COMPANY BACKGROUND LSSI was founded in 1981 by CEO Frank Pezzanite, who developed the MINI MARC minicomputer cataloging system while at Informatics, Inc., and his wife, Judy Pezzanite, a librarian and the company's COO. Since the Reagan-era push for privatization, the company has done library project and management work for several federal agencies, including the Library of Congress, the Department of Energy, and the Smithsonian Institution. LSSI saw opportunity beyond the federal arena, but needed capital. So, in 1996, the Follett Corporation, known for its college stores, bought a half interest in LSSI. While Follett was seen as an entree to the academic market, in 1997, the Riverside County Library System (RCLS) outsourcing opportunity 'sprang up,' in Frank Pezzanite's words. RCLS became the country's first fully outsourced public library, where all employees work for the company. (Riverside also has a county librarian and has separate contracts for janitorial services and landscape maintenance.) In 1998, the Jersey City Public Library hired LSSI to supply top managers. That contract concluded, as have public library contracts in Hemet, CA (top managers); Fargo, ND (top manager); and Linden, NJ (top manager). Ongoing are six full outsourcing contracts. They include: Riverside, CA ; Calabasas, CA ; Lancaster, TX ; and Finney County, KS. LSSI in August began service in Germantown, TN and last month opened a library in Red Oak, TX. It also has a contract to provide consultant services to help establish a library in Bee Cave, TX. While LSSI began providing outsourced technical services to Montgomery College, Rockville, MD, in 1999, its major academic library effort was at Chatham College in Pittsburgh, where it supplied staff from February 2000 to July 2003. College spokesman Paul Kovach says Chatham was 'quite pleased' with LSSI but concluded that it would be more cost-effective to hire its own librarians. Chatham librarians are staff, not faculty, and LSSI supplied staff but didn't manage the entire library budget, as it has done in public libraries. LSSI officials have said the company hasn't pursued the academic market because most librarians have faculty status and tenure. That would preclude major changes in personnel deployment and spending. In 2000, LSSI established a virtual reference operation, hiring Steve Coffman from the County of Los Angeles Public Library to manage it. In June 2003, LSSI sold that Virtual Reference division, which played a major role in expanding live reference service among libraries, to Tutor.com. While Coffman has said LSSI chose to focus on library management, the move also came as the Pezzanites needed funds to buy back Follett's half of LSSI. Follett spokeswoman Pam Goodman says of the sale, 'Their business no longer fit with our long term strategy.' Up to now, there hasn't been enough potential in library outsourcing for new entrants. Earlier this year, the city of Germantown, TN also sent an RFP to Los Angeles-based Library Associates, a firm that mostly works with special libraries. The company bid on the contract and now will consider competing in the public library arena. LSSI has about 440 employees, with only ten percent working at its Germantown, MD headquarters. The rest work at customer sites - nearly a third at Riverside 's facilities. Annual revenue, says Frank Pezzanite, is 'in the $20 million range.' The Riverside contract represents about one-third of LSSI's revenues, and public library outsourcing is about 70 percent of its business. The Pezzanites own half of LSSI. The other half is owned by Internet Systems, Inc., also owned by the Pezzanites along with a third investor they wouldn't identify. Internet Systems was formed by the Pezzanites to buy back LSSI from Gaylord, which owned the company for about three years in the 1980s. Internet Systems did authority processing, database preparation services, and retrospective conversion for libraries. At the American Library Association Annual Conference in Orlando last June, there were hints of a new direction for LSSI. A representative of Starbucks, speaking on a panel organized by LSSI VP Steve Coffman, said that LSSI is establishing a new food service arm to operate Starbucks franchises in libraries. Later, Coffman told LJ that 'LSSI has talked to Starbucks' but whether LSSI participates 'is still very much an open question.' LSSI has ties to several library institutions. It funds the LITA/LSSI Minority Scholarship in Library and Information Technology, a scholarship at the University of Maryland for part-time LIS students, and the Urban Libraries Council/LSSI Award of Excellence in Public Library Management. THE POLITICAL ARENA Does the entry of a private management company help neutralize political disputes or exacerbate them? It depends on where you look. In Riverside County, the decision to outsource helped resolve a city-county dispute over library resources. In 1998, LSSI Advisory Council member Ron Dubberly wrote that, in Riverside, 'asset management has been distanced from the political arena.' ('Why Outsourcing Is Our Friend,' American Libraries, 1/98, p. 72 - 74.) In other cases, outsourcing has been hardly clear of politics. Last year, the proposal to have LSSI run the Passaic Public Library, NJ, was seen as an effort by Mayor Samuel Rivera to gain greater control over the library. He and city council members negotiated with LSSI without informing library board members and staff. Linden, NJ officials portray the hiring of LSSI as an effort to upgrade library services, saying the director was uncooperative with the board, among other criticisms. That former director, Roberta Canavan, asserts that there were also political reasons - and a former board member backs her account. Hired during a previous administration, Canavan had refused to support the mayoral candidacy of John Gregorio, who was pardoned after being convicted of conspiracy charges. Once Gregorio returned to office in 1991, Canavan says, the mayor influenced the library board against her; she contends that the boost in library performance since her departure is partly thanks to grants she had sought to automate the library. Though LSSI policy bans political contributions in the company's name, according to state records, LSSI gave $500 to Gregorio's campaign in 2001. LSSI spokeswoman Terri Armand says the payment was for tickets to Gregorio's birthday dinner for library head of operations Greg Pringle and his wife - 'a miscellaneous administrative expense... not intended to be a political donation.' In 2002, LSSI Sales Manager George Bateman gave $500 to the election committee for two New Jersey state assemblymen, one a former member of the library board in Pennsauken, where LSSI last year solicited business. Bateman, a Maryland resident, says he's long made 'contributions in states where I have no business relationship. I'm aware of good political leadership. It has nothing to do with my job.' Frank Pezzanite says, 'I don't control my employees. I try to discourage [political contributions].' In Jersey City, LSSI was brought in by Republican Mayor Bret Schundler, and then ousted when Democrat Glenn Cunningham gained office. After Schundler left the mayoralty and ran for governor, while the LSSI contract was extant, Pezzanite, also a Maryland resident, contributed $2000 to his campaign. 'I liked his thinking, on a political basis,' Pezzanite says. Fran Ware, LSSI's site director in Jersey City at that time (and another Maryland resident), gave Schundler $1,125, according to state records. In New Jersey, LSSI has hired a lobbyist, Barry Lefkowitz, who also represents the New Jersey Conference of Mayors. Lefkowitz's role, says Pezzanite, is to provide information on 'the political feel' of communities considering a contract with LSSI. EDGY ISSUES As the debate over LSSI shows, the library community has struggled to define when outsourcing becomes privatization. The federal government, however, has drawn a line. In Southern California, 13 libraries serve as Passport Acceptance Agencies. However, one Riverside community's application for its library branch - run by LSSI - was declined because the State Department will only designate public employees to serve on its behalf. The Riverside County Library System, LSSI's largest client, is alone in having a professional librarian monitoring the contract - something county officials have recommended to ensure contract performance. But the relationship apparently isn't tense. When Riverside County officials in July named a replacement for Gary Christmas, who was promoted to deputy county executive officer, they chose Nancy Johnson, who since 2000 had worked for LSSI, heading the Hemet Public Library, an independent library in Riverside County. News coverage in the Riverside Press-Enterprise noted that Johnson has been a librarian for 31 years, 'has worked for public library systems in the Inland area and Orange County,' and 'had been the Hemet city librarian since 2000,' but didn't make the LSSI connection. 'She's been a longtime librarian in Southern California. Only part of that time did she work as a contract director for Hemet,' says Christmas. 'I don't see a problem with that. She's going to be working for the county. She knows the way they've operated, at least in terms of the Hemet arrangement.'