Big piece of state printing opened to private competition

Staff writerFebruary 18, 2014 

UPDATE 6:50 p.m.:

Private companies often can do large print jobs faster and cheaper than state government can do in-house, according to a state determination that will expand the private sector's role in the printing of state documents.

The decision by Gov. Jay Inslee's budget office comes more than two and a half years after the Legislature mandated the review and more than a year later than originally planned.

Some 365 private companies may now compete to take over the business cards, letterhead, brochures, maps, voter guides and other items that have been printed in bulk by the state.

"To me, this is a wise move for the state, and the business owners are thrilled with the opportunity," said Jules Van Sant, executive director of the Pacific Printing Industries Association, a regional trade association.

The immediate effects at the state printer may be limited - but only because the upheaval there was already underway.

"There's no bulk printing happening right now," said Jennifer Reynolds, a spokeswoman for the Department of Enterprise Services.

The state still has the machines to do it, but some of the expertise went out the door this month along with 15 laid-off workers.

Enterprise Services said it knew the budget office's decision was a possibility but said the main factor driving the layoffs was an ongoing decline in bulk orders. A shift to digital technology has reduced demand.

Most bulk printing, in fact, was already farmed out to the private sector - $4.1 million last year. Eliminating the bulk-printing staff, by contrast, is projected to save just $1.1 million next year.

The layoffs are the latest shrinking for a staff that now numbers about 50, less than half its 2008 size. Back then, the printer was a separate agency. It was eliminated and folded into Enterprise Services in the same 2011 law that called for the outsourcing reviews.

The privatization decision leaves the printer's future all the more in doubt.

"It is not clear that this program can fully recover costs through its operations going forward," David Schumacher, Inslee's budget director, wrote in the memo to DES that orders the new competitive process. The printer operated at a loss of nearly $1.8 million last year.

"It would be beneficial for DES to begin to think about whether it would be more cost-effective and efficient to contract with vendors for the remaining activities in the P&I (printing and imaging) program. To do so, the Legislature would need to make some statutory changes."

Even without changes in the law, more privatization could be coming. Schumacher's Office of Financial Management chose the rest of the printer's work for study in its next set of outsourcing reviews.

Brian Earl, president of the Teamsters union local that represents many of the workers at the printer, said some companies may be offering bulk-printing prices that are at or below cost. He argues the printer is competitive.

"Over the number of years that this has kind of been in the forefront, we have demonstrated that we are still on a relative basis a lower cost vendor," Earl said.

Today, government agencies place orders with DES, which decides if it can do the work in-house or if it will be bid out to one of 365 approved companies. Under the new system, agencies will be able to go directly to those companies for bulk printing. DES may compete for the work, but that appears unlikely unless the agency reverses course on its move away from bulk printing.

The direct bidding will save time, Schumacher wrote. It could also lower the price tag, he wrote, based on comparisons of eight companies to DES that showed "most services were provided at a lower cost by the bidding vendor."

Rep. Sam Hunt, an Olympia Democrat from a state-worker-heavy district, said there are probably some things that must be produced in-house, such as judicial documents.

"If we completely eliminate the state printer, all but that, is it really cost-effective?" he asked.

Spokane Republican Sen. Michael Baumgartner, who introduced the law that prompted the outsourcing reviews, called the bulk-printing decision a sign of progress.

“I’m pleased any time the state can find common-sense savings from non-core priorities of government,” Baumgartner said.

He had hoped it would be finished sooner. In early 2012, officials predicted a decision by October of that year.

But DES officials had to set up a new agency, then figure out how to do the new kind of contracting, said Roselyn Marcus, who used to head up contracting at DES and now leads the legal team at the budget office that makes the contracting-out decisions.

In this case, she said, the agency also had to decide what the seemingly simple category of bulk printing should include. Then DES had to figure out why most existing vendors didn’t bid on the work.

The agency ended up finishing its review and handing it over to the budget office for a decision last October. By that time, the agencies had also made decisions on state mail delivery, which ended up being kept in-house, and website work, some of which was chosen for contracting.

The next round should go faster and be done by the end of the next fiscal year, in June 2015, Marcus said.

The legislation requires study of up to six activities every two years. The budget office chose four to examine next:

- The rest of the state’s printing and imaging work.

- An unfinished part of the Web work studied last time. The budget office decided to privatize the state’s main website and many online transactions, but the company picked to do the work, NIC, wanted to fund it with fees on businesses that access motorists’ driving records. Lawmakers blocked that plan.

- Real estate leasing services. A 22-person staff helps state agencies find space and negotiate leases. About 1,300 leases cover 10 million square feet of offices and other space. OFM said there are thousands of companies that do similar work.

- Vehicle claims. A group of workers at DES investigate their fellow state employees’ car accidents and determines the state’s liability, then pays damages or negotiates a settlement. About 580 private firms do similar work, the review found.

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