News

State jobs to be outsourced

Just weeks before Christmas, nine state employees were informed that their jobs are being eliminated and that their place of work, the state central store, is closing its doors for good.

By ALLISON FARRELL – IR State Bureau

http://helenair.com/articles/2004/12/03/montana/a07120304_01.txt

In an email sent to the employees of the operation Wednesday, Department of Administration officials said the state will begin sub-contracting the ordering and delivery of office supplies, paper and janitorial products to an as-yet unnamed private delivery firm.

Steve Bender, acting director of the state Department of Administration, said two of the nine employees will be kept on, and said his department will do everything it can to find new work for the remaining employees.

"We’re confident it makes sense," Bender said Thursday.

Central stores employee Richard Fisher of Helena suspects that an out-of-state delivery service will eventually get the contract. He said a company based in Salt Lake City has the "inside track" on the job, but Bender said the state is still seeking bids.

"All of the warehouseman have family that will be affected by it," said Fisher, who has two daughters of his own. "They’re going to basically be sending jobs out of state."

The transition will occur over the next six months and the doors of the state central store will be shuttered no later than June 30, the Department of Administration email states.

The central store orders and delivers office supplies, as well as paper and janitorial products, to state offices as well as schools and city and county governments.

Fisher, who has worked for the bureau for almost a year and for state government for about four years, said he’s surprised that the state wants to shut down the store since a recent study shows that outsourcing could cost the state $268,000 more over 10 years.

"It saves everybody money," Fisher said. "We’re purchasing in bulk, and there’s no mark up. We’re not in it to make a profit."

The study, prepared by SGR, Inc. of Helena this past summer, shows that hiring a private firm will cost the state an additional $26,000 a year. However, the private model could save the state more than $1 million over 10 years if estimated high freight costs are not realized, the study said.

The study considered the proposals "basically even" and noted that "financially, both models are equivalent."

Bender called the higher cost a wash, and said out-sourcing will bring state ordering into the "21st century." Outsourcing will allow for on-line ordering, and will offer next-day delivery around Montana, Bender said. Other benefits include lower product costs, consolidated purchasing and potential job employment, if the vendor locates operations in Montana, the study concluded.

Benefits of the current business model include continuation of personal service, local employment and business continuity, the study said. The study also said that current operations minimize lifting injuries, since products are delivered right to the customers’ desks.

Bender, however, said the state central store has been criticized for competing with the private sector and was only allowed to operate these last 24 years because it realized significant cost savings for the state.

"That cost savings appear to have disappeared," Bender said.

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