Junk the Managed Competition Clunker

By | Published in Voice of San Diego | December 12, 2013 |

The city's publishing services division prints letterheads, creates graphic designs, handles high-volume copying jobs and oversees more than 560 copy machines throughout the city. Four city auditors evaluated the division's performance after it went through the managed competition program. Image via ShutterstockLet’s say you buy the car of your dreams and it turns out to be a lemon. It keeps stalling and breaking down, despite costly maintenance. The ride is bumpy and dangerous, and you never quite get where you want to go. When do you stop pouring money into repairs and get a new car?

The city of San Diego has clung to a lemon called “managed competition” for seven years now, and it’s time to let go.

There’s now a growing consensus about the problems, which Voice of San Diego reported on in its Dec. 3 story, “Three Managed Comp Fixes That Everyone Agrees On.” But not “everyone agrees” on three fixes. We believe managed competition is flawed beyond repair.

The whole idea is for San Diegans to receive high-quality city services at lower cost. The concept of managed competition – bringing in private companies to bid against city workers for their jobs – hasn’t worked, as all sides now apparently realize.

There are better ways to identify efficiencies and enhance city services – ways that focus on input from the people providing services and the people living in San Diego who rely on those services.

Even former proponents of managed competition now agree on three big problems that are core to the program, and won’t change with small tweaks.

First, most city services – from libraries to trash collection – are inherently public, and very difficult to provide in a way that’s consistent with the legal obligation for-profit companies have to maximize gain for shareholders. These companies profit from public contracts mainly by reducing services, raising fees and cutting wages and benefits, none of which is good for residents.

Second, keeping service levels flexible is crucial but contractually difficult. Once a contract is awarded to a private contractor, there will be no flexibility without added cost to the city.

Finally, the concern that managed competition “isn’t working for businesses” should take a backseat to the fact that it’s not working for taxpayers and residents. The point of the 2006 ballot initiative that authorized managed comp was to save money only if it could be done while maintaining or enhancing services and protecting the public good.

The city can find better ways to increase efficiency and improve services by listening to the frontline workers who know the work best and seeking feedback from city residents.

Experience has shown that a cooperative relationship between city management and blue-collar workers, represented by AFSCME Local 127, leads to more efficient services. For example, in 2009, the union gathered ideas on redesigning trash and recycling service from the drivers. The resulting changes saved the city $4.4 million.

The city also needs to engage with residents of all San Diego neighborhoods on the expectations and costs of services. The aim of efficiency measures should not be layoffs, but rather providing residents with the best possible services, the best bang for their tax buck.

Managed competition, originally pushed by the right-wing Reason Foundation, was mostly scrapped by the federal government after the nonpartisan Government Accountability Office determined in 2008 that there was no proof of cost savings, and no effective way to track deterioration of service quality.

It’s time for San Diego to haul this clunker to the junk heap. There are other options that will better serve our city.

Peter Brownell, Ph.D., is research director at the San Diego-based nonprofit Center on Policy Initiatives. Brownell’s commentary has been edited for clarity. See anything in there we should fact check? Tell us what to check out here. Want to respond? Submit a commentary.