VEDP Inefficient, Ineffective, Says JLARC

VEDP deeply flawed says JLARC

Best state for business? Not anymore. Virginia has slipped badly in the past decade.

The Virginia Economic Development Partnership (VEDP), once renowned as one of the top state economic development organizations in the country, suffers from “systemic deficiencies,” concludes a blistering report by the Joint Legislative Audit and Review Commission (JLARC).

Some of the conclusions:

VEDP is not an efficiently or effectively managed organization. 
The partnership “lacks many of the fundamental components or organizational management needed to operate efficiently and effectively and to coordinate well with external entities. Key elements missing from VEDP’s operations include a deliberate strategy to meet statutory responsibilities, adequate operational guidance for staff to carry out their job responsibilities, effective accountability mechanisms, useful performance measures, and effective coordination with external partners. Without these elements, VEDP risks wasting limited resources…”

VEDP’s approach to marketing Virginia compromises its effectiveness.
The partnership “has not taken basic steps to ensure it is effectively and efficiently marketing Virginia to new and existing businesses. … VEDP’s marketing services have been largely reactive and generated substantially fewer location and expansions decisions (“announcements”) than suggested by the agency’s performance measures.”

VEDP’s unstructured approach to administering incentive grants leaves the state vulnerable to fraud and poor use of limited resources.
The partnership’s “approach to administering incentive grants has exposed the state to avoidable risk of fraud and financial loss, and has increased the potential that state funding is not efficiently allocated. VEDP administers 10 incentives grant programs and awarded $384 million to companies over the past decade. During this time period, many of the projects supported through VEDP-administered incentive programs did not meet their performance requirements.”

The one ray of hope: Virginia’s export-promotion program: “VEDP’s export promotion (international trade) programs have demonstrated success in assisting Virginia companies with selling their products in international markets.”

Bacon’s bottom line: There’s an even bigger question to ponder. Of all the places that Virginia invests in economic development — corporate recruitment, incentives, tourism, agricultural marketing, the Center for Innovative Technology, university research — is corporate recruitment/incentives the best allocation of funds? Clearly, it was at one time in Virginia’s history. I’m not saying it isn’t now. But like every other expenditure of state dollars, we should seek the greatest return on investment of public dollars, which means periodically reviewing all state-funded initiatives. This might be a good time to step back and look at the big picture.

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6 responses to “VEDP Inefficient, Ineffective, Says JLARC

  1. Some of the things that JLARC is dinging VEDP for – sound like things never done from it’s inception as opposed to things that have strayed from it’s inception in 1995 under George Allen.

    Other things sounds like things that folks on JLARC seem to think should be done but I don’t see comparisons to other standards – industry or other similar type organizations and so JLARCs opinion.

    And you can see this is the Agency response and then JLARCs response to the agency response where they disagree – on the facts…

    I have developed questions about JLARC’s objectivity on some of their studies over the years. The wield a powerful weapon and without question some of their reports are on target – but others I wondered about – and this is one also.

    Some folks in the General Assembly seemed to have copies of this report – before the date it was officially released and released their own press releases to the papers in advance…

    I’m a bit of a skeptic about this report…

  2. Here is an example of what I am talking about:

    ” VEDP needs new policies and procedures to ensure that it prioritizes projects that create quality jobs and have the greatest economic benefit for Virginia’s regions. ”

    When it comes to economic development .. I would ask – what is an industry approach to this…

    no matter what VEDP does – a company that is incentivized to come here – may well not survive – due to events beyond the control of the company and VEDP.. yet JLARC thinks you can have a standard by which to judge effectiveness for “ensuring jobs”.

    they lay out the following:

    Conduct due diligence before paying grant
    this is pretty subjective… is there standard for this?

    Decide when to award grants and the size of grants
    does VEDP not do this right now?

    Collect performance information from companies during and after performance period

    I strongly suspect this is done – the question is to what degree and who decides what is the threshold for “enough”?

    Verify jobs created, capital invested, and wages paid
    you’re going to do this for as long as the company continues? Is this really useful?

    Grant a performance extension to a project

    ???? this is a recommendation?

    Enforce clawback provisions

    if the company goes broke – how are you going to do this?

    I don’t think the folks who did this study at JLARC – understand how economic development is done… they’re apparently trying to use an accountability template for a govt agency with a well-defined mission and explicit policies and metrics.

    Economic development does not work that way –

    it’s as varied as the economic environment is…

    it’s more like venture capital than it is like some defined step-by-step recipe

    I’m thinking the results of this study -may have been pre-ordained based on some of the embarrassments that were indeed encountered earlier.

    and I seriously don’t know what exactly would be done – to the satisfaction of JLARC but I suspect this report Tees up some folks in the General Assembly to make “changes”… and would not surprise me that few if any of the JLARC recommendations actually get incorporated and institutionalized… at the end of the day but the faces in the agency will change…according to what some in the General Assembly want.

  3. I have not read it closely yet (I need to) but I sat through the presentation. Much of this was a failure of leadership and many of the issues could be explained as signs of abysmal morale within the staff. Apparently the staff jumped at the chance to cooperate with the study, another sign that all was not right. So a change of face or faces at the top might be the right start. And I wouldn’t disagree with an effort to bring the agency back within the executive branch with the leader appointed by the Governor and then confirmed by the GA.

    • Poor morale, poor leadership => what we have an executive branch for fixing. Just saying.

      • I guess I would think if there were poor leadership and poor morale that there would be an equivalently bad retention rate.

        is that true?

        look at the way JLARC evaluated the Tobacco Commission – look at how they started off… and then got to things that needed to be addressed compared to this one.

        what was the outcome , actions taken – for the Tobacco Commission?

        Were there, for instance, lessons learned from the Tobacco Commission – used as a benchmark for this commission since both of them are pointed at benefitting regions in need of economic development and incentives.

        I remain skeptical … because if this is not a straight up honest effort – that is to the same standard used for the Tobacco Commission – it has an agenda-based odor to it.

  4. Been reading the papers , articles and editorials

    and….

    as far as I can tell – VEDP has been this way from it’s inception and was never set up with proper management and operating principles from the get go.

    I feel that JLARC did not make that aspect clear in their report and it was important for them to make that part clear… and since they did not – the timing of the study is a question.

    and to Steve H’s point about how an agency is controlled or not – it seems to be a bad habit with agencies in which the GA is supposed to have oversight…like the Virginia Tobacco Region Revitalization Commission – another agency with a troubled history also associated with the General Assembly…

    AND which JLARC has also done a report:

    http://jlarc.virginia.gov/pdfs/reports/Rpt412.pdf

    of which I would recommend folks go read and then compare the tone and tenor of that report with this one and come back and give an opinion of whether the two are similar in their approach and accountability or not.

    I think JLARC has a responsibility to be consistent and even-handed on their reports especially of agencies with similar missions and I’m a little skeptical …

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