The "Principals" of Privatization

Office Depot
Office Depot trucks will deliver school supplies to Detroit Public Schools on demand thanks to a new privatization inititative. The program will put to rest the grossly inefficient warehousing system previously used by the district.

Stocking classrooms and offices with pens, pencils, notepads, and other supplies just became easier—and cheaper—for Detroit public schools. Under a new purchasing plan that went into effect July 1, school principals can now order supplies directly from private office-supply company Office Depot rather than dealing with the district's byzantine bureaucracy.

The new privatization plan replaces a cumbersome system that former interim schools CEO David Adamany called a "disgrace" and Deputy CEO Jonathan Maples labeled "a horror story."

Office Depot beat out 17 other companies to win the Detroit contract, promising the district a 20 percent discount on office supplies, which will produce an immediate savings of $1 million.

But the savings do not end with less expensive office supplies. Detroit schools also will save on the costs of transportation, labor, and waste disposal. Office Depot is assuming the costs of maintaining a comprehensive inventory and removing obsolete or used up supplies, which allows more money to go directly into education.

School principals also are freed from the previous system, which, by its very inefficiency, created a black market based on bartering with other schools using stockpiled supplies. In fact, The Detroit News reported that one school stored 80 mop buckets in a closet for the express purpose of trading them for other supplies.

Teachers who paid out of their own pockets for school art supplies and other basic school equipment for their classes when schools failed to meet their orders will be spared this expense by the new system.

In addition, privatizing the office supply system will allow for a heretofore unheard-of efficiency and flexibility for both teachers and administrators. The purchasing plan will allow market forces to apply competitive pressure on Office Depot to provide consistently high-quality products and services. If Office Depot fails to deliver, the district can go elsewhere.

Office Depot has been operating under market pressures for years, and, unlike Detroit Public Schools, is focused on the business of office supply distribution, warehousing, and accounting. Considerations basic to most business operations, such as efficiency, quality control, customer satisfaction, and competition for contracts, will revolutionize the experience of Detroit principals and teachers ordering supplies, and provide for a basic flexibility in the system, allowing it to change with the market and with principals' needs.

As a further boon to the district, Office Depot will assume the responsibilities for accounting for each principal's purchases, creating a means of measuring costs and holding principals responsible for their expenditures. Under the district's management, there was not even an office-supply inventory system. The Detroit News reported that as many as $7 million of surplus goods often sat unused in the central warehouse, gathering dust and becoming obsolete—if not stolen first. Office Depot now assumes responsibility for inventory, in effect submitting a report card on both principals' and its own performance.

Critics have raised questions about the wisdom of submitting something as important as school supplies to the "greed" of the marketplace. But it is the dependency of private companies upon profits which necessarily entails concern for service to the consumer. In public organizations complaints are often ignored or avoided by an inefficient and impassive bureaucracy which has no motive to improve.

The bottom line in the private-sector is service, and the new plan with Office Depot comes with service, a means of measuring that service, and a simple mechanism in the bidding cycle for reorganizing that service or simply going to another source, if service is unsatisfactory.

The Detroit Free Press noted that Adamany "basically had to blow up [the old purchasing system] and start over." Adamany, who stepped down June 30 to become president of Temple University, expressed hope that the Office Depot and other plans will build momentum for his successor, Colorado Springs Superintendent Kenneth Burnley, to continue with further privatization in other areas.

At a time when the ideas of greater choice, competition, and decentralization are gaining ground in education, Detroit's plan to put more purchasing and decision-making power in the hands of local principals is a smart move.

Michael Nolan is a freelance writer based in Indianapolis.