Arizona in outsourcing duel - East Valley Tribune: News

Arizona in outsourcing duel

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Posted: Saturday, May 15, 2004 6:34 am | Updated: 5:16 pm, Thu Oct 6, 2011.

The state Chamber of Commerce is accusing Gov. Janet Napolitano of playing politics at the expense of business by blocking state contracts from going to companies that perform some of the work out of the country.

The governor’s monthold order came after a controversy surfaced involving a state contract that allows inquiries about certain welfare programs to be directed to privately operated call centers in India and Mexico.

Farrell Quinlan, a chamber vice president, said the governor’s directive is unwarranted and antibusiness. He also suggested

that Napolitano, a Democrat, had some political motives behind the move as it conforms with Democratic party criticism of job movement overseas and federal tax policies that do not penalize companies that outsource. The argument has been a major part of Sen. John Kerry’s bid to unseat President Bush.

Quinlan said the governor’s action may be illegal because Napolitano effectively is changing state procurement regulations without going through the formal rulemaking process.

That process has several requirements, including public hearings.

Gubernatorial counsel Tim Nelson said Napolitano has the power to put any conditions on any state contracts — even if they effectively preclude some companies from bidding.

The governor denied that the order penalizes corporations that want state contracts but may have multinational operations to complete various aspects.

"I think they’re misreading what we’ve done,’’ she said.

Napolitano said this does not affect the broad business community but only those seeking state contracts on services that can be performed domestically.

And she said it makes sense for the state budget and the taxpayers.

"For example, when you’ve just lost 250 call center jobs in Chandler, it’s hard to justify paying state tax dollars to a company to have a call center outside the United States,’’ she said.

She also cited security concerns. In the directive that went to state procurement officials, the governor’s Department of Administration said the no-offshore provision must be put into contracts "due to security and identity protection concerns.’’

At this point the governor said the only contract she can find that would run afoul of the new rule is one entered into during the administration of her predecessor, former Gov. Jane Hull.

That seven-year pact required Citigroup to answer questions from people who had questions on food stamps or welfare payments, programs administered in Arizona by the state Department of Economic Security.

Queries from English speakers go to India.

Spanish-speaking callers are routed to Mexico.

Napolitano said she cannot void that contract but can prevent future problems.

Quinlan said the new regulation penalizes firms that are global in nature and also runs contrary to treaties such as NAFTA and its efforts to link the economies of the United States with Mexico and Canada.

Napolitano said she still believes in international trade and nothing in her policy affects private business relationships.

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