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Steps You can take to help Stop Contracting-Out and Begin to Contract-In.

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Presentation on theme: "Steps You can take to help Stop Contracting-Out and Begin to Contract-In."— Presentation transcript:

1 Steps You can take to help Stop Contracting-Out and Begin to Contract-In

2 Todays Goal Identify potential Contacting Out situations early in the process or even before the process begins. to begin to think about building business cases to bring work back into the bargaining unit. Is to help Workers:

3 Our greatest strengths are : The collective action of workers in the workplace. The work and imagination of members. Workers know their workplaces and the way that work is organized in the workplace. Workers know what just doesnt make sense because of their workplace experience.

4 Workplace Changes that can lead to Contracting Out - The Early Signs Federal Budgets and Economic Updates Internal budget and salary wage envelope shortages Workforce reductions through attrition Big Picture privatization and Contracting Out schemes Re-organization of workplace structures and systems Lack of Training

5 Federal Budgets and Economic Updates Governments regularly announce cuts that lead to contracting out in their financial planning instruments. Every year in the fall the federal government issues an Economic Update and every spring they release a budget. Governments also prepare Estimates which are made public. These are all fiscal planning documents that spell out what government is planning to spend in particular areas. The union usually reviews these planning documents. Stay alert to what the union and the press report about fiscal updates and budgets.

6 Internal budget and salary wage envelope shortages Often the reason for Contracting Out is so that the employer can get work done using a different budget. The employer announces that they just dont have enough money to hire any more workers, even though the workload of the organization clearly indicates that more workers are needed. Because the extra work needs to be done, they typically find money in other budgets and then contract out the work. These costs are seldom compared against the costs that would have been expended had the internal workforce completed the work. Budget allocations are never inevitable. The employer is making a conscious decision that can and should be challenged.

7 Workforce reductions through attrition When workers retire, the employer doesnt replace them, even though the work still needs to be done or is increasing. The Employer contracts-out bargaining unit work that retired workers used to do. The employer should have secession plans to replace retiring workers. The Employer should be asked to share their secession plans with the Union at UMCs at all levels

8 Big Picture Privatization and Contracting Out schemes New political bosses or ambitious managers operate ideologically. They believe that the private sector is always more efficient. They tend to quote books with titles like The Lexus and the Olive Tree or In Search of Excellence to back up their ideology. They will say that the parts they want to contract out are non-core, that private sector expertise is needed, that tax-payers will be better served. In most cases these are assumptions not facts. Your knowledge of your work can demonstrate that these are assumptions. You are the expert.

9 Re-organization of workplace structures and systems As soon as a manager indicates that the workplace is going to be reorganized in order to realize efficiencies workers need to be vigilant. Contracting out isnt inevitable, but it is usually part of the change option being considered. The union and the workers need to be involved in the changes from the start to make sure that Contracting-Out doesnt happen and to identify opportunities to Contract-In The most effective reorganizations - and the ones that actually benefit workers as well as the workplace - are the ones where the union is a joint partner in the reorganization.

10 Lack of Training Inadequate and inaccessible workplace training is often a precursor to contracting out. If new skills are needed the employer should provide them instead of Contracting the work out. Accessible and equitable workplace training should be a regular Union Management Committee (UMC) agenda item.

11 Examples of Contracting-Out Contracting-out for work done by the bargaining unit Volunteerism Student Employment Temporary Staffing Agency Workers Contracting-Out as a function of Deregulation

12 Contracting for work done by the bargaining unit Work done by the internal workforce is done by an outside contractor who is paid for his services and his workforce. Some Examples of this at DND include: –logistics support and maintenance of government equipment and infrastructure is transferred to a private company. –Maintenance contracts like this often accompany new large ticket purchases and are used by the private sector to minimize initial costs while maximizing longer term costs. –Language training and other specialty teachers –Construction and facility Maintenance –Food Services and Food preparation contracts with chain operations like Tim Hortons and MacDonalds

13 Volunteerism Volunteerism is a form of Contacting Out Volunteers perform important roles in a democratic, compassionate society. Their importance should not be underestimated. At the same time, when an activity is important, it should be recognized as being important by society and have paid dedicated workers attached to it. Parks Canada contracts out work to volunteers in National Parks and Historic sites while Revenue Canada has discontinued front counter service while encouraging staff to volunteer to help taxpayers instead. Is volunteerism being used on DND bases?

14 Student Employment Employers are using students as low waged substitutes for regular workers. Facilitating student employment is important, but it should be used as a learning experience for students interested in a career in some aspect of the public service - not simply a work replacement program. If students are replacing regular works they should be hired on a term or casual basis. The Treasury Board Policy on Student Employment specifies that students are to be employed in programs that enrich their academic programs and develop employability skills while being mentored and assessed within a structured learning plan tailored to the students career goals. Parks Canada and the Canada Border Services Agency regularly replace regular workers with students who are paid much less than they would if they were employed on a casual basis often for prolonged periods of time and in situations where they have received inadequate training.

15 Temporary Staffing Agency Workers Temporary staffing agencies to do work that would normally be done in-house by the unionized workforce is another prominent way of contracting out work. Both the work being performed is contracted out as well as the staffing work that would ordinarily be done by unionized in-house staffing officers. Dollars spent on Temporary Staffing Agencies will have doubled over the last five years and the Public Service Commission is investigating. Temporary staffing agencies often employ workers at significantly lower wages than those of in-house employees but any savings to the employer are eliminated by contractor profits. This form of contracting out is particularly harmful.

16 Temporary Staffing Agency Workers continued Young people and women entering the job market are especially negatively affected. These have limited access to extended benefits too. If workers discover that temporary staffing agencies are being used in their workplaces they should challenge the employer at UMCs. Employers should disclose all instances where they use temporary staffing before their use as well as the reason and duration of the assignment. Those reasons should be recorded by the union and sent up the chain to the National office.

17 Contracting-Out as a function of Deregulation Workers, who are employed in regulatory and inspection capacities, and those who support their work, need to be aware of government efforts to deregulate the regulations that they administer and enforce. Often deregulation leads to the elimination of jobs through attrition. Is this kind of Contracting Out occurring at DND?

18 Why Workers should Oppose Contracting Out Workers should oppose contracting out because: –in doing so they protect their jobs. –they oppose practices that often severely undermine the levels and quality of service they provide to their clients. (Even Fortune 500 companies who switched to contracting out for many of their services are bringing a lot of those services back in-house.) –Contracting Out often introduces complexity, increased costs, friction in the value chain, the need for additional senior management attention and skill sets.

19 Why Workers should Oppose Contracting Out continued –Contracts never fully protect organizations from customer damage and service interruptions. ( Deloitte Consulting Report, 2005). –Contracting out increases the amount of lower paid jobs in the workforce hurting the overall economy. –By opposing Contracting-Out, PSAC members can encourage Contracting-In.

20 What all Workers can do All workers need to be vigilant in the workplace. If an unfamiliar worker is in the workplace doing work that you suspect might be bargaining unit work, approach the other worker and find out why they are there. After gaining an understanding of the situation if you think that it might be contracting out - report it to the union

21 What Union Activists Can do. Union activists are leaders in their workplaces and in their regions. They are essential links in identifying Contracting Out in the workplace. Union activists can:

22 Constantly communicate with other union members in the workplace Communicate regularly with all workers in the workplace about Contracting Out. Invite workers to tell you about instances of suspected contracting out. Let them know what to look for.

23 Talk with Management Local Union management meetings are an excellent place to learn about what is being planned for the workplace and whether contracting out is part of those plans. Regularly ask management for their plans about the impacts of government policy like federal budgets, shrinking internal budgets, workplace change and workplace efficiency initiatives. Have their responses or lack of responses recorded in the minutes of the UMC and distributed to all members.

24 Your Collective Agreement WFAA Annex I : Departments or organizations shall review the use of private temporary agency personnel, consultants, contractors, employees appointed for a specified period (terms) and all other non- indeterminate employees. Where practicable, departments or organizations shall refrain from re-engaging such temporary agency personnel, consultants or contractors or renewing the employment of such employees referred to above where this will facilitate the appointment of surplus employees or laid-off persons. This can be used as justification for UMC reporting of on-going Contracting Out situations – The union cant hold the employer accountable for this Collective Agreement clause unless they understand the on-going extent of the Contracting-Out in their workplaces.

25 Talk with Your Union The communication links that union locals and local activists nourish between their component and the PSAC are essential in helping to further identify contracting out trends, priorities and fight-back actions. If the union knows about instances of suspected contracting-out it can investigate the occurrence at other levels of the organization and research contracts through other avenues. Use the Contracting-Out reporting interface coming soon to the PSAC Think Public website.

26 Analyzing a Contracting Out Proposal: Some Questions Will the contractor be required to meet qualitative standards? What mechanisms does the employer intend to put in place to enforce those standards? Will the contract be based on less staff and low wages? How will the employer ensure that contracted work meets Health and Safety Standards? What services will be downloaded to existing clients or customers? Will a private sector monopoly be created?

27 Analyzing a Contracting Out Proposal: Some Questions continued Will the Employer share the business case they are using to justify contracting out? Has the employer adequately compared the contracting costs with the in-house costs? Has the employer analyzed the contractors resources? What existing resources will the contractor expect to use for free? What other hidden costs are there - legal, administrative, oversight, tendering, negotiating, re-tendering? Does the employer have a plan in place should the contractor default?

28 Contracting In The most efficient way to provide services are to do them in-house by unionized full time workers. Targets may include both work that was Contracted-Out when it should not have been or they can include work that was never done in-house but could and should be done in-house. You need to consider if the service can or should be done in-house, how the contractor has performed and other strategic considerations

29 In-house Considerations Could the service or function be provided more efficiently and at lower overall costs by contracting in while providing the client or the public with increased quality of services? Are there other organizational benefits like secession planning, career training plans, apprenticeship potential, security and privacy obligations? Is it practical to bring the service or the function in- house? Does the organization already provide similar services?

30 In-house Considerations continued Does bringing the contract in-house give management more flexibility? Are those services under utilized? Would the services that the contractor provides be a good fit? To what extent does the in-house organization already support the contractors organization through contract management, infrastructure, tools etc?

31 Contractor Considerations Has the contractor met its obligations? Do examples exist of bad or incomplete service? Does the client or the public have concerns with the contracted service? Is the Contractors work force less well trained and more transient? Does the Contractor provide good working conditions and strong health and safety protection for its workforce? Are there potential privacy or security concerns with the contractors operation? Is the Contactor Canadian or does it have international ties?

32 Strategic Considerations Do the union and the workers believe this is a contracting-in proposal worth fighting for? Are resources available for the fight-back? When is the existing contract up for renewal? Will management consider the contracting-in option? (If they wont – that doesnt mean you dont move ahead – it does mean that you will use different tactics) Does the existing contractor have a unionized work-force? Would organizing the contractors workforce be a more strategic option? Would there be support from the public, politicians and other groups for contracting-in this service?

33 Contracting Out Methods and Process Competitive and Non-Competitive or Sole Source contracts. Even contracts that were originally competitive can quickly become monopolies as in-house resources and expertise are lost.

34 Simple Contracts or Purchase Orders usually include masthead (name and address of buyer) purchase order number sellers name date of order date that service is required (beginning and end) payment terms for goods, (concerns related to shipping and insurance) ordering branch or section detailed description of service expected clear description of major units of service price per unit and/or total cost of all units of service terms and conditions of contract

35 Tenders or Requests for Proposals Instructions to Contractors about essential requirements A contact person who is usually the main person in charge of the contract Specifications of the work to be done (can be detailed or fairly simple) Examinations, Site visits - P3s offer to create joint statements of work Length of contract and if contract extensions will be allowed Total Costs and Unit Costs Terms of Payment – when the contractor will be paid, bonus etc. Professional permits, licenses or certifications that are required

36 Tenders or Requests for Proposals continued Bonds to be paid should the Contractor pull out at a crucial time during the process Certificate of compliance – proof that the contractor has insurance Reference to governing laws or professional standards Subcontracting rights Terms of Cancellation Penalties for non-compliance possibly the Contract agreement Description of the Evaluation Criteria

37 Performance Incentive Fees A CPIF Cost-Plus-Incentive-Fee contract is a cost-reimbursement contract that provides for an initially negotiated fee to be adjusted later by a formula based on the relationship of total allowable costs to total target costs. The contractors profit increases when actual costs are below the target cost defined in the contract and should ordinarily apply a ceiling. The theory is that this incentive encourages the contractor to be more effiecient and more productive. Contractors that employ UNDE workers (for example at Goose Bay) receive PIFs. Private corporations shouldnt be able to exploit the public purse, but when they do they are still the employer and the workers should receive a fair share of the companies profits.

38 Where to find information about: Contracts, Contract History, Contract Intentions Other useful information

39 Public Sources for examining the Extent of Outsourcing MERX Public Accounts Proactive Disclosure

40 MERX MERX is the Canadian Public Tenders service tendering billions of dollars of goods and services annually. It connects buyers in the federal, provincial and Municipal, Academic, Schools and Hospital (broader public sector) to potential contractors. B=1&PORTAL=MERX&State=1&hcode=0oAbh0Y4HyEmQfk9Gq XlQw%3d%3d B=1&PORTAL=MERX&State=1&hcode=0oAbh0Y4HyEmQfk9Gq XlQw%3d%3d This is an example of a potential Contracting In situation in Nova Scotia.

41 Public Accounts Public Accounts is a government website that shows exactly how much money is actually spent on outsourcing The information there is fairly broad so although it is helpful it is often difficult to separate legitimate contract purchases (i.e. cell phon services) from outsourcing the work that our members do. eng.html eng.html

42 Governments Disclosure of Contracts The government has a policy that all Contracts of $10,000 must be published. This website shows all the contracts that were issued by DND for over $10,000. since October 31, 2004 and every three months thereafter. The database on this website can be sorted by date, Vendor name, Description of Service and Value eng.asp?q=4&y=2008&id=id52082

43 Public Work Government Services Professional Services This website include links to: PS Online ian electronic procurement tool that assists federal departments in the procurement (below the NAFTA threshold) of professional services.PS Online Temporary Help Services (THS) The Cyber Protection Supply Arrangement ia federal government-wide procurement vehicle for the delivery of various informatics security services.The Cyber Protection Supply Arrangement Task-Based Informatics Professional Services is a combination Standing Offer and Supply Arrangement (SO/SA) for the provision of informatics professional services related to a particular activity or initiative.Task-Based Informatics Professional Services In-Service Support Supply Arrangement site provides access to approved suppliers for human resource, organizational, and project management consulting services.In-Service Support Supply Arrangement Technical, Engineering and Maintenance Services Supply Arrangement is a government-wide procurement vehicle for the delivery of various technical professional services required on an "as and when requested" basis.Technical, Engineering and Maintenance Services Supply Arrangement

44 Other Sites that Might be of Help The following information and websites may be useful in compiling a corporate profile of a contractor that is bidding for bargaining unit work.

45 Basic Information on the Company On the web, check out Yahoo Finance at or Hoovers at Corporate Information at is particularly good for foreign companies To confirm the name or address of the company use on-line yellow pages such as Big Yellow at or Info Space at For European companies use Europages, the European Business Directory at

46 Narrowing It Down To fully understand the operations of the target firm, it is important to get an overall sense of the employers products/services. Sites that can help you include: –OSHA at –The North American Industry Classification System (NAICS) at the U.S. Census Bureau –The Thomas Register –Securities and Exchange Commission (SECs) EDGAR database –For Canadian Companies SEDAR at For European and British owned companies see Company Annual Reports On Line (CAROL) or Kompass at

47 Narrowing It Down continued –For Corporate history Mergents on Line –The Wall Street Transcript at a compilation of interviews with corporate –Free Public Record Sites at provide massive amounts of information from public –The AFL-CIOs Executive Pay Watch at provides information on executive compensation –SOCRATES, the corporate social ratings monitor published by KLD Research & Analytics Inc. –Corporate Information –Strategis (Industry Canada) OnlineOnline –Canadian Company Capabilities OnlineOnline –Advise for OnlineOnline

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