Posts about Managed Competition
The High Costs of Blindly Cutting Budgets
By Corinne Wilson | Published in Voice of San Diego | February 5, 2013 |
What good is city government?
We all rely on city services for the necessary basics that support our daily lives. Ideally, everything runs so smoothly we barely notice all the work that goes into keeping our city clean, safe and functional.
But when those services stall or fall short, the disruptions get our attention and the long-term repercussions can lower our quality of life. When the sewer lines back up, the firefighters arrive late or uncollected garbage piles up, the value of municipal government becomes crystal clear.
In San Diego, repeated budget-cutting during the administration of former Mayor Jerry Sanders has reduced some of our public services to unacceptably low levels.
Saving money is great. But simply slashing budgets without a realistic assessment of whether citizens are getting the services they need is not only irresponsible but ultimately more costly than providing good, efficient services.
The tree-trimming budget is a particularly troubling case in point. Over the past six years, the budget for tree maintenance along our streets was cut in half and then eliminated except for emergencies. An untrimmed, top-heavy palm tree fell on a city resident and left him paralyzed. A jury recently ordered the city to pay $7.65 million for its negligence in failing to maintain the trees, according to Courthouse News Service.
Clearly, that budget-cutting decision did not save money. And, even more importantly, it put the health and safety of San Diego citizens at risk.
Last week, the City Council voted to restore some funding for trimming palm trees in public rights of way. Now the council must take proactive action to determine the appropriate levels of other services, rather than waiting until damage is done.
It’s time for a real conversation about the need to deliver the services San Diegans expect and deserve.
To begin with, we are lacking the information and systems to measure whether the services provided to city residents are at adequate levels. And the city pays private contractors to provide many of our services, without sufficient oversight of how well those contractors are doing their jobs.
During the previous administration, the budgets that determine service levels were drastically reduced for many city departments, with the budget taking priority over realistic needs. We need a full accounting of those cutbacks and the services we have lost, from library and swimming pool hours to police car maintenance.
Before the “managed competition” program continues, we need to pause and take stock of our needs as a city. Each managed competition is based on the current service levels of a city department and concludes with a contract awarded either to that department or a private contractor. Already, city administrators have had repeated difficulties defining the work to be done in the contract documents.
To avoid locking us into reduced service levels that put citizens and city finances at risk, the city needs to develop solid measures of service levels and quality. That process should involve residents from all parts of San Diego.
Everyone who lives and pays taxes in San Diego needs the services that only city government can provide. We need debris cleared from the streets and storm drains, safe water piped to our homes and maintenance of fire trucks and garbage trucks completed regularly — to name just a few crucial services.
Good fiscal stewardship is not just a matter of doing things on the cheap. It means getting good value for money spent. It’s no bargain to shortchange city residents on basic services and put public health and safety at risk.
Corinne Wilson is research and policy lead at the Center on Policy Initiatives, a San Diego nonprofit dedicated to economic equity for working people and communities.
Open the Competition: Insourcing Is the New Outsourcing
By Clare Crawford | Published in U-T San Diego | July 25, 2012 |
Four times, the city of San Diego has pitted city workers against private companies in a competition for the continued responsibility to provide an essential city service. All four times, the city workers have proved that they – as U-T San Diego put it last week – “provide taxpayers with the best bang for their buck.”
The evidence is in. Given the chance, city staff can figure out how to do their work at a lower cost than private, for-profit companies can.
It’s time for the city administration to set aside assumptions that privatization saves money and find out whether more savings are possible by allowing city staff to compete for work that is now contracted out.
A significant share of the city’s general fund budget – $176 million in the past year – goes to pay private contractors and consultants.
In fact, the next service on Mayor Jerry Sanders’ “managed competition” auction block – street and sidewalk maintenance – is already substantially outsourced. The city’s fiscal year 2012 budget shows $43.6 million spent on contracts in the transportation and stormwater department, compared to $38.4 million for employee wages and benefits. Much of that contract expense is for major street resurfacing projects.
San Diego taxpayers deserve to have all options evaluated for saving money on at least some of those projects.
And insourcing may also improve the quality of services, which can be substandard under private contractors seeking to maximize profits. Even residents of the mayor’s own neighborhood of Kensington have suffered, when a contractor two years ago left streets torn up for months and left equipment in the gutters that caused a rash of tire punctures.
While privatization consultants continue their drumbeat of promises, a repeated pattern of service failures and cost escalation has prompted many cities and states to insource services previously privatized. Mildred Warner, a Cornell University expert on privatization, says the reversal began in 1997, when contracting out public services peaked in the United States.
“The privatization experience of the late 20th century has taught us that … managing markets for public services is both challenging and costly,” Warner wrote in 2008. “That experiment has failed to deliver adequately on efficiency, equity or voice criteria.”
The top two reasons city managers bring privatized work back in-house, according to a survey by the International City/County Management Association, are unsatisfactory service quality (61 percent) and insufficient cost savings (52 percent). For example:
- Evansville, Ind., took back control of its water and sewer system from a private operator in 2010, for an estimated savings of $14 million over five years.
- Atlanta dissolved its water system contract 16 years early because of mismanagement and poor service under a private company.
- A Pennsylvania study this March found the state could save $78 million by insourcing school bus services.
- Locally, the San Diego Unified School District has saved $1 million a year since bringing bus services in-house in 2010.
- The San Diego Community College District has saved at least $900,000 a year by insourcing its IT management.
San Diego uses a managed competition process similar to that used by the federal government, requiring contractors to save at least 10 percent over the employees’ proposal to account for the city’s costs in transitioning to private service delivery. City workers won the landfill competition without applying that differential.
But outsourcing also frequently carries many more hidden costs for taxpayers – such as environmental violations, the loss of local jobs and a lack of transparent and accessible public records.
Besides saving $2.7 million a year, keeping city workers on the job at Miramar Landfill means we all can breathe easier about the continued safe and efficient handling of more than a million tons of waste each year, hazardous materials and closed landfill sites.
As Councilman Todd Gloria tweeted following the landfill announcement Friday: “No one delivers services better than city staff.”
Since managed competition is intended to save money, it only makes sense to include city staff in a full competition for important services that are now outsourced.
Crawford is executive director of the Center on Policy Initiatives (CPI), a local nonprofit that advocates for workers.
CPI statement on City Council decision on Miramar Landfill
By Susan Duerksen | September 27, 2011 |
Unfortunately, San Diego’s City Council has decided to continue with an expensive and misguided process to contract out Miramar Landfill, without any hard data on the potential benefits or costs and despite many red flags.
Councilmembers David Alvarez, Marti Emerald and Todd Gloria are to be commended for their serious consideration of the issue and their support for the public’s best interests.
More than 150 San Diego residents, including individuals and representatives of a wide variety of community groups, took time on a Monday to come to City Hall to express their concerns about the many risks in contracting out the landfill to a private operator.
Most Councilmembers stated before the vote that the landfill is extremely well-run now by city staff, and makes money for the city. As Councilmember Alvarez noted, there is no “real data” supporting the idea of handing over public control to a for-profit operator, and it could well mean “limitless costs to the city for decades to come.”
In studying the issue for more than a year, CPI has determined the risks far exceed potential gains from putting the landfill through the Mayor’s “managed competition” program.
The city cannot escape legal and financial liability for contractor malfeasance or negligence, which could mean lawsuits or fines from numerous regulatory agencies. The need for strong oversight of private contractors and subcontractors adds to taxpayers’ long-term costs.
Highlighting the risks of contracting out needed services to private companies, it was reported that the city has paid $1.9 million to settle a lawsuit by a software contractor it fired because of delays and cost overruns.
Taking San Diego for a ride, again
By Clare Crawford | Published in San Diego Union-Tribune | June 21, 2011 |
The city of San Diego has never mastered the art of managing contracts.
Debris haulers contracted by the city overcharged victims of the 2007 wildfires. Computer system consultants ran millions over budget and months behind schedule. Recently, a private ambulance company took advantage of lax oversight to shortchange the city by an estimated $18 million. And so on.
Again and again, private contractors take San Diego taxpayers for a ride – because they can. Read More
Outsourcing proceeds despite doubts, risks and unknown costs
By Susan Duerksen | April 28, 2011 |
While admitting to concerns about costs, service quality, risks to public health and more, San Diego officials are moving quickly to outsource six city services.
A City Council committee yesterday sent the draft contract for two of the services – water customer service and street sweeping – to the full Council for a final decision. Read More
San Diego wasted $500k on consultants; more scrutiny needed as quest to privatize landfill continues
By Susan Duerksen | March 24, 2011 |
A consulting firm received $500,000 to handle the botched sale of Miramar Landfill, as the San Diego City Council
learned in a budget revision this week. On the heels of that costly failure, Mayor Sanders has already launched into another effort to privatize the landfill.
CPI is urging the City to adequately evaluate the viability, costs and consequences before continuing the headlong rush to outsource the vital public service.
Greenberg Traurig consultants were hired for $500,000 before basic questions were ans Read More
SDDPC, a New Transparency
By Murtaza Baxamusa | Published in VoiceofSanDiego.org | April 2, 2010 |
Next week, the City Council will approve an IT service contract for $45 million annually. This is to process over 60 million emails, maintain hundreds of software applications from golf-course reservation to service schedules of fire engines and handle emergencies from virus attacks to network blackouts. The contractor is a nonprofit corporation that has had a sole-source agreement with the City since 1979, the San Diego Data Processing Corporation (SDDPC).
The most outstanding element that distinguishes the new SDDPC contract from any other contract, is its level of transparency. Everything the contractor does in the performance of public functions is subject to the Public Records Act. Every meeting of the corporation board is subject to the Brown Act. It submits annual financial statements as well as performance reviews and customer satisfaction surveys. And, the public knows the compensation of its executives as well as its employees. Read More
