes there's some resistance only because of the resource constraints and the learning curve that may exist.

It is something new in state government, particularly in the state of Florida. Before, things were done either through an executive order, an executive-level direction, department-level direction or legislative mandate. Things were generally done intuitively. People were just expected to make the right decisions.

Now we actually have a much more formal process that helps agencies evaluate options and determine what the right course of action is. Now when they go to ask for a budget and/or go to the contracting phase, they've already got all the information they need, and they appreciate that.

We've seen several agencies jump on board right away. The Department of Juvenile Justice is one. The Department of Corrections and our own Department of Management Services have also seen the value in what we do. The value in having an artifact of the deliberation that shows that there was a logical thought process behind this, and it wasn't just driven by intuition, legislative mandate, lobbyists—that this was actually a thought-out and reasoned decision.

Gilroy: What sort of training or educational services are you providing to the agencies?

Garrigo: That's interesting that we got to that subject. Since I've been on board, we've created this mantra, this mission statement, of "Advocate, Educate and Evaluate" as our three goals and our three business lines. Coming from the private sector, this is my first foray into this public sector. This "Advocate, Educate and Eval­uate" approach has really become how we try to drive our business. We're advocating for innovation, we're educating on best practices and we're evaluating for value.

The statute really helps us with our third vector—"evaluate for value." It tells us what we need to do as far as the business case process. And as we began to get our legs under us and grow, we went to agencies and we told them this is a statutory requirement. You need to do this. Here are the elements of the business case— please comply. In some cases, we got a shoulder shrug. "Hey, that's great but we don't know what a business case is and we've never had to write one. What are the elements? Can you help us?"

And that's how we got into our other business line which is "educate on best practices." We developed a curriculum on a couple of things. In particular, what is the statute and how do you comply? What are the necessary elements for compliance? What needs to be the business case? Why is the Council a good idea, and how are we going to help you?

The other curriculum covers the business case and how to write it. It's a longer course, and we went through the different elements on what's in a business case and the information you might need to create one. We've trained over 100 program and procurement people over at the Department of Environmental Protection, and we've done several trainings over at the Department of Corrections, Department of Juvenile Justice, where we've done face-to-face training on both of those elements. It's been very well received, quite honestly.

We're in the process right now of trying to evolve that into an online solution so we can touch more people—again, going towards efficiency—and let people self-select and self-train through new online learning and web tools. It's been pretty well received, and I think that's a high value mission for the group right now.

Our third vector is "advocate for innovation," and we are still trying to find some resources for that. That's more of a research-driven thing, looking at trends in government, trying to find solutions and then building cases for them. We want to look for ways the state might be able to deploy some of these either enterprise-wide, or possibly localized efficiencies that we might pick up from other states—maybe even from Reason Foundation—and to bring them into state government to have people evalu­ate and consider as an option.

Gilroy: Can you give a sense of some of the implementation lessons learned along the way, particularly with regard to how you do your work, how you communicate your work to others and what policymakers do with the products that you helped create?

Garrigo: Having executive support is obviously very important. The governor at the time and the legislature got together and decided this was a good idea. They did staff us to get the job done and gave us support and authority to go into agencies at all levels and begin to have the discussion. Unfortunately, we ran into a very dif­ficult budget time and we realized very quickly that our resources were going to be impacted negatively. We weren't going to be able to have the reach that we wanted, so a key lesson there is make sure you have the resources to execute the mission. That's fundamental in business.

We've been through five budget cycles, so three regular sessions and a couple of special sessions—all really focused on budget—and we've been impacted to varying degrees. We have been able to stabilize now with our staff. It's only a staff of four, two analysts, an admin and myself. We have been able to augment our staff a little bit with interns and temporary work, when necessary. And we've been successful, quite honestly, achieving some results through that as well. But obviously with such a small staff we are limited, so that's a key thing as well. Having the executive support is fine, but having the resources is really fundamental.

Those are probably the two key lessons. Everything else has been going pretty well. The agencies are receptive, but they are in somewhat the same predicament that we are in: they would like to invest more resources for the analysis and the compliance, but they're losing people and losing funds, and that's impacting the way they're able to interact with us.

Gilroy: Who else is doing this sort of work in other states?

Garrigo: Well, if we define the work that we do as this pre-budgetary analysis of project identification and the decision-making process on how to execute a plan to solve that problem, I'm not sure that I've run across anybody that has.

I know through some of the work that Reason has done that some other states have begun to look at incorporating some of our key learning and some of our language into organizations in their own states, other councils on efficient government. And I would encourage that. But quite honestly I haven't come across anybody that is within state government—as opposed to the private sector—that has that role of "advocate, educate and evaluate" in looking enterprise-wide at the possibility for implementing efficiencies in government. But I think there should be more of it, obviously.

As I mentioned, I come from the private sector. In the private sector, there's much more focus on the fiscal justification of what you want to do, why you are doing it, what the problem statement is, how much it's going to cost, what's the return on investment, and how's it going to positively impact the corporation. Those are business fundamentals that don't always exist in state government.

A lot of times, things are done either through a legislative mandate, or perhaps an agency head or other individuals just decided to do something on intuition because they feel that this is the right thing to do and the right way to do it. Not enough time is really spent on deciding whether we should go down the path before we go down the path. Let's evaluate if that's the right path to take, and then determine how we're going to go and execute this before we move forward. We've had some experiences here in the state—and I know other states have had similar experiences— where there's this impetus for change, a decision is made to go down a particular path, and it just doesn't end well or it doesn't execute.

Here in Florida, we wrote a report for the governor and legislature a while back on a couple of large projects (People First, My Florida Marketplace and the Project Aspire). Some of them were classic outsources, some of them were more hybrid approaches and some of them were internal developments and deployments that weren't going well. In the report we pointed out that very thing—that you need to have a good plan, make sure you've made the right choice before you get involved, have a plan to execute it well and in the end, you have a plan to get out of it. And I don't think, from either my experience here or from what I've read doing the research, that there are too many places where that thought process is really done—or done well. That's what we're here for, and we'll continue to do our work.

Gilroy: Regarding the report you just mentioned on the large enterprise IT outsourcing projects, I found the level of rigor and analysis to be quite impressive, and what it brought to the table was a very fair and dispassionate analysis of what at the time were controversial initiatives. The report was very balanced, both in terms of assessing the implementation challenges and the relative contributions of both the public and private sector to those challenges.

Garrigo: I appreciate that you took the time to read through it and took that away from it because that's exactly what we were trying to do. I think the uniqueness of the Council is that regardless of where we are housed administratively, we do try to be unbiased and depoliticize certain issues. We do try to bring an objective take on the issue that we're dealing with. In that particular case, it was a special report requested by the governor and we tried to take a very middle-of-the-road approach to it—depoliticize the activities, which at that point were highly politicized—and take a clear, logical approach to it. I think to the staff's credit, we were able to produce a report and reinforce the activity.

Now, I would hope that the Council continues to be a neutral organization. We have a balance of public and private sector members on our Council. We here on the staff do try to remain as neutral as we can. Analysts sometimes get very excited about certain things and it's incumbent on me, particularly, to make sure that we keep the emotion out of it and look at it much more empirically. We want to focus on the facts, not the feelings. We haven't approached any of our business cases as an advocate for any particular decisions. So we don't go in thinking outsourcing is good, and contrarily, we don't come in thinking that outsourcing is bad either. We want to look at the facts, evaluate the options and determine which is the right course. I hope to continue to drive the Council to that.

Gilroy: If you were advising a policymaker in another state trying to create a similar council, what sort of advice would you offer in terms of how to approach it and how to prioritize what these days would likely be limited resources for any new shop coming into existence?

Garrigo: Well, if it were for a similar council, obviously there are a couple of places that you need to have participation. You have to have executive support to be able to work through the agencies, and you have to have legislative support to get the right charter, get the statute and then get the funding. If you get those two in alignment, I think you have the good probability of success if you go forward.

The statute that created us is pretty narrow in that it speaks mostly to outsourcing. I would also encourage legislatures setting similar councils to potentially broaden the mission in the statute to allow for not only the review of outsourcing projects, but also for any projects to go through a business case or some sort of evaluation process before they execute. That would include insourcing or any variants of a combination of what I call "right-sourcing," such that there's consideration on how to right-source a solution, as opposed to just going down a path because that's what someone's particular preference is.

Gilroy: The type of work that the Council on Efficient Government is doing in Florida would seem to be a fairly ubiquitous type of practice in the private sector, yet a relatively new one in the public sector. Were you surprised at how fresh this approach is in government?

Garrigo: In Florida, I think it was the right time for it. There had been initiatives from different facets of government to push for one thing or another—whether it was bigger government or smaller government or outsourcing or privatization—and I think it was the right time and place for it. It was the right time for people to raise their hands and ask "why are we doing this?" and "is this the right decision?"

I think as we've gone out to try to educate the agencies on best practices, they get it. There are a lot of people that are long-time state employees at different levels who don't have the private sector experience, but still understand the need to justify things—both financially and for public policy—before they implement. This gives them the opportunity, if not the excuse, to do that. Sometimes things have been done in the past where it's just been a mandate, and people have tried to execute whatever that role is without really doing the analysis. So I think they're receptive to it.

Our approach is new, and it is a different thought process and different execution process. But state government is going to have to figure out how to do it, especially in these tight budget times when every project needs to be evalu­ated. Efficiencies are more important now than ever, and that requires a full analysis of projects before you implement them.

It's the proverbial "ready, aim, fire" as opposed to "ready, fire, aim." It is more important now than ever, and I think people are more receptive to it now than they have been in the past.


Henry Garrigo served as Executive Director for Florida's Council on Efficient Government within the Governor's Office and the Department of Management Services. The Council serves as an advisory board to the Governor and state legislature in reviewing business cases for proposed outsourcing projects. In September 2009, Mr. Garrigo returned to the private sector to continue to advocate for efficiencies in the government and the public sector.

Prior to joining the Council on Efficient Government, Mr. Garrigo was employed by the Intel Corporation for 10 years in a variety of operational, management, and sales roles. Most recently, he worked as the Worldwide Program Manager focusing on the design, development, and deployment of the worldwide system integrator marketing program.


Leonard Gilroy is Director of Government Reform


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