State Dollars Can Not Be Expended for Outsourcing Jobs: Ohio Gov.

Ohio Gov. Ted Strickland is of the opinion that for over a decade, Ohioans have been subject to unfair trade agreements that gave rise to a culture of offshoring thousands of jobs at the expense of Ohioans who work for a living. Under this backdrop, the Governor issued an executive order that prohibits the using of public funds for services provided offshore. “Ohio’s policy has been and must continue to be that public funds should not be spent on services provided offshore,” Strickland said in the order.

Texas-based Parago Inc.’s outsourcing of hundreds of applications processing and call center jobs recently sparked off controversy and Strickland’s Strickland order came as a reponse.

In March, the Ohio Department of Development contracted with Texas-based Parago, Inc. to administer a program to provide $11 million rebates for the purchase of new energy-efficient appliances. But the company was reported to outsource the job to El Salvador.

But Parago reportedly used hundreds of workers in El Salvador to process applications and answer customers’ calls. State officials said they were never told about the arrangement and never asked.

“Ohio’s policy has been – and must continue to be – that public funds should not be spent on services provided offshore. Throughout my administration, procurement procedures have been in place that restricts the purchase of offshore services. Despite these requirements, federal stimulus funds were recently used to purchase services from a domestic company which ultimately provided some of those services offshore. This incident was unacceptable and has caused me to redouble my commitment to ensure that public funds are not expended for offshore services,” Strickland said in the order.

Earlier, the governor asked Lisa Patt-McDaniel, the development director to further review the circumstances surrounding the award of the Parago contract including any potential legal recourse with the vendor.

The governor said the state does have procedures in place to restrict the purchase of offshore services, but that that Parago incident “has caused me to redouble my commitment to ensure that public funds are not expended for offshore services.” The order says no executive cabinet agency, board or commission shall enter into any contract that uses funds it controls to purchase outsourced services.

“This program was successful in stimulating economic activity for Ohio appliance manufacturers and retailers,” Strickland said. “But contracting with a domestic service provider that ultimately outsourced jobs could and should have been prevented. This order will ensure that this never happens again,” the Governor said.

The Department of Administrative Services, through the state’s chief procurement officer, must have procedures in place by Aug. 31 to ensure compliance with the order.