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International News

Ohio Governor Prohibits Offshoring For Public Services

January 01, 2011 posted by Steve Brownstein

Ohio Governor Ted Strickland has issued an executive order that prohibits the expenditure of public funds for services provided offshore and beyond the boundaries of the United States and its territories - a practice known as Offshore Outsourcing or "Offshoring" - a move that is a reaction to public outcry after a El Salvadoran call center was used for Ohio's appliance rebate program, according to a report on Cleveland.com.

A press release on the Office of the Governor website at Governor.Ohio.gov reveals that the state's Department of Development awarded a $357,300 contract to a Texas-based service provider in March 2010 to assist with the agency's implementation of the $11 million federal stimulus-funded appliance rebate program which rewarded consumers with federal stimulus dollars when they bought energy-efficient appliances.

Despite state procurement requirements designed to restrict service providers from using public funds for offshore labor - in particular, an Ohio Department of Administrative Services (DAS) directive that requires agencies to ask potential vendors to list all locations where the services will be performed - the contract was awarded to a company that practiced "offshoring" and used offshore labor.

The company in Texas never told state officials in Ohio it would use a foreign call center, and the state did not require the information with bids. State officials learned about the call center from an Ohio resident who asked a call center employee where the operation was located, according to the press release.

"Ohio's policy has been - and must continue to be - that public funds should not be spent on services provided offshore," Strickland states in the Executive Order.  "Throughout my Administration, procurement procedures have been in place that restrict the purchase of offshore services."

In June 2008, Strickland signed an executive order (E.O. 2008-12S) that implemented Think Ohio First practices promoting economic development by maximizing the use of Ohio businesses when agencies conduct purchases.

Banning the practice of offshoring where public funds are concerned - like the governor of Ohio issuing an executive order prohibiting use of public funds for outsourcing - may seem like a no brainer to many, but according to a blog on The Economic Populist the use of taxpayer dollars to offshore outsource jobs happens every day, from food stamp and unemployment support to large software design projects.

The controversial practice of "offshoring" has come to the attention of other states as well. As reported earlier on the ESR News Blog, California Governor Arnold Schwarzenegger recently signed into law California Senate Bill 909 (SB 909).

While SB 909 does not prohibit offshoring when it comes to background checks, the law will require a disclosure in the privacy statement of the background check firm's website, as well as a link to that privacy statement.