Friday, July 18, 2014

FEDERALIST PAPERS No. 46. The Influence of the State and Federal Governments Compared

From the New York Packet. Tuesday, January 29, 1788.

MADISON
To the People of the State of New York:
RESUMING the subject of the last paper, I proceed to inquire whether the federal government or the State governments will have the advantage with regard to the predilection and support of the people. Notwithstanding the different modes in which they are appointed, we must consider both of them as substantially dependent on the great body of the citizens of the United States. I assume this position here as it respects the first, reserving the proofs for another place. The federal and State governments are in fact but different agents and trustees of the people, constituted with different powers, and designed for different purposes. The adversaries of the Constitution seem to have lost sight of the people altogether in their reasonings on this subject; and to have viewed these different establishments, not only as mutual rivals and enemies, but as uncontrolled by any common superior in their efforts to usurp the authorities of each other. These gentlemen must here be reminded of their error. They must be told that the ultimate authority, wherever the derivative may be found, resides in the people alone, and that it will not depend merely on the comparative ambition or address of the different governments, whether either, or which of them, will be able to enlarge its sphere of jurisdiction at the expense of the other. Truth, no less than decency, requires that the event in every case should be supposed to depend on the sentiments and sanction of their common constituents.
Many considerations, besides those suggested on a former occasion, seem to place it beyond doubt that the first and most natural attachment of the people will be to the governments of their respective States. Into the administration of these a greater number of individuals will expect to rise. From the gift of these a greater number of offices and emoluments will flow. By the superintending care of these, all the more domestic and personal interests of the people will be regulated and provided for. With the affairs of these, the people will be more familiarly and minutely conversant. And with the members of these, will a greater proportion of the people have the ties of personal acquaintance and friendship, and of family and party attachments; on the side of these, therefore, the popular bias may well be expected most strongly to incline.
Experience speaks the same language in this case. The federal administration, though hitherto very defective in comparison with what may be hoped under a better system, had, during the war, and particularly whilst the independent fund of paper emissions was in credit, an activity and importance as great as it can well have in any future circumstances whatever. It was engaged, too, in a course of measures which had for their object the protection of everything that was dear, and the acquisition of everything that could be desirable to the people at large. It was, nevertheless, invariably found, after the transient enthusiasm for the early Congresses was over, that the attention and attachment of the people were turned anew to their own particular governments; that the federal council was at no time the idol of popular favor; and that opposition to proposed enlargements of its powers and importance was the side usually taken by the men who wished to build their political consequence on the prepossessions of their fellow-citizens.
If, therefore, as has been elsewhere remarked, the people should in future become more partial to the federal than to the State governments, the change can only result from such manifest and irresistible proofs of a better administration, as will overcome all their antecedent propensities. And in that case, the people ought not surely to be precluded from giving most of their confidence where they may discover it to be most due; but even in that case the State governments could have little to apprehend, because it is only within a certain sphere that the federal power can, in the nature of things, be advantageously administered.
The remaining points on which I propose to compare the federal and State governments, are the disposition and the faculty they may respectively possess, to resist and frustrate the measures of each other.
It has been already proved that the members of the federal will be more dependent on the members of the State governments, than the latter will be on the former. It has appeared also, that the prepossessions of the people, on whom both will depend, will be more on the side of the State governments, than of the federal government. So far as the disposition of each towards the other may be influenced by these causes, the State governments must clearly have the advantage. But in a distinct and very important point of view, the advantage will lie on the same side. The prepossessions, which the members themselves will carry into the federal government, will generally be favorable to the States; whilst it will rarely happen, that the members of the State governments will carry into the public councils a bias in favor of the general government. A local spirit will infallibly prevail much more in the members of Congress, than a national spirit will prevail in the legislatures of the particular States. Every one knows that a great proportion of the errors committed by the State legislatures proceeds from the disposition of the members to sacrifice the comprehensive and permanent interest of the State, to the particular and separate views of the counties or districts in which they reside. And if they do not sufficiently enlarge their policy to embrace the collective welfare of their particular State, how can it be imagined that they will make the aggregate prosperity of the Union, and the dignity and respectability of its government, the objects of their affections and consultations? For the same reason that the members of the State legislatures will be unlikely to attach themselves sufficiently to national objects, the members of the federal legislature will be likely to attach themselves too much to local objects. The States will be to the latter what counties and towns are to the former. Measures will too often be decided according to their probable effect, not on the national prosperity and happiness, but on the prejudices, interests, and pursuits of the governments and people of the individual States. What is the spirit that has in general characterized the proceedings of Congress? A perusal of their journals, as well as the candid acknowledgments of such as have had a seat in that assembly, will inform us, that the members have but too frequently displayed the character, rather of partisans of their respective States, than of impartial guardians of a common interest; that where on one occasion improper sacrifices have been made of local considerations, to the aggrandizement of the federal government, the great interests of the nation have suffered on a hundred, from an undue attention to the local prejudices, interests, and views of the particular States. I mean not by these reflections to insinuate, that the new federal government will not embrace a more enlarged plan of policy than the existing government may have pursued; much less, that its views will be as confined as those of the State legislatures; but only that it will partake sufficiently of the spirit of both, to be disinclined to invade the rights of the individual States, or the prerogatives of their governments. The motives on the part of the State governments, to augment their prerogatives by defalcations from the federal government, will be overruled by no reciprocal predispositions in the members.
Were it admitted, however, that the Federal government may feel an equal disposition with the State governments to extend its power beyond the due limits, the latter would still have the advantage in the means of defeating such encroachments. If an act of a particular State, though unfriendly to the national government, be generally popular in that State and should not too grossly violate the oaths of the State officers, it is executed immediately and, of course, by means on the spot and depending on the State alone. The opposition of the federal government, or the interposition of federal officers, would but inflame the zeal of all parties on the side of the State, and the evil could not be prevented or repaired, if at all, without the employment of means which must always be resorted to with reluctance and difficulty. On the other hand, should an unwarrantable measure of the federal government be unpopular in particular States, which would seldom fail to be the case, or even a warrantable measure be so, which may sometimes be the case, the means of opposition to it are powerful and at hand. The disquietude of the people; their repugnance and, perhaps, refusal to co-operate with the officers of the Union; the frowns of the executive magistracy of the State; the embarrassments created by legislative devices, which would often be added on such occasions, would oppose, in any State, difficulties not to be despised; would form, in a large State, very serious impediments; and where the sentiments of several adjoining States happened to be in unison, would present obstructions which the federal government would hardly be willing to encounter.
But ambitious encroachments of the federal government, on the authority of the State governments, would not excite the opposition of a single State, or of a few States only. They would be signals of general alarm. Every government would espouse the common cause. A correspondence would be opened. Plans of resistance would be concerted. One spirit would animate and conduct the whole. The same combinations, in short, would result from an apprehension of the federal, as was produced by the dread of a foreign, yoke; and unless the projected innovations should be voluntarily renounced, the same appeal to a trial of force would be made in the one case as was made in the other. But what degree of madness could ever drive the federal government to such an extremity. In the contest with Great Britain, one part of the empire was employed against the other. The more numerous part invaded the rights of the less numerous part. The attempt was unjust and unwise; but it was not in speculation absolutely chimerical. But what would be the contest in the case we are supposing? Who would be the parties? A few representatives of the people would be opposed to the people themselves; or rather one set of representatives would be contending against thirteen sets of representatives, with the whole body of their common constituents on the side of the latter.
The only refuge left for those who prophesy the downfall of the State governments is the visionary supposition that the federal government may previously accumulate a military force for the projects of ambition. The reasonings contained in these papers must have been employed to little purpose indeed, if it could be necessary now to disprove the reality of this danger. That the people and the States should, for a sufficient period of time, elect an uninterrupted succession of men ready to betray both; that the traitors should, throughout this period, uniformly and systematically pursue some fixed plan for the extension of the military establishment; that the governments and the people of the States should silently and patiently behold the gathering storm, and continue to supply the materials, until it should be prepared to burst on their own heads, must appear to every one more like the incoherent dreams of a delirious jealousy, or the misjudged exaggerations of a counterfeit zeal, than like the sober apprehensions of genuine patriotism. Extravagant as the supposition is, let it however be made. Let a regular army, fully equal to the resources of the country, be formed; and let it be entirely at the devotion of the federal government; still it would not be going too far to say, that the State governments, with the people on their side, would be able to repel the danger. The highest number to which, according to the best computation, a standing army can be carried in any country, does not exceed one hundredth part of the whole number of souls; or one twenty-fifth part of the number able to bear arms. This proportion would not yield, in the United States, an army of more than twenty-five or thirty thousand men. To these would be opposed a militia amounting to near half a million of citizens with arms in their hands, officered by men chosen from among themselves, fighting for their common liberties, and united and conducted by governments possessing their affections and confidence. It may well be doubted, whether a militia thus circumstanced could ever be conquered by such a proportion of regular troops. Those who are best acquainted with the last successful resistance of this country against the British arms, will be most inclined to deny the possibility of it. Besides the advantage of being armed, which the Americans possess over the people of almost every other nation, the existence of subordinate governments, to which the people are attached, and by which the militia officers are appointed, forms a barrier against the enterprises of ambition, more insurmountable than any which a simple government of any form can admit of. Notwithstanding the military establishments in the several kingdoms of Europe, which are carried as far as the public resources will bear, the governments are afraid to trust the people with arms. And it is not certain, that with this aid alone they would not be able to shake off their yokes. But were the people to possess the additional advantages of local governments chosen by themselves, who could collect the national will and direct the national force, and of officers appointed out of the militia, by these governments, and attached both to them and to the militia, it may be affirmed with the greatest assurance, that the throne of every tyranny in Europe would be speedily overturned in spite of the legions which surround it. Let us not insult the free and gallant citizens of America with the suspicion, that they would be less able to defend the rights of which they would be in actual possession, than the debased subjects of arbitrary power would be to rescue theirs from the hands of their oppressors. Let us rather no longer insult them with the supposition that they can ever reduce themselves to the necessity of making the experiment, by a blind and tame submission to the long train of insidious measures which must precede and produce it.
The argument under the present head may be put into a very concise form, which appears altogether conclusive. Either the mode in which the federal government is to be constructed will render it sufficiently dependent on the people, or it will not. On the first supposition, it will be restrained by that dependence from forming schemes obnoxious to their constituents. On the other supposition, it will not possess the confidence of the people, and its schemes of usurpation will be easily defeated by the State governments, who will be supported by the people.
On summing up the considerations stated in this and the last paper, they seem to amount to the most convincing evidence, that the powers proposed to be lodged in the federal government are as little formidable to those reserved to the individual States, as they are indispensably necessary to accomplish the purposes of the Union; and that all those alarms which have been sounded, of a meditated and consequential annihilation of the State governments, must, on the most favorable interpretation, be ascribed to the chimerical fears of the authors of them.
PUBLIUS


Learn More About American History:  Visit Jamestown, Yorktown and Colonial Williamsburg Living Museums In Virginia.  It's A Revolutionary Concept.

Thursday, July 17, 2014

Governor McAuliffe Announces More Than 200 New Jobs for Carroll County

English: A chair in it's bare nature waiting t...
English: A chair in it's bare nature waiting to be upholstered. (Photo credit: Wikipedia)
~Vanguard Furniture to establish first Virginia household furniture upholstery production operation~ 

RICHMOND - Governor Terry McAuliffe announced today that Vanguard Furniture, a high-end upholstery producer, will invest $550,000 to establish its first Virginia household furniture upholstery production operation in Carroll County. The project will create more than 200 new jobs.

Speaking about today’s announcement, Governor McAuliffe said, “We welcome Vanguard Furniture to the roster of impressive companies that have expanded into Virginia. Vanguard is able to take advantage of an available facility that will allow a quick start-up to production, and Southwest Virginia offers an abundant workforce with a skill set in the furniture industry. Carroll County has gone to great lengths to meet the company’s needs and ensure that the Carroll County Industrial Park site will be home to Vanguard’s first Virginia operation. We look forward to the company’s future success in the Commonwealth.”
“Carroll County is a great fit for Vanguard Furniture’s first Virginia household furniture upholstery production operation,” said Maurice Jones, Virginia Secretary of Commerce and Trade. “Southwest Virginia has a rich history in the furniture industry, and the addition of over 200 new jobs paying above the average prevailing wage is significant news for a region that continues to rebound economically.”

Vanguard Furniture, a family held company, employs 500 associates and is currently operating out of five manufacturing buildings in Conover, North Carolina, and a 40,000-square-foot showroom in High Point, North Carolina. The company offers a broad selection of high-end upholstery and case goods.

Andy Bray, President of Vanguard Furniture, said, "Our company has experienced unprecedented growth over the last few years, and we feel the need to expand our operations.  The communities surrounding our new facility in Carroll County, like Galax and Mt. Airy, North Carolina, have proud traditions of manufacturing quality upholstered furniture. We anticipate our new facility will attract some of the finest craftsmen in this area.”

The Virginia Economic Development Partnership worked with Carroll County, the Carroll County Industrial Development Authority, and Virginia’s aCorridor to help secure the project for Virginia. Funding and services to support the company’s employee training activities will be provided through the Virginia Jobs Investment Program.

Carroll County Board of Supervisors Chairman David Hutchins said, “Today is a great day in Carroll County to have secured more than 200 new jobs for our citizens in an economic sector that is a natural fit. This project would not have been carried out without the coordination and assistance of many groups and individuals, such as the Carroll County Industrial Development Authority, which is under the very capable leadership of Mr. Richard Slate.  Vanguard Furniture is a forward-thinking company with exceptional benefits that will certainly add to Carroll County and the region as a whole.”

Governor McAuliffe Announces Administration Appointments

McAuliffe speaking at Frying Pan Park in Hernd...
McAuliffe speaking at Frying Pan Park in Herndon, VA. (Photo credit: Wikipedia)
RICHMOND – Governor Terry McAuliffe announced additional appointments to his administration. The appointees will join McAuliffe’s administration focused on finding common ground with members of both pa
rties on issues that will grow Virginia’s economy and create more jobs across the Commonwealth.


Office of the Governor

Rachel Levy, Special Assistant in Constituent Services
Rachel Levy interned in the Governor’s Press office this past spring and formerly interned at the White House in the Office of the Press Secretary. She graduated with a B.A. from the University of California, Davis. She holds a degree in Communication with English and Writing minor.


Secretariat of Education

Eric Von Steigleder, Special Assistant to the Secretary of Education
Eric received his B.A. from the University of Mary Washington and his Master’s in Multimedia Journalism from the Richard T. Robertson School of Media and Culture at VCU. Most recently, he served as the Marketing Manager for an Henrico-based law firm and Editor of the East End Daily, an online news source in Richmond’s East End.

Secretariat of the Commonwealth
Board Appointments

Chesapeake Bay Bridge and Tunnel Commission
·       The Honorable Chris Snead of Hampton, Member, Hampton City Council
Emergency Medical Services Advisory Board
·       Samuel T. Bartle, MD of Richmond, Assistant Professor, Departments of Emergency Medicine and Pediatrics, Virginia Commonwealth University/MCV
·       Stephen J. Elliott*, BAS, NREMT-P of Palmyra,  Battalion Chief/Shift Commander, Albemarle County Fire Rescue
·       The Honorable Joan F. Foster of Lynchburg, Member, Lynchburg City Council; Director of Development, Lynchburg Beacon of Hope
·       Kelly G. Southard of Orange, Rescue Chief, Orange County Rescue Squad; Senior Principal/ Partner, Gillum Architects, P.C.
Joint Leadership Council of Veterans Services Organizations
·       Richard J. Rinaldo of Newport News,  Lieutenant Colonel, U.S. Army Retired
Roanoke Higher Education Authority Board of Trustees
·       Robert A. Archer of Salem, President and CEO, Blue Ridge Beverage Company, Inc.
·       Patricia White-Boyd of Roanoke, President, Star City Management, Inc.
·       Charles A. Price, Jr. of Roanoke, Retired General Contractor
Secure Commonwealth Panel
·       John L. Bell, Jr. of Virginia Beach, Deputy Chief of Police
·       John A. Braun of Falls Church, President and Chairman of the Board, Dynamis, Inc.
·       Patrick E. DeConcini of Hampton, Principal, DeConcini & Associates, LLC
·       Paul T. Diamond, MD of Charlottesville, Associate Professor and Director of Neurorehabilitation, Department of Physical Medicine and Rehabilitation, University of Virginia Health System
·       Michael Lawrence Hamlar of Roanoke, Founder/President Hamlar Enterprises, LLC, Adjunct Professor, American National University
·       L.V. “Pokey” Harris of Chilhowie, Director of Emergency Management, Washington County
·       Jim Redick* MPA, CEM of Virginia Beach, Director of Emergency Preparedness and Response, City of Norfolk
·       Reuben Korah VargheseMDMPH of Arlington, Health Director and Division Chief, Arlington County Public Health Division
·       The Honorable Angelia M. Williams, Vice Mayor, City of Norfolk
Southwest Virginia Higher Education Center, Board of Trustees
·       Christine P. Kinser of Tazewell, Superintendent, Tazewell County Public Schools
·       Steven C. Cochran of Blacksburg, Director of Human Resources, HHHunt Corporation
State Air Pollution Control Board
·       Samuel A. Bleicher of Arlington, Principal, The Strategic Path LLC
·       Rebecca R. Rubin of Fredericksburg, President & CEO, Marstel-Day Environmental Company, LLC
Virginia-Asian Advisory Board
·       Julia Kim of Vienna, Chief of Staff, Office of Delegate Mark L. Keam, Virginia House of Delegates
Virginia Biotechnology Research Park Authority
·       Kenneth E. Ampy of Chesterfield, Chief Executive Officer, Astyra Corporation
·       Eric S. Edwards, MD, PhD of Powhatan, Co-founder, Chief Medical Officer and Vice President of Research and Development, Kaleo, Inc.
Virginia-Israel Advisory Board
·       Irving M. Blank, Esquire, of Richmond, Partner, ParisBlank LLP
·       Marc K. Broklawski of Fredericksburg, Project Management, U.S. Government
·       The Honorable Eileen Filler-Corn of Springfield, Virginia House of Delegates, 41st District; Director of Government Relations, Albers & Company
·       William R. Frank of Henrico, Public Policy Manager, Virginia Association of Community Services Board
·       Aviva Shapiro Frye of Bristol, Co-Founder & Executive Director, World Prayer Foundation and World Medical Travel, LLC
·       Joyce Slavin Scher of Richmond, Founder and President of Victoria Charles Fine Jewelry
Virginia Small Grains Board
·       Ellen Matthews Davis of West Point, Management Consulting
·       James H. Hundley, III* of Champlain, Owner and Operator, Cloverfield Enterprises

*Denotes reappointment

Secretary Harvey and Secretary Hazel Visit VA Medical Centers, Discuss Commonwealth’s Role in Ensuring Access to Critical Services to Virginia Veterans

Injuries incurred by service members are cover...
Injuries incurred by service members are covered by the Veteran Administration. (Photo credit: Wikipedia)
RICHMOND – Governor Terry McAuliffe has tasked Secretary of Veterans and Defense Affairs John Harve
y and Secretary of Health and Human Resources Bill Hazel to with Veterans Administration hospitals across Virginia to ensure Virginia veterans and their families have access to the critical services they need to enhance their health and well being.

“As home to thousands of veterans, active duty service members and their families, Virginia has the responsibility to ensure that members of the armed service have access to the healthcare, mental health services, and resources they and their families need to succeed,” said Governor McAuliffe. “That is why I have asked Secretary Harvey and Secretary Hazel to work with the VA medical centers in Virginia to explore ways the state can give support to their operations and make sure Virginia is providing top notch services to our veterans.”

Secretary Harvey and Secretary Hazel began their tour of VA hospitals on Tuesday, July 8, with a visit to McGuire VA Medical Center in Richmond and visited Hampton VA Medical Center on Wednesday, July 9th. Next week, they will also visit Salem VA Medical Center to meet with the hospital director and identify opportunities for the state to lend assistance on any issues related to Virginia veterans seeking care and medical services.  

Governor McAuliffe has also made it a top priority of his administration to provide pathways for gainful employment to Virginia veterans and their families. As part of this effort, he has vowed to end veterans’ homelessness by the end of 2015, and just last month announced that veterans homelessness decreased by 14 percent between 2013 and 2014. Additionally, under the Governor’s leadership, Virginia has expanded the Virginia Values Veterans initiative, which encourages employers to recruit, hire, train, and retrain our veterans, and recently announced that the state was awarded a federal grant of over $3.4 million allocated to veterans’ job training. The Governor will continue to make veterans health and success a priority throughout his term, and this effort is another step towards promoting their welfare.


Fiscal Year 2014 General Fund Revenue Collections Down 1.6% From Fiscal Year 2013 And $439 Million Below Forecast

The Timing of Nonwithholding Payments in Response to Federal Budget 
Uncertainty Drives the Shortfall

RICHMOND- Governor McAuliffe announced  that preliminary figures indicate the state concluded Fiscal Year (FY) 2014 with an approximately $438.5 million shortfall in general fund revenue collections, excluding transfers.

Total general fund revenue collections declined by 1.6 percent in FY 2014, behind the revised revenue forecast of 1.0 percent growth. This marks the first time that Virginia revenues have declined outside of a national recession. 

The main driver of the revenue decrease was a large drop in nonwithholding payments.  Despite record-breaking increases in the stock market, it appears that the uncertainty about the federal Fiscal Cliff in December 2012/January 2013 shifted more realized capital gains from 2013 into 2012 than expected.  Revenue collections during the last quarter of each fiscal year are significant in this regard because upper income individuals who have a significant portion of their income based on capital gains pay a substantial portion of their tax liability in the April to June period.

A comprehensive breakdown of the preliminary FY 2014 revenue shortfall is shown below.  The final FY 2014 tally will not be available until mid-August. 

Analysis of Fiscal Year 2014 Revenues
Based on Preliminary Data
  • Total general fund revenue collections fell short of the official forecast by $438.5 million (-2.7 percent variance).
    • Total general fund revenues declined 1.6 percent compared with the forecast of 1.0 percent growth.
  • The revenue shortfall is primarily due to a large drop in individual nonwithholding collections. That source, which is made up on non-wage income (mainly capital gains), was $401.1 million off the mark.
  • Payroll withholding and sales tax collections, 83 percent of total revenues and the best indicator of current economic activity in the Commonwealth, also fell short of the forecast by $78.9 million, a forecast variance of -0.6 percent.
    • Estimates for these two sources are directly tied to the economic outlook developed during the fall forecasting process, and specifically, the outlook for jobs and wage income in the Commonwealth.
    • The general weakness in withholding and sales tax collections over the last several quarters is indicative of the negative effect that federal government spending cuts are having on the Commonwealth.
ADDITIONAL DETAILS
  • Individual income tax withholding, 64 percent of total general fund revenues, was below the estimate by $66.0 million (-0.6 percent variance).
    • Annual collections increased 2.3 percent compared with the forecast of a 2.9 percent increase.
  • Individual income tax nonwithholding collections, 15 percent of total revenues, fell 10.1 percent in fiscal year 2014 reversing the 19.1 percent gain in FY 2013, despite a record-level stock market increase in both years. Total nonwithholding collections fell short of the annual estimate by $401.1 million (-14.3 percent variance).
  • Individual refunds finished $51.3 million (-3.0 percent variance) below the annual estimate, a net positive for the Commonwealth.
  • Taken together, withholding, nonwithholding, and refunds, i.e. net individual income taxes, fell 0.8 percent, behind the annual forecast by $415.7 million, a forecast variance of 3.7 percent.
  • Sales and use tax collections, 19 percent of total revenues, fell short of the annual estimate by $12.9 million (-0.4 percent variance).
  • Corporate income tax collections, 5 percent of total revenues and one of the most volatile revenue sources, declined by 4.9 percent, compared with the forecast of a 3.4 percent decline.
  • Wills, Suits, Deeds, and Contracts (primarily recordation tax collections), 2 percent of total revenues, finished the year $66.7 million (-17.7 percent variance) behind the annual projection of no growth.
Insurance premiums tax, 2 percent of total revenues, exceeded the annual estimate by $31.0 million (11.8 percent variance).

Our Notes;  Glad to see the economic recovery is in full swing.  ????

Governor McAuliffe Orders Evaluation of Major Information Technology and Service Contracts in State Government


Norman Lacy, aged 65, founding Executive Direc...
Norman Lacy, aged 65, founding Executive Director of the Information Technology Contract & Recruitment Association (ITCRA) in 2006 (Photo credit: Wikipedia)
Governor Terry McAuliffe issued Executive Directive Number Two, directing the Virginia Secretaries of Administration, Finance and Technology to deliver a report on the Commonwealth’s practices with respect to information technology and service contracting and to make recommendations on how to spend taxpayer dollars with greater efficiency and accountability.

As the directive states, the Governor requested the review out of his concern that Virginia government is “inappropriately dependent on expensive contract labor when traditionally-appointed state employees can perform at a higher level at a lower cost.” In addition to requesting a report on the state of the Commonwealth’s IT workforce and contracts, the Governor directed the Secretaries to evaluate the impacts of insourcing vs. outsourcing contract services and to study the extent to which contracting companies may misclassify workers as “independent contractors” rather than employees, a distinction that often results in employees being denied benefits like health coverage. 

The Governor’s full Executive Director is below:

Executive Directive 2 (2014)

ASSESSING AND EVALUATING MAJOR INFORMATION TECHNOLOGY AND SERVICE CONTRACTS

One of the primary responsibilities of the Chief Executive Officer of the Commonwealth of Virginia is to ensure that every taxpayer dollar is being spent as efficiently and transparently as possible.  In the face of a revenue shortfall and potential budget cuts, the urgency to increase accountability and find cost savings in Virginia government is even greater. Virginia taxpayers spend millions of dollars annually on contractors for information technology (IT) and other services outside of our state workforce.  I am concerned that state government is inappropriately dependent on expensive contract labor when traditionally-appointed state employees can perform at a higher level at a lower cost. 

In an effort to ensure that procurement decisions in state government are based on sound fiscal analysis, I am directing my Secretaries of Administration, Finance and Technology to report to me by October 1, 2014 on the following:

1.      An assessment of all IT full time equivalents (FTE) in state government, both contractors and state employees.   From 2012 to 2013, Virginia state government saw an increase in more than 100 contingency IT contractors, costing the state an additional $17 million.  This IT contingency labor program is outside the scope of larger IT contracts and projects (i.e. Northrop Grumman).  A thorough review of the amount of IT personnel in each agency is needed to fully understand the issue.

2.     A thorough evaluation of (1) all existing major IT projects and contracts, (2) the Master Services Agreement, and (3) other major service contracts not IT related[1].  The evaluation of these contracts would include:
a.      Contract term
b.     Procurement method and history
c.      Original amount negotiated in contract versus actual amount currently being paid
d.     Number of change orders or amendments to contract
e.      Number of employees working on project (state employees and contractors)
f.      Performance standards and benchmarks

3.     A cost-benefit analysis of insourcing versus outsourcing these contracted jobs.  This analysis would consider the costs and benefits of hiring full-time state employees instead of using contractors.  The cost of health insurance and other employee benefits for these individuals should be considered in this analysis.   

4.     Worker classifications of all contracted employees.  Worker misclassification occurs when an employer improperly classifies a worker as an “independent contractor” instead of an employee of that organization.  A 2012 report of the Joint Legislative Audit and Review Commission (JLARC) recommended that if misclassified employees are working on state contracts, the employer should be issued a stop work order and possibly be prohibited from bidding on future contracts for a specified period of time.   

5.     A review of the process and protocol for approving major contracts, amendments to contracts or change orders.   Currently, there is no clear singular protocol for approving contracts or amendments of major contracts.  A thorough review is needed to streamline the process and to make recommendations on how to proceed more efficiently with the appropriate oversight. 

6.      Recommendations for cost savings and efficiencies through this review. 





                                                                                                                                                                                    _____________________________________________
                                                                  Terence R. McAuliffe, Governor




Attest:




_____________________________________________
Levar M. Stoney, Secretary of the Commonwealth