HomeMy WebLinkAbout2011-07-19; City Council; MinutesMINUTES
SPECIAL MEETING: CARLSBAD CITY COUNCIL WORKSHOP
DATE: JULY 19, 2011
TIME: 11:00 AM
PLACE: CITY ADMINISTRATION BUILDING, ROOM 173A, 1635 FARADAY AVENUE, CARLSBAD, CA
The Mayor called the meeting to order on April 19, 2011 at 11:00 a.m. Present: Hall, Kulchin, Packard
and Blackburn. Absent: Douglas.
REGIONAL REPORTS
Kulchin: No report.
Hall: Council Member Hall, Carlsbad representative on the SANDAG Board of Directors and SANDAG
Transportation Committee, reported that 1-5 funding of approximately $800 million would not be available
until 2035.
Packard: No report.
Blackburn: No report.
PRESENTATION - BEST VALUE SERVICES
The following records were submitted for this discussion and are on file in the Office of the City Clerk:
• Approaches to Delivering Best Value Services, Power Point presentation, July 19, 2011.
• Delivery of Best Value Services -July 8, 2011, City Council Workshop, Memorandum to Mayor
and City Council from City Manager, July 8, 2011.
• Approaches to Delivering Best Value Services-July 15, 2011, Memorandum to City Manager
from Cradock Stropes, Management Analyst and Greg Hermann, Senior Management Analyst.
Council received a presentation from Deputy City Manager Cynthia Haas, Assistant City Manager John
Coates, Senior Management Analyst Greg Hermann and Management Analyst Craddock Stropes.
Staff explained that a broad range of cities and processes were researched in order to provide Council
with a comprehensive report. Carrollton, Texas, was identified as a city similar to Carlsbad in
characteristics and demographics, and Carrollton's Director of Competition Tom Guilfoy was in
attendance to explain Carrollton's Best Value Service program and answer questions from the Council.
City Council Workshop July 19, 2011
Mr. Guilfoy outlined goals, processes and review and evaluation techniques used for their managed
competition model and explained his role in assisting departments to operate more efficiently and to
stay competitive. He stated that services were designed to fit the needs of the community and that
"quality" was written into all contracts. Of the eleven business units/departments evaluated for
managed competition, four were outsourced.
In response to questions from Council, Mr. Guilfoy explained Carrollton's "better, faster, friendlier,
cheaper" philosophy, the importance of staff training and coaching to operate in a new environment
and the gap between the private and public sectors.
Mayor Hall, with Council concurrence, directed staff to provide an initial recommendation for
proceeding with a managed competition program, and the pros and cons of committees to assist in the
running of the program.
PROPOSED SENATE BILL NO. 833
The following document was distributed for this item and is on file in the Office of the City Clerk.
• Senate Bill No. 833 as amended in Senate April 25, 2011.
Joshua Clevert, representing the San Diego Sierra Club came forward to address Council regarding the
Senate Bill, water supplies and the relocation of aquaducts.
Mayor Hall, with Council concurrence, directed staff to send written opposition to Senate Bill No. 833 on
behalf of the Council. Council Member Blackburn stated that he needed more information on this item.
COUNCIL PRIORITY PROJECTS
The above document was distributed to Council Members and is on file in the Office of the City Clerk.
Mayor Hall adjourned the meeting at 1:00 p.m.
Donna Heraty II
Deputy City Clerk
7/18/2011
Approaches to Delivering Best
Value Services
July 19, 2011
Agenda
• Carlsbad's current approach to contracting for
services
• Research on approaches to providing best
value services
7/18/2011
Carlsbad's Current Approach to
Contracting for Services
Cynthia Haas, Deputy City Manager
Carlsbad's Approach to Contracting
• Definitions
• When we contract
• Current contracts
7/18/2011
Important Work Accomplished
by Many People...
• Full-time
• Part-time
• Seasonal
• Temporary
• Volunteers
• Elected and Appointed Officials
• Independent Contractors & Consultants
Definitions
• Contractor- Includes vendors and means any
business entity/party that has entered into a contract
with the city for the provision or disposition of
goods, services, professional services and/or
construction projects.
• Only responsible for the results rather than method
and supply their own labor, materials, supplies,
equipment and office space.
• Includes "consultants" or advisors
7/18/2011
We May Contract When...
We lack the knowledge or expertise on a
subject.
Liebert Cassidy Wfirtmore* -,
We May Contract When...
We need a third party to do the work: neutral,
independent, unbiased
Financial audits
Business .
Process
Reviews J
Surveys CM
Environmental Review
[bw]RESEARCH
PARTNERSHIP
7/18/2011
We May Contract When...
It is more cost effective and quality can be
maintained
CARLSBAD
We May Contract When...
It is necessary to maintain optimal staffing
levels during times where workload is
unusually high
- Emergencies
- New Programs/Mandates
- Special Projects
City Employee
Contractors
7/18/2011
Example Questions
Contracting
• Special knowledge or
skills?
• Need control?
• Multiple contractors
available?
• Appropriate quality?
• Less cost?
• Special equipment
required?
• Do we have the staff to
do it?
• Stand alone service?
• Meet the schedule?
Current Contracts
FY 2011 contracted for $25 million in general
fund services
- $3 million in wastewater treatment
- $1 million in planning services
- $850,000 in landscape maintenance
- $8.5 million in solid waster disposal
Also contract for $20 million in services for CIP
7/18/2011
Research on approaches to
providing best value services
Craddock Stropes, Management Analyst
Greg Hermann, Senior Management Analyst
John W. Coates, Assistant City Manager
Research Findings
Service Evaluation
Processes
Who Guides the
Process
Service Delivery
Options
7/18/2011
Methodology
• Quantitative and qualitative research studies
conducted by other cities and trade organizations
• Academic research
• Articles from newspapers and trade publications
• Case studies from other cities and public agencies
• White papers compiled by industry experts
• Interviews with representatives of cities
Methodology - Cities Included
Bloomington, IL
Carrollton, TX
Centennial, CO
Charlotte, NC
Chula Vista, CA
Colorado Springs, CO
Corpus Christi, TX
Costa Mesa, CA
Escondido, CA
La Quinta, CA
Long Beach, CA
Newport Beach, CA
Oceanside, CA
Phoenix, AZ
Rockford, IL
San Diego, CA
San Marcos, CA
Ventura, CA
Vista, CA
Tifton, GA
Yuma, AZ
7/18/2011
Methodology - Resources
• International City/County Management Association
• League of California Cities
• National League of Cities
• Government Finance Officers Association
• Reason Foundation
• National Council on Public-Private Partnerships
• Academic research and white papers
• Newspaper and trade publication articles
• Conference presentations
Service Evaluation Processes
• Internal review
• Competitive analysis
• Managed competition
7/18/2011
Internal Review
• Self-assessment of a service's current level of
effectiveness and efficiency
• Completed upon assignment, often under
regular annual review
ICMA
leaders at the Core of Better Communities
'VISTA BOOflFCRD
iSBSSSSTCityoflort.CgjHnj
Competitive Analysis
• Compares a department's current capabilities, costs
and performance with other potential providers to
determine the level of competitiveness
• Short-term approach; limited time frame
• May not lead to sustained efforts
cm-ofCHUIA VISTA City of YUM A
10
7/18/2011
Managed Competition
Guided process in which private-sector
providers are encouraged to compete with city
departments to provide public services
Long-term strategy; involves significant
cultural change
CARROLLTON CityofPhoenix
TEXAS
TKC CTTY or SAN
Who Guides the Process
• Staff
• City Council / elected officials
• Citizen committees
11
7/18/2011
Staff
• Provide data and background knowledge
necessary for services evaluation
• May involve all levels of an organization
City Council/ Elected officials
Can have varying levels of responsibility
depending on process selected
Typically make final policy decisions regarding
service delivery options
12
7/18/2011
Citizen Committees
Can advise on appropriate service levels,
efficiencies and outsourcing opportunities
CITY OF COLORADO SPRINGS
Service Delivery Options
• In-house services
• Contracted services
• Shared services
• Privatization
13
7/18/2011
In-house Services
A service delivery option that utilizes city staff
exclusively
Contracted services
Involves a competitive bidding process in
which requests for proposals are disseminated
to eligible vendors
14
7/18/2011
Shared Services
Concentrates related resources performing
like-activities in order to service multiple
partners at lower cost and with higher service
levels
Privatization
Service provision is completely transferred
from the public sector to the private sector
15
7/18/2011
Service Evaluation
Processes
Summary
Who Guides the
Process
Service Delivery
Options
Questions
16
All Receive
For the Information of the'
City Manager £^-~
TO: CITY MANAGER
FROM: Human Resources Director
CITY COUNCIL POLICY ON REHIRING OF RETIRED ANNUITANTS
This memorandum is prepared in response to a request by the Mayor and City Council to
explore the possibility of creating a City Council policy concerning the rehiring of retired City
employees.
There are essentially two ways that a retired city employee can be reemployed by the city - as a
part-time/hourly employee or as an "independent contractor". Those retirees employed on an
hourly basis must adhere to the rules and regulations concerning reemployment as outlined by
the California Public Employees' Retirement System (CalPERS); those who are reemployed as
independent contractors are not subject to the CalPERS rules regarding reemployment but
instead must adhere to the requirements for independent contractor status as outlined by the
Internal Revenue Service and by the City of Carlsbad's Purchasing Ordinance. Some factors that
indicate that a retiree is operating as an independent contractor include possession of a City of
Carlsbad business license, a place of business separate from City facilities, and other business
clients in addition to the City of Carlsbad. This memo will address the current practices
associated with the reemployment of retired employees on an hourly or part-time basis only -
guidelines concerning the process for hiring independent contractors can be found in the
Purchasing Ordinance.
The City of Carlsbad adheres to the rules and regulations outlined in the California Government
Code and the California Public Employees' Retirement System (CalPERS) law regarding working
after retirement. Generally, a retired annuitant (i.e. a person receiving a pension under the
CalPERS system) may not work for a CalPERS employer without reinstatement. However, there
are several exceptions to this rule that have been established by CalPERS that permit the
reemployment of retired annuitants under certain circumstances. Some of the most common
exceptions that allow for a retired annuitant to be hired back with a CalPERS agency on a part-
time basis include the following:
• Leave of absence of regular employee exception (the retired annuitant is filling in when
a regular full-time employee is on a leave of absence)
• Litigation exception (the retired annuitant is being retained because he/she is involved
in litigation on behalf of the agency and the agency desires to preserve his/her
testimony)
• Special skills or to prevent stoppage of work (21221(h)) exception (the retired annuitant
is appointed by the governing body (City Council) and has the skills needed to perform
work for a period not to exceed 12 months)
• "Special position" exception (the retirad annuitant is reemployed into a position
designated as acceptable by CalPERS, including reemployment as a member of the
governing board of the contracting agency (e.g. as a City Council member), as an
appointed member of the governing body of a contracting agency, as a crossing guard, a
juror, a member of a legislative committee, among others)
• Disability retirement exception (allows a person retired for disability to work in a
position that is significantly different from that which the member retired until he/she
has reached the mandatory retirement age in the position he/she will be reemployed)
• Special skills or to prevent stoppage of work (21224) exception (the retired annuitant is
appointed by the "appointing power" of a public agency (City Manager/City Attorney)
and has the skills needed to perform work of limited duration)
The last exception listed (the special skills (21224) exception) has been used for many years at
the City of Carlsbad in order to enable retired annuitants to be reemployed on a part time basis
under certain circumstances. Under this exception, retired annuitants have been called to
assist the city on a temporary basis when there are spikes in workload, work-related injuries,
leaves of absence, and vacations. Retired annuitants have also filled in when the city is
recruiting for hard-to-fill positions, provided help on limited term special projects, and
conducted background investigations.
If the retired annuitant falls under one of these exceptions, he/she may be reemployed by the
agency under the following general CalPERS regulations:
J The retired annuitant must be of "normal retirement age" which, in the case of Carlsbad
employees, is 50 for safety employees and 60 for miscellaneous and management
employees
S If the retired annuitant is not of "normal retirement age", he or she may still be
reemployed as a retiree as long as 1) there was no agreement to return to work as a
retiree before the employee retired and 2) there is a bona fide break in service of 60
days or longer between the date of retirement and the date the retired annuitant
returns to work
J The retired annuitant's assignment will not exceed 960 hours in a fiscal year
Under Option #3 above, there are a number of ways that the City Council could opt to make the
provisions for reinstatement more restrictive for retired annuitants. These include reducing the
number of hours that can be worked in a fiscal year to a number less than 960, limiting the
number of fiscal years that can be worked in succession, or imposing a waiting period between
the date of retirement and the date of rehire.
The City of Carlsbad is currently in compliance with CalPERS rules and regulations concerning
the reemployment of retired annuitants, and regulations in this area are extensive and subject
to change periodically. Therefore, if the City Council direction is to continue the city's current
practice of adhering to the provisions outlined in the California Government Code and CalPERS
law concerning the reemployment of retired annuitants, staff's recommendation is that we do
not attempt to formalize the current processes and procedures within a Council policy.
However, if the City Council desires to make the provisions for reinstatement more restrictive,
it is staff's recommendation that a Council policy be drafted and adopted to reflect the
guidelines that would be unique to Carlsbad.
Please let me know if there is any additional information you require.
JULIE CLARK
•S The retired annuitant is not filling a regular, part time position but instead is performing
work that is on call, as needed, supplemental or used to fill gaps for regular employees
V The retired annuitant's rate of pay will not be less than the minimum, nor exceed the
maximum that is paid to employees performing comparable duties.
There are a number of advantages to using retired annuitants to supplement the city's regular
workforce. In addition to giving us flexibility to addrers temporary hiring needs as previously
described, retired annuitants possess institutional knowledge that can often not be duplicated,
and the use of their services often provides cost savings to the city. One example of this can be
found in the way that the city conducts its background investigations. Our practice has been to
use retired annuitants who have formerly served in the fire and police departments to conduct
background investigations of safety job applicants. This work is done on an "as-needed" basis
whenever potential new hires are being processed, and it is work that must be done by a sworn
safety officer or a hired private investigator. Using retired annuitants in this capacity results in
a financial savings when compared to using an outside firm to perform the same type of work.
Currently, the City of Carlsbad is guided by the provisions outlined above in the employment of
retired annuitants. This information is accessible on the CalPERS website and is included in the
CalPERS publication called "Employment After Retirement." In cases where it has been
determined that specialized skills are needed and that a retired annuitant can provide such
skills, the city has employed retired annuitants on an hourly basis for periods that do not
exceed the 960 hour limitation. As there are penalties for both the retired annuitant and the
employer if these rules are not followed, the Human Resources Department oversees both the
hourly rate paid to retired annuitants and the number of hours worked in each fiscal year.
There are several options for Council consideration in terms of creating a Council policy
addressing the rehiring of retired annuitants:
1. Continue the city's current practice of adhering to the provisions outlined in the
California Government Code and CalPERS law concerning the reemployment of retired
annuitants without codifying them in a Council policy
2. Formalize the city's position to follow the established rules and regulations by restating
the current restrictions in a City Council policy
3. Draft a City Council policy to make the provisions for reinstatement for City of Carlsbad
more restrictive than those outlined by the California Government Code and CalPERS
law or to prohibit the reemployment of retired annuitants altogether.
CITY OF
CARLSBAD
Memorandum
July 8, 2011
To: Mayor and City Council
From: City Manager f
Re: July 19th Council Workshop - Articles Relating to Public Agencies and the
Delivery of Best Value Services
At the Council's workshop on July 19th, staff will be presenting a summary of the results of the
research that has been done on public agencies' approaches to delivering best value services.
In preparation for that meeting, I am providing you a few of the articles that were used in
preparing the report in case you would like to do some advance reading on the topic. The
articles are:
• Government Finance Officers Association Best Practice Statement on managed
competition
• A report on outsourcing written by Public Financial Management, Inc. for the city of
Colorado Springs
• Two documents from Carrollton, TX about their managed competition process
• A report compiled by the city of Bloomington, IL on managed competition (while not a
source document in itself, it is a nice summary of their research into the topic)
Please let me know if you have any questions about the information.
C: City Attorney |Date; 7//////
City Clerk • .T~\. / /I Distribution: ;
Attachments (4) I City Clerk
| Asst. City Clerk
LH/src j Deputy Clerk
City Hall
1200 Carlsbad Village Drive I Carlsbad, CA 92008 I 760-434-2820 I 760-720-9461 fax I www.carlsbadca.gov
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GFOA Best Practices and Advisories
In 1993, the Government Finance Officers Association (GFOA) Executive Board directed the
association's staff to work with the GFOA standing committees to develop a body of
recommended practices in the functional areas of public finance to give GFOA members and other
state and local governments more guidance on sound financial management practices. This effort
represented a fundamental new direction for GFOA and one that is still evolving.
In 2009, the GFOA's Executive Board determined that GFOA's Recommended Practices should be
reclassified as Best Practices and Advisories. A GFOA Best Practice identifies specific policies
and procedures as contributing to improved government management. It aims to promote and
facilitate positive change rather than merely to codify current accepted practice. Partial
implementation is encouraged as progress toward a recognized goal. A GFOA Advisory identifies
specific policies and procedures necessary to minimize a government's exposure to potential loss
in connection with its financial management activities. It is not to be.interpreted as GFOA
sanctioning the underlying activity that gives rise to the exposure. The ongoing and nature work of
the standing committees will be the development of Best Practices and Advisories.
This resulting collection of Best Practices and Advisories have been approved by the GFOA
Executive Board after careful development by the standing committees. Each practice and
advisory was developed drawing on the collective wisdom of more than 50 persons with extensive
and diverse experience in public finance. The best practices are intended to identify enhanced
techniques and provide information about effective strategies for state and local government
practitioners.
These Best Practices and Advisories are written as guidance for our members. You should check
with your own professionals about specific issues related to your government.
May 2011 - GFOA's Executive Board Approves New Best Practice: Designing and Implementing
Sustainable Pension Benefit Tiers
Best Practices and Advisories By Category
Accounting, Auditing, and Financial Reporting
Budgeting and Fiscal Policy
Canadian Issues
Debt Management
Economic Development and Capital Planning
Retirement and Benefits Administration
Treasury and Investment Management
GFOA Best Practices and Advisories that were approved by the Committee on Canadian Issues as
applicable to Canadians are also available in the Canadian section.
1 Back 1
i : J_1 7/1
BEST PRACTICE
Managed Competition as a Service Delivery Option T2006) (BUDGET)
Background. Governments are continually tasked with providing high quality services within the constraints of
limited financial resources. In order to meet this challenge, many governments have turned to the private sector or
other governments as an alternative to in-house service delivery as potential ways to save money or improve
services. One choice within potential service delivery options is managed competition, in which governments
require in-house service units to compete with external providers.
Recommendation. The Government Finance Officers Association (GFOA) recommends that governments
systematically identify and evaluate the major factors in considering a managed competition option. Service level,
cost, efficiency, effectiveness, quality, customer service, and the ability to monitor the service provider's work
should be essential components of any managed competition decision. In addition, governments should clearly
define the service parameters in the expected service delivery.
When evaluating whether to undertake a managed competition initiative, governments should consider the
following key points:
1. Executive Direction. The heads of government must support a move toward a managed competition service
delivery model. Support from the government's executive and legislative leadership is essential. The
governmental leaders should establish clear expectations and standards for such an initiative. It is necessary to
have a transparent process.
2. Environmental Consideration. Consideration must be given to how managed competition is affected by
demographics, the economy, geography, citizen sensitivity and the local political environment. Organizations are
encouraged to closely evaluate the strengths and weaknesses of the jurisdiction relative to the managed
competition option. Consideration should also be given to an analysis of opportunities and threats on the
environment external to the organization. A look at how other communities have fared with managed competition
for that particular service may be necessary.
3. Stakeholders' Support. Stakeholders need to be appropriately involved. Stakeholder groups may include
unions, employees, media, advocacy groups, local businesses, and the public. By involving stakeholders in the
managed competition process, governments will have a better opportunity to convince stakeholders of the value
of a competitive service model.
4. Legal Ramifications. Issues associated with employment law compliance and existing labor agreements must
be considered. If a switch to managed competition affects union employees, options like workshops, meetings,
and open forums should be considered to communicate to labor unions the possible benefits of managed
competition. Human resource impacts should be a factor when making the determination whether to go ahead
with managed competition. As part of the negotiations with potential contractors, thought should be given to
hiring the current workforce or retraining current employees for reassignment. It should be noted that shifting a
service to a contractor might transfer liability and other risks to the contractor (even though these risks are likely
built into the contract price).
5. Service Availability. The services considered for managed competition should be measured against the
availability of the service in the market place. Some services, such as trash collection and building construction,
may lend themselves to competition. Fairness of competition should also be analyzed. In addition, consideration
should be given to the total investment that the government has made in the current service delivery. A substantial
prior investment may preclude the government from entering into a competitive situation.
6. Cost The cost decision as to whether to perform a service "in house" or outsource it to an external provider
involves four basic steps. Determining the different cost structures is necessary before proceeding with the request
for proposal (RFP). However, cost should not be the only basis in comparing competitive bids. Governments
should develop a decision-making process that seeks to account for all relevant factors.
• Service definition. The first step in a cost analysis is to clearly define the government service that is being
considered for outsourcing. A thorough analysis of the service level and performance standards will
provide the best framework for evaluating the full cost of the service, whether it continues to be delivered
in-house or it is outsourced to an external provider.
• Calculate the in-house costs that could be avoided by outsourcing the service. GFOA's Best Practice,
Measuring the Cost of Government Services, defines the full cost of a service, as that which encompasses
all direct and indirect costs related to that service. Governments should understand that not all indirect
costs would be avoided if the service were outsourced.
• Estimate the total costs of outsourcing. The costs of outsourcing include the contractor's bid price, the
government's contract administration costs, and the government's transition costs, less any new revenue
generated from outsourcing.
• Compare the cost savings from outsourcing to the costs incurred. The final step in a make-versus-buy
cost analysis is to calculate the difference between the costs saved by outsourcing a service and the costs
incurred. If the costs saved are significantly greater than the costs incurred, then outsourcing may make
financial sense.
7. Transition Process. Governments must be fully prepared to allow for a smooth transition if a change in a
service delivery provider takes place. It is essential that initial monitoring occur to make sure that no disruption in
service arises.
8. Performance Metrics. Governments must employ performance metrics as a means of comparing and
evaluating efficiency and effectiveness standards for service activities. Elements like productivity, quality,
timeliness, and desired outcomes are needed. Contract staff must be prepared to develop and manage a
competitive services agreement. The success of competitive service delivery often rests on the ability of the
organization to develop and manage a strong performance based services agreement (including appropriate
incentives and penalties). It is imperative that an organization develops the skills to design relevant performance
metrics that ensure service quality. The establishment of consistent benchmarks that measure service
performance is essential.
References
• GFOA Best Practice, "Performance Management: Using Performance Measurement for Decision Making,
2002 - Updated Performance Measures," 1994.
• GFOA Best Practice, "Measuring the Cost of Government Services," 2002.
• "Make or Buy? Using Cost Analysis to Decide Whether to Outsource Public Services, " Government Finance
Review, August 2004.
• GFOA Best Practice, "Establishment of Strategic Plans," 2005.
Approved by the GFOA's Executive Board, October 6, 2006.
PUBLIC FINANCIAL MANAGEMENT, INC.
Outsourcing
Methods & Case Studies
City of Colorado Springs
Sustainable Funding Committee
04/10/2009
OUTSOURCING
Overview 3
Types of Outsourcing 3
When to Outsource 4
When not to Outsource 5
Outsourcing Guidelines 6
Case Studies 11
Managed Competition 15
Public-Private Partnerships 17
Outsourcing Advisory Boards 18
Outsourcing in Colorado Springs 19
Conclusion 20
Colorado Springs Sustainable Funding Committee - Services Subcommittee Page 2 of 21
OUTSOURCING
Overview
Outsourcing is a useful tool employed by cities across the country to cut costs, improve
quality of service, and raise revenue. Approximately 80 percent of all U.S. cities
outsource some services1. It also can help free up limited city resources for more critical
public goals such as improving overall quality of life, maintaining public safety, and
sustaining economic growth.
Although outsourcing has in recent years been a subject of controversy, engendering
the opposition of municipal and private sector labor unions alike, it has the potential to
depoliticize certain aspects of service delivery, as fixed contracts allow for better budget
control and reduce the need for controversial service cuts. In addition, it reduces the
need for direct personnel management by shifting these responsibilities to the
contractor.
Outsourcing is not simply limited to private vendors; services can be outsourced to
other public entities as well. When correctly applied and executed, it can maximize
performance, increase operational efficiency, and better deploy resources to meet
critical goals. However it should only be applied carefully and selectively to those areas
where significant cost and efficiency gains can be attained.
Types of Outsourcing
Outsourcing can occur in many forms, as listed below:
» Contracting out typically involves a competitive bidding process in which RFPs
(Requests for Proposals) are disseminated to eligible vendors. Some city and
state governments require contractor registration prior to bidding while others
independently select potential contractors based on experience and reputation.
Contractor proposals are then evaluated and a decision is made based on either
a cost or "best value" basis. Contractor performance is then monitored and
managed in view of predetermined service goals.
• Public-Private Partnerships are cooperative arrangements between
governments and private organizations to jointly fund or operate a particular
program, project, or service. Public-private partnerships typically involve
concerned local stakeholders helping to provide a program, project, or service of
a particular value to a local community or neighborhood. Such arrangements
benefit both the government and the private organizations involved by
1 Outsourcing in State and Local Governments: A Literature Review and a Report on Best Practices.
University of Tennessee Center for Business and Economic Research. September 21, 2006.
ftp://ftp.nashville.gov/web/sserv/Outsourcing_Lit_Review_Final_0926.pdf
Colorado Springs Sustainable Funding Committee - Services Subcommittee Page 3 of 21
undertaking a valuable service, project, or program that could not be carried out
independently by either entity.
• Volunteers or volunteer associations are often called on to provide public
services highly valued by community members for no cost to the city. Many
cities use volunteers for park maintenance, recreational programs, and
neighborhood watch activities among other programs.
• Load shedding involves government relinquishing the responsibility for providing
services or operating a program. Most often, this is done with the understanding
that another entity, public or private, will buy the public assets associated with
the service or program and offer these itself2. An example would be handing off
of a city museum to a private museum foundation or control of a city park to a
local parks conservancy.
• Franchising involves the licensing of private service providers to exclusively
provide public services in a particular area. Private vendors then charge city
residents fees for the services they provide. Although rarely used by city
governments, franchising can sometimes be a more efficient way for larger cities
to organize residential waste collection and hauling.
• Vouchers involve government payments to third parties for goods or services
provided to residents. Vouchers are often used to enhance the competition and
availability of a service to residents without direct government service
provision3. While commonly used by school districts, housing, and social service
agencies, vouchers can also be used to provide municipal employee benefits.
When to Outsource
Outsourcing has been used by cities to solve various problems ranging from a Jack of
internal expertise to a need for significant cost reductions. Many cities have found that
equipment, maintenance, or labor costs for providing a service have risen faster than
budgeted revenues. In these cases, some have found that the economies of scale and
resulting efficiencies enjoyed by private vendors can be brought to bear on behalf of city
agencies, reducing the cost of providing services and shielding cities from labor and
equipment cost increases over the length of the contract.
Other cities have found that outsourcing allows them to improve quality, by utilizing a
contractor with more knowledge and expertise in providing a particular service. City
2 Richard D. Wertz and Charlie Tyer. "The Privatization of Local Government Services: A Growing
Trend," The South Carolina Policy Forum Magazine, Vol. 8, no. 2. Spring 1997: 30-41.
J Kevin R. Kosar. "Privatization and the Federal Government: An Introduction." Congressional Research
Service. December 28, 2006. http://fas.org/sgp/crs/misc/RL33777.pdf
Colorado Springs Sustainable Funding Committee - Services Subcommittee Page 4 of 21
agencies faced with providing a new service can lack the skills, experience, and expertise
necessary to produce quality results, making a contractor a more practical option.
Moreover, a contractor's profit motive often leads it to offer the best product at the
lowest price in order to obtain future business. Shifting responsibility for service delivery
to a contractor can also allow city agencies to focus more on achieving their core
missions rather than spending time on administrative tasks.
In general, private contractors operate under fewer bureaucratic and regulatory
constraints than public entities. They are less likely to be bound by inflexible collective
bargaining agreements and civil service regulations, and therefore have more flexibility
in adjusting staffing levels. In addition, they are less restricted by strict procurement
regulations and operational procedures that can slow down service delivery and inhibit
the development of more effective solutions. This yields greater potential for increased
innovation and flexibility in improving service delivery.
Outsourcing also enables cities to increase accountability for service delivery. It is often
difficult to terminate city employees for poor performance. However, contracting
allows cities to hold the service provider accountable for service delivery, through the
use of contract renewal, performance bonds, and lateness penalties. Rebidding a
contract on a regular basis enables a city to compare performance and hold existing
contractors accountable by regularly subjecting them to competition. In addition,
performance bonds and lateness penalties protect cities from the effects of poor
performance; in contrast, these costs are often not recovered under in-house operation.
When not to Outsource
Outsourcing is not a universal panacea for all cost and performance problems. In many
cases, it can be an inappropriate option for certain city services and carries with it a
great deal of risk, which, unmitigated, can produce catastrophic results. There are
several instances in which the risk of contractor failure will outweigh the potential
benefits from outsourcing.
Cities should never outsource functions that are inherently governmental, such as law
enforcement, policy making, and public safety. These functions are essential to the well
being and quality of life of citizens and therefore should never be subjected to the risk
of contractor failure. In addition, maintaining city control over these functions is a
critical component of maintaining democratic control and accountability over city
services. For this reason, it is often best to first identify and evaluate services that are
the best candidates for outsourcing, and exclude those for which these risks are
unacceptable.
In general, outsourcing should never be considered for areas where there is not
sufficient private sector expertise and experience. Often, in-house staff have years of
valuable experience and know-how that cannot be replicated in the private sector.
Colorado Springs Sustainable Funding Committee - Services Subcommittee Page 5 of 21
Losing this expertise when engaging a contractor can be very regretful in the event the
contractor fails to meet minimum performance standards. Contracting should be used
to select only experienced, well-qualified vendors with a proven methodology- when
they are available.
In addition, outsourcing should not be used for new programs and initiatives with
undefined goals and expectations. This precludes the ability to hold contractors
accountable for results and creates an enormous potential for waste, fraud, and abuse.
The fixed nature of contracts also locks the city into financial obligations that exist even
after new programs are redesigned, scaled back, or eliminated.
Moreover, when there is a significant risk of city administrative upheaval, outsourcing is
not an advisable option. Sometimes high turnover among contract negotiation, supplier
management, and contract enforcement staff can obviate the development of
institutional knowledge and memory that ensures effective contractor monitoring and
management. Frequent changes in contract management staff and policies sometimes
lead governments to overlook critical cost overruns, quality management, and
performance problems.
Outsourcing a function carries with the loss of certain advantages derived from in-house
work. For example, outsourcing often leads to a loss of control over personnel, work
practices, and quality control. The consequences of this loss can vary depending on the
type of service outsourced. In addition it can entail a substantial commitment of
administration and oversight, which will vary with the risk of contractor failure and the
potential consequences of that failure. Administration requires extra time and effort to
be spent drafting RFP's, soliciting bids, writing specifications, and setting performance
standards.
Disputes with contractors can also sometimes saddle the city with the unexpected
liability of contesting civil litigation. In addition, since contractors are not accountable to
the public and have only the profit motive as a driving force, they may be less likely to
be responsible with the public assets and taxpayer dollars they receive. Furthermore,
there is the genuine risk of contractor bankruptcy or failure that can put the provision of
critical city services in jeopardy without adequate stop-gap measures in place. With
these considerations in mind, there are several steps that cities can take to minimize the
effect of these disadvantages and protect against these risks.
Outsourcing Guidelines
In advance of any outsourcing consideration, certain issues should be taken into account
before deciding whether contracting will work in a particular service area.
Colorado Springs Sustainable Funding Committee - Services Subcommittee Page 6 of 21
In-house versus Outsourced Service Delivery
An outsourcing decision should be based on the fact that the service cannot be
performed more efficiently in-house. In order to determine this, a city should fully
estimate the internal cost-of service and weigh this against the cost of engaging a
contractor.
Often, public agencies find that it is more cost-effective to reorganize or improve
operations than turn to a third party contractor. The potential costs and benefits of an
internal improvement initiative should be considered before making a final outsourcing
decision.
When estimating the in-house cost of service, a city should include some measure of the
costs related to managing employee payroll, pension and health benefits, workmen's
compensation claims, and other personnel management functions to accurately
compare with indirect costs borne by contractors, not immediately apparent in the
contractor quote.
In addition, when weighing the costs and benefits of in-house versus contracted service
delivery, it is essential to incorporate any additional contract administration costs into a
contracting estimate. Adequate contractor monitoring and management can often incur
significant costs that should be fully incorporated into the outsourcing estimate.
Procurement regulations and existing contractual arrangements can be significant
impediments to the advancement of an outsourcing initiative. It is critical that legal
limitations and requirements be considered when evaluating or implementing an
outsourcing option. Additionally, the political viability of any large scale outsourcing of
services should also be considered. Outsourcing initiatives have the potential to
decrease employee morale and often incur strong opposition from municipal employee
unions. These political factors should always be planned for and considered in advance
of an initiative, with sufficient attention paid to employee and union concerns.
Deciding on a Contractor
When initiating the RFP process, it is best to send out the RFP to a wide array of
potential vendors, to prevent a monopoly bid and increase the number of viable options
before the city. Obtaining a sufficient number of proposals is critical to realizing the
benefits of contractor competition. However, the RFP submittal should also be
restricted to vendors reasonably experienced and qualified to provide the service.
When soliciting bids, checking the track records and past clients of contractors can be a
helpful way to restrict bids to qualified, higher quality contractors. Doing preliminary
Colorado Springs Sustainable Funding Committee - Services Subcommittee Page 7 of 21
research on a contractor can weed out questionable contractors and simplify the
decision-making process in the final evaluation.
In addition, fully recognizing the city's strategic interests and performance goals can be
key in selecting the right contractor. Selecting a contractor who fully meets and aligns
with city goals and expectations is critical to maximizing performance and preventing
future problems and delays.
Furthermore, the lowest bid contractor is not always the best contractor. Low bid
contractors are often inexperienced, underestimate the cost of service, and sometimes
pass on significant additional costs in the form of cost overruns, delays, and poor quality
work needing remediation. In addition to cost, including quality ranking factors that
identify and incorporate vendors' strengths and weaknesses in the final evaluation can
mitigate this risk.
Post Selection
When outsourcing a particular program or service, cities often have to reduce their
workforce associated with that area. The prospect of mass layoffs or forced retirements
can be very controversial and endanger the success an outsourcing initiative. Many
cities have dealt with this by adding a provision to the contract requiring that existing
city employees be given first preference for hiring by the private vendor. Others have
sought to reduce their existing workforce through attrition, hiring freezes, early
retirement incentives, or employee retraining. In implementing an outsourcing
initiative, a city should be mindful of the effects it will have on current city employees
and plan accordingly.
When outsourcing a service area, it is important to retain key managerial functions in-
house. Budget control, business planning, policy making, supplier management, and
performance management should always be under the control of city staff, in order to
hold contractors accountable and align program activities with established city goals4.
With any contracting initiative, there is the real risk of change orders and cost overruns
that can unexpectedly increase the cost of the contract. To avoid this, the city should
negotiate contracts that do not hold the city liable for significant cost overruns and
minimize or otherwise restrict the number of allowable change orders. Sometimes,
loose contract provisions enable contractors to bill for additional personnel, supply, or
material costs not included in the original bid that significantly increase the overall cost
to the city. Negotiated contracts should have fixed cost provisions that protect the city
from such an event, as well as fully specify the work to be performed. In addition, the
city should consider negotiating performance-based contracts that withhold payments
4 Paul Lauria. "Fleet Management that Should Never Be." Automotive Fleet. September 2002.
http://www.mercury-assoc.com/resources/fleet-mgmt-n.mctions-not-outsource-l .pdf
Colorado Springs Sustainable Funding Committee - Services Subcommittee Page 8 of 21
to vendors until specified performance goals and metrics are met. Adopting this type of
contract can further protect the city against cost, schedule, and performance risk.
Sometimes, contractors pull out of contracts when they find they are ill-equipped to
perform their assigned tasks. In these events, cities are often left with little or no
remaining internal capacity to step in and provide the service. Retaining some staff in-
house protects against this, while allowing for in-house professional advice to be
provided to the contractor when needed. In addition, requiring a performance bond
from contractors can also protect a city financially in the event of an abrupt pull-out.
A city should fully gauge and plan for unanticipated liabilities and risks associated with a
contract. As with any contract, lax standards, corruption, graft, and failure to meet
performance goals and deadlines are distinct possibilities. To mitigate these effects,
cities should fully plan for these contingencies as part of an overall risk management
strategy for each contract.
It is also important that a city actively manage its relationship with contractors.
Communication of goals and expectations to contractors is critically important to
successful outcomes. Lapses in communication can easily lead to unnecessary disputes
in which the contractor fails to meet the goals, standards, and expectations of the city.
Also critical to any successful outsourcing is adequate contract oversight and contractor
monitoring to foster contractor accountability and implement quality management. Lax
oversight can lead to major problems later in a project or program's life. Making sure
that contractors live up to the terms of the contract and deliver the specified products
and services on time is critical to ensuring a successful outcome. However, it is also
important to strike a balance between tight regulation and providing the flexibility to
get the job done more efficiently and at a lower cost.
The following examples show common problems governments have faced when they
have undertaken poorly executed and badly applied outsourcing initiatives:
• Washington D.C negotiated a 7 1/z year contract with Affiliated Computer
Services to install and maintain 16,500 parking meters in 1999. A recent report
by the D.C Auditor revealed that from 1999 to 2005, almost 7,000 tickets were
issued to vehicles parked at broken meters and the number of citizen complaints
jumped from 3,652 to 89,840s. The report found that ACS suffered from a wide
array of problems and inefficiencies that went unnoticed by DCDOT, the agency
responsible for monitoring the contractor. ACS consistently failed to repair
parking meters within the 72-hour period specified in the privatization contract,
yet DCDOT remained disengaged from the quality of ACS' performance. During
5 Paul Duggan. "Parking Meter Outsourcing Costs City, Report Says." Washington Post. February 28, 2007.
http://www.washingtonpost.com/wp-dyn/content/article/2007/02/27/AR2007022702115.html
Colorado Springs Sustainable Funding Committee - Services Subcommittee Page 9 of 21
the 7 1/2 year period, ACS billed the District $644,952 in bagged meter fees, which
under the contract it was not entitled to, and received payment without any
formal investigation. In the end, the Auditor estimated that if parking meter
management had been retained in-house for the seven year period, it would
have cost the city $8.8 million less than the contract with ACS6.
Denver began a contract with Redflex Traffic Systems to administer its new red
light traffic photo enforcement program in 2008. However, a few months into
the contract, Redflex had failed to deliver key data and statistics required in the
contract as well as provide support staff, maintenance reports, equipment
certifications, and access to live video and still images. Under the contract,
Redflex must reimburse the city $25 each time it fails to photograph all but 2
percent of detected violations. Yet the data to make this determination was
never delivered to the city, making enforcement of this provision impossible to
determine. At the same time, the Police Department, responsible for enforcing
the contract, failed to demand any of the required reports and data until a
newspaper investigation of the contract began in December 2007. The lack of
data from Redflex has prevented Denver from knowing whether the red-light
cameras actually deter traffic violations, the chief goal of the program7.
San Diego engaged Grant Thornton, LLP to build the framework for its voter-
approved managed competition program in 2007. The $658,515 contract,
negotiated by the Mayor's Office, was later deemed to be illegal by the City
Attorney's Office, as it was not approved by City Council as mandated by the city
code8. Council members have in turn been angered by city staff's inability to tell
them what products and series the city has yet received from Grant Thornton or
what the City would receive in the future. Almost two years into the contract,
Grant Thornton had only managed to deliver a managed competition guide and
identified a few city departments as candidates for managed competition, while
the Mayor's Office twice missed self-imposed deadlines to advertise for bids9.
Texas negotiated a seven-year $863 million contract with IBM to transfer state
records to a centralized computer system. Severe problems soon developed
under the contract, including the temporary loss of half of 8 months worth of
Medicaid fraud records and a failure to meet server backup timeliness targets,
6 Ibid.
7 Kevin Flynn. "Do Denver Red-Light Cameras Deter Violations?" Rocky Mountain News. January 4, 2009.
http.7/www.rockymountainnews.com/news/2009/jan/04/denver-collecting-75-fines-not-red-light-traffic-
d/
8 David Washburn. "Privatization Consultant's Contract Comes Under Scrutiny" Voice of San Diego. June
20, 2008. http://www.voiceofsandiego.org/articles/2008/06/20/news/02grantthornton062008.txt
9 Helen Gao and Craig Gustafson. "Bid to outsource operations stalls amid opposition."5on Diego Union
Tribune. March 23,2009. http://www3.signonsandiego.com/stories/2009/rnar/23/lrn23contract222537-
bid-outsource-operations-stalls/?zlndex=71164
Colorado Springs Sustainable Funding Committee - Services Subcommittee Page 10 of 21
for which IBM was fined $900,000. In addition, the Governor's Office found that
IBM project overseers failed to implement the necessary checks and balances to
ensure the project's security. As a result, the Governor recently suspended the
transfer of state records to IBM10.
Case Studies
Several cities have had successful experiences with outsourcing in a variety of program
areas:
Internal City Administration Services
• Atlanta, GA outsources its records management functions. With the projected
sale of its City Hall East building in summer 2009, Atlanta lost its primary records
storage facility. In response, the City negotiated a $150,000,10 year contract
with Iron Mountain, Inc to store City records in a secure facility. A Records
Management Administrative Committee composed of representatives from
various City departments was created to oversee the contract. As a result,
Atlanta eliminated the need for its Records Management Division, while
preserving City oversight of records management activities.
• Richmond, VA has in recent months moved to privatize its municipal fleet
operation. The initial request for information called for mandatory performance
standards that would tie full payment to meeting time and quality performance
benchmarks. Under a contracting agreement, the City would retain a fleet
operations manager and staff to oversee and support the private operation
while the contractor would be responsible for preventive maintenance, minor
and major repairs, body repairs, tire inspection and replacement, and overall
management of the operation. A May 2007 report by the City Auditor estimates
a potential savings of $2.6 million from contracting out these operations11. In
addition, the cities of Dallas, TX, Huntingdon Beach, CA, and Montgomery
County, MD have each successfully outsourced select fleet management
functions.
• Sandy Springs, GA completely outsources IT services for City network systems.
Under a five year, $1 million contract that began in 2006, CH2M HILL provides
personnel, applications, security, disaster recovery and remote infrastructure
10 Paul McDougall. "Texas Halts Work on IBM Outsourcing Contract." Information Week. October 29,
2008. http://www.informationweek.com/news/global-
cio/outsourcing/showArticle.jhtml?articlelD=211800068
" "City of Richmond Moves.to Outsource Vehicle Services." Government Fleet. July 9, 2008.
http://www.government-fleet.com/Channel/Maintenance/News/Story/2008/07/City-of-Richmond-Moves-
to-Outsource-Vehicle-Services.aspx
Colorado Springs Sustainable Funding Committee - Services Subcommittee Page 11 of 21
support for the City's IT needs12 Outsourcing IT functions as part of an overall
full-scale outsourcing of non-public safety functions enables Sandy Springs to
keep service costs low, maintain a lower tax burden, and preserve adequate
service quality.
• New York, NY has partially outsourced its 311 municipal call center. In 2001,
New York had 45 citywide call centers staffed by almost 1,000 employees. With
the election of Mayor Michael Bloomberg ii, November 2001, came a complete
reorganization of the City's call centers into a single 311 service center. Due to
the huge volume of calls to the system for a city of over 8 million people, New
York outsourced a portion of call center operations to private vendors for peak
periods. At particularly busy times, contracted call assistants assist callers. In
addition, New York contracts with Language Line, a translation and
interpretation services company, to handle foreign-language calls. New York
found that using contracted call assistants reduces the need for costly
permanent personnel during peak periods and services to non-English speaking
City residents.
Transportation and City Infrastructure Services
• Sunnyvale, CA completely outsources traffic signal maintenance. The preventive
maintenance and repair of the city's traffic signals have been outsourced for
over 10 years. The contract is subjected to a competitive bidding process every
one to three years, and is overseen by the city's Division of Transportation and
Traffic. Sunnyvale typically negotiates fixed price contracts and requires
contractors to put up a performance bond, to protect the City against cost and
performance risk. In addition to Sunnyvale, the cities of Newport Beach, CA and
Lakewood, CA have also completely outsourced this function.
" Dallas, TX outsources 60 percent of its street sweeping operations. In recent
years, the City negotiated three year contracts for street sweeping services on
select City streets. Due to a very competitive bidding process, Dallas has seen its
cost per gutter mile swept fall from $20 in 2004 to $17.44 in 2007. Like Dallas,
many other cities have also found it more cost effective to outsource this
function rather than fully retain it in-house, given the significant cost of sweeper
maintenance and labor.
• Philadelphia, PA recently contracted out operation of its waste treatment plant.
Previously, the City experienced complaints about the odor and bad aesthetics of
its sludge processing facility. In addition, the plant lacked the capacity to fully
12 Brad Jones. "CH2M HILL Managed Services awarded SI million contract to provide IT services for the
City of Sandy Springs, Georgia." CH2M HILL. June 2, 2006.
http://www.ch2m.net/Default.aspx?tabid=150.
Colorado Springs Sustainable Funding Committee - Services Subcommittee Page 12 of 21
process liquid sludge into exceptional quality biosolids and reuse the processed
biosolids effectively. Under the terms of the contract, a contractor will take over
plant operations and construct a new facility to convert treated waste into
pellets that qualify as fertilizer for a broader range of uses. In the end, the
privatization is estimated to yield cost savings ranging from $100 million to $200
million over the life of the 23-year contract13.
Public Safety Services
• Houston, TX outsources background checks for incoming fire cadets. Houston
admits approximately 375 new cadets into its fire academy each year out of
about 2,000 applicants. In 2002, Houston paid local companies Joe Winter
Investigations and Boyd Smith & Associates $480,000 over three years to take
over screening functions. The move is estimated to free the department's 70
arson specialists from routine administrative tasks to concentrate on
investigating the City's approx. 18,000 fires per year14.
• Lakewood, CO uses volunteer labor for certain police activities. The City uses
trained citizen volunteers for police administrative work, such as fingerprinting
citizens and issuing parking tickets to violators of handicapped parking. Training
comes in the form of a citizen police academy and a police ride-along program.
Volunteers are currently employed in all divisions of the Police Department,
doing clerical work, computer entry, statistical analysis, investigative assistance,
community presentations, and neighborhood speed control under the
supervision of City personnel. Volunteers also manage the neighborhood watch
program and create and distribute newsletters and brochures for the program.
As a result, Lakewood has realized cost savings in multiple areas, targeting
resources to core police services. Engaging talented citizens committed to public
service has proved to be an excellent means to cut staffing costs, reduce
administrative overhead, and concentrate existing police staff on directly
improving public safety. Although Lakewood is a much smaller city than Colorado
Springs, the model can be tailored to adapt to Colorado Springs' unique
circumstances.
• Chelsea, MA has outsourced its entire parking enforcement operation. In 1992,
Chelsea's parking enforcement program operated at a deficit and annual
collections totaled $150,00015. In 2006, after outsourcing parking enforcement,
13 City of Philadelphia: Office of the Controller. Analysis of the Water Department Biosolids Recycling
Center Privatization Proposals. November 2006.
http://www.philadelphiacontroller.org/publications/audits/02_2006_Analysis_of_the_Water.pdf
14 Jenna Colley. "Fire Department takes new cadet screening private." Houston Business Journal. February
22,2002. http://houston.bizjournals.com/houston/stories/2002/02/25/story5.html
15 Municipal Management Associates. Chelsea Case Study. 2008.
http://municipalmanagement.com/Chelsea-Case-Study-41 .htm
Colorado Springs Sustainable Funding Committee - Services Subcommittee Page 13 of 21
the City collected over $1.5 million and received a net surplus of over $1
million16. Private operators are often more willing to invest in capital equipment
and technology that eventually improve productivity and efficiency, thereby
reducing cost. The cities of Anaheim, CA, West Hollywood, CA, and Montgomery
County, MD, have also outsourced parking enforcement and realized
substantially increased revenues and a lower parking enforcement cost per hour.
Most recently, Atlanta, GA moved ahead with plans for a parking ticket and
meter collection privatization initiative that is projected to increase revenue for
the City.
• Berkeley, CA uses private security guards at some city facilities. In 2005, the City
contracted with Securitas Security Services, USA to provide security guards at
two city office buildings. The guards were responsible for monitoring traffic,
providing information to visitors, directing citizens to appropriate city offices,
and securing public restrooms at the end of the day17. Berkeley has found it
more cost effective to use a contractor to secure public buildings than have City
employees provide service for very brief periods of time. Using contracted
security guards has also allowed for the flexibility to absorb staffing reductions
mandated by budget cuts, without the need to terminate unionized City
employees. In addition, the state governments of Kansas, New Mexico, and
Missouri also use private security guards at state office buildings, due to the
flexibility and cost savings offered by contracted security.
Parks and Recreation Services
• Los Angeles County, CA contracts out management and operation of 16 of its 19
county golf courses to small firms, groups of individuals, and larger management
firms. The contracting effort was intended primarily as a means to raise revenue,
and in very short time met that goal. By 1996, seven years after the privatization,
the County realized a 146 percent increase in annual revenue for its Mountain
Meadow Course18. Privatizing golf courses has also been a popular means for
cities to increase user fee revenue. From 1987 to 1995, the percentage of cities
contracting out for golf course services increased from 15 percent in 1987 to 25
percent in 199519. Other major cities such as New York, Chicago, and Detroit
16 Ibid.
City of Berkeley, CA; Office of the City Manager. Contract No.6818 Amendment: Securitas Security
Services USA Inc. April 22, 2008.
http://www.ci.berkeley.ca.us/uploadedFiles/Clerk/Level_3_-_City_Council/2008-04-
22_Item_33_Contract_No._6818_Amendment_Securitas_Security_Guard_Services_US A_Inc._for_l 947
_Center_Street_and_2180_Milvia_Street.pdf
18 Privatization of Municipal Golf Courses. Reason Foundation. 2006.
http://www.privatization.org/database/policyissues/golfjocal.html
19 Contracting Public Services Survey: 1995 Update. Mercer Group, Atlanta, GA.
Colorado Springs Sustainable Funding Committee - Services Subcommittee Page 14 of 21
have contracted out municipal golf courses and seen notable improvements in
facilities, conditions, and more importantly, annual revenue.
Transit
• Washington, D.C. has partnered with commercial landowners to finance
construction of a new transit station. In 1998, the government of the District of
Columbia developed a Citizens Plan for Prosperity in the 21st Century that
identified areas of the District in need of economic development. The Plan called
for the construction of a new, in-fill Metro station at New York Avenue to spur
development in the underdeveloped North of Massachusetts (NoMa) corridor. In
response, the District's Department of Housing and Community Development
and Department of Transportation worked with area commercial landowners to
come up with a creative solution to finance the project's projected $100 million
cost. The landowners agreed to donate land for the new station and pay an
annual development fee that generated $25 million toward the project. In the
end, the project was projected to generate more than $1 billion of total public-
private investment and over 5,000 permanent jobs in the area around the new
station.
Managed Competition
Managed competition is a competitive bidding model employed by some cities to test
the market for improved service delivery and lower cost. It is a structured, actively
managed, and transparent process allowing for comparison of in-house staff and
contractors and their abilities to deliver quality public services at a reasonable cost.
When implemented correctly, managed competition has the potential to produce
annual savings of 10-30 percent20.
Typically, managed competition is restricted to areas seen as not inherently
governmental, such as public works, park management, and transportation. Under the
process, a Statement of Work is distributed by a city to both private vendors and in-
house staff. When drafting a proposal, in-house staff are often forced to restructure
organizations and processes in a way that is more competitive with private vendors21.
Often, cities establish a "firewall" between Statement of Work and in-house proposal
draft teams, to ensure that in-house staff do not get an advantage through access to
internal information. Next, in-house and contractor proposals are evaluated by an
independent board. The board then selects a "best value" service provider according to
predetermined cost, experience, and quality criteria.
20 Elliott Sclar. The Privatization of Public Services: Lessons from Case Studies; Economic Policy Institute.
2004.
21 City of San Diego, CA. Mayor's Announcement of the Managed Competition Process. September 7,
2007. http://www.sandiego.gov/mayor/pdf/mcbrief070907.pdf
Colorado Springs Sustainable Funding Committee - Services Subcommittee Page 15 of 21
Managed competition has the potential to transform in-house service delivery, making
it more efficient, accountable, and cost effective. In addition, it forces city agencies to
examine service quality and gauge the full cost of providing a service, enabling them to
take active steps to improve performance. However managed competition also takes a
significant amount of planning to be successful. Reliable structures must be set up to
monitor, manage, and regulate the competitive process that can be costly to construct
and maintain. However these costs should be weighed against the potential benefits
from the program. When feasible, introducing the competitive mechanisms and
efficiencies of the private sector in city agencies can be a powerful means to reduce
costs and improve in-house operations22.
Examples:
• San Diego, CA has introduced managed competition to a host of city services,
including trash collection and street sweeping. Under Mayor Jerry Sanders' 2007
plan, private contractors compete with City staff for a range of non-
governmental service contracts, including one-fifth of San Diego's trash
collection routes. The City develops a Statement of Work and acquisition plan,
and disseminates an RFP to a City agency and private vendors. An independent
evaluation board, the Managed Competition Independent Review Board
(MCIRB), evaluates the proposals to ensure a level playing field, and then
recommends the "best value" proposal to the Mayor. The Mayor then either
accepts or rejects the MCIRB recommendation. If accepted, he forwards it on to
City Council for final approval. The Reason Foundation estimates that with an
expanded scope, the City has the potential to save $80 to $200 million per year
through the program23.
• Pittsburgh, PA has managed competition processes for select city services.
Under the City's program, City unionized employees and private firms competed
for contracts to provide fleet maintenance, animal control, and solid waste
collection services. In the end, the City selected a private vendor for fleet
maintenance services, with savings estimated to exceed $1.4 million a year. City
employees won the award for animal control services, with a proposal to save
over $50,000 the first year, and almost $500,000 over six years through a plan to
redesign existing operations.
• Charlotte, NC has a comprehensive managed competition program for a wide
variety of city services. Each of the City's Key Business Units (KBU'S) develops a
competition plan outlining what services will compete with the private sector
during the coming year. The plans contain a timetable for subjecting a service to
22 E.J. McMahon, A. Moore, & G. Segal. Private Competition for Public Services: Unfinished Agenda in
New York State; Civic Report 4. December 2003. http://www.manhattan-institute.org/html/cr_41.htm
23 Reason Foundation. "Study: Managed Competition Can Save San Diego S80-S200 Million a Year."
September 12, 2007. http://www.reason.org/news/san_diego_managed_competition_091207.shtml
Colorado Springs Sustainable Funding Committee - Services Subcommittee Page 16 of 21
competition, a strategy for making business practices more competitive, a
justification for retraining service in-house without competition, and the reasons
to contract with a private firm without managed competition24. Within three
years of the start of the program, the City had conducted 34 competitions, 24 of
which were awarded to the City agency and 10 to a private vendor. City workers
alone were able to achieve $2.4 million in savings in other services that were not
subjected to competition25.
• Indianapolis, IN began a managed competition process for fleet services in 1995.
The City gave its Fleet Services Division (IPS) three years to prepare for a
competitive bidding process. As a result, IPS focused its efforts on implementing
employee-generated reforms and strengthening its cost record-keeping and
performance measurement system. These innovations enabled IPS to develop an
accurate annual budgeting method and performance-based incentives. IPS also
implemented a market-based rate structure for its customers, which resulted in
the outsourcing of 20 to 25 percent of its work. By the end of the initial contract
period, IPS had reduced its total costs by 35 percent and managed to successfully
underbid all private vehicle repair firms that submitted bids.
Public-Private Partnerships
As mentioned earlier, public-private partnerships are unique ways of organizing public
and private stakeholders to provide valuable programs, projects, or services. These
partnerships have been used to advance a number of major civic projects that have
enhanced infrastructure, fostered community development, and improved public safety.
Public-private partnerships are particularly useful for achieving projects with high
upfront costs, but broad, long-term benefits.
Several major cities have adopted public-private partnerships to achieve goals in a
variety of program areas:
• Houston, TX's Project Houston Hope rehabilitates vacant tracts in inner-city
neighborhoods into affordable housing and then sells them to middle and low
income families. Since 2005, the city's Land Assemblage Redevelopment
Authority (LARA) has worked with Linebarger Goggan, the law firm responsible
for collecting delinquent taxes, to acquire tax delinquent, derelict properties and
redevelop them into attractive middle and low income housing. LARA and
Linebarger Goggan developed a legal process to sell a bundle of properties below
the amount of taxes owed and transfer them to LARA. LARA then engaged local
community development corporations to manage construction of affordable
housing on the properties. The City in turn utilized two of its homebuyer
24 E.S. Savas. "Competition for Municipal Services in Charlotte." National Council for Public-Private
Partnerships. http://www.ncppp.org/resources/papers/Savas_Charlotte.pdf25 Ibid.
Colorado Springs Sustainable Funding Committee - Services Subcommittee Page 17 of 21
assistance programs to secure buyers for the new homes. As a result, the
formerly blighted properties are back on the tax rolls at a higher value, while
saving the city $1 million each year in mowing and demolition costs26. Private
investment in inner city properties has also soared, raising property values and
attracting new businesses to the area.
• Washington D.C's Metropolitan Police Department partnered with Lockheed
Martin IMS to develop a red light photo enforcement program. In 1999, the
District negotiated an agreement with IMS under which IMS covers all up-front
capital expenses for the system in return for a contingency fee for each fine it
collects from violators. In addition, IMS handles all aspects of the program
including installation, image processing, vehicle owner identification, issuing
notices, and collecting fines at no cost to the District. In about one year, IMS
mailed 133,732 notices and collected $6,104,839 in fines, while red-light
violations at intersections with cameras dropped by an average of 47 percent27.
• Chicago, IL worked in partnership with major local corporations to develop a
popular new downtown park. The City was able to obtain $200 million of the
$450 million construction cost in private financing for the internationally
acclaimed Millennium Park28. In addition, during the construction phase, URS
Corporation provided complimentary staff for program and construction
management. The park has since caused a dramatic rise in surrounding property
values, an influx of new residential development, and a notable increase in
tourism. The park is also predicted to attract $1.4 billion in residential
development, 36 million visitors, and $1.9 billion in revenue from hotel,
restaurant, shopping, and entertainment venues over ten years29.
Outsourcing Advisory Boards
Outsourcing advisory boards are government commissions that oversee, plan,
coordinate, and assist outsourcing efforts. These boards have been used by states
across the nation to coordinate broad outsourcing efforts. At least 14 states have boards
and commissions related to competition and privatization, many of which provide
assistance to agencies in implementing outsourcing initiatives30. While not commonly
adopted by cities, an outsourcing advisory board can be an excellent way to coordinate
26US Conference of Mayors. "Houston's Hope for Affordable Housing."2007.
http://www.usmayors.org/bestpractices/buscouncil/pubpri07/houston07.pdf
27 National Council for Public-Private Partnerships. "Automated Traffic Photo Enforcement." 2000.
http://www.ncppp.org/cases/trafrlc.shtml28 Neighborhood Capital Budget Group. "Following the Money for Millennium Park." 2005.
http://www.ncbg.org/public_works/millennium_park.htm
29 Ibid.
30Gordon Higgins. "Privatization Proposals in Other States." Montana Legislative Services Division.
http://leg.mt.gov/content/publications/research/past_interim/blacrecomms.pdf
Colorado Springs Sustainable Funding Committee - Services Subcommittee Page 18 of 21
and sustain a broader outsourcing effort. In addition, they can provide the political
leadership for advancing an outsourcing initiative in a difficult environment.
Outsourcing in Colorado Springs has at times been executed on a relatively ad hoc basis,
with the Traffic Engineering Division noting that engineering contracts have been
executed that cost the City more than providing a service in-house. Outsourcing
advisory boards provide guidance, direction, and coordination for individual agencies,
ensuring that outsourcing is executed to produce the best results for a city. They are
also an excellent way to organize outsourcing efforts around a set of key contracting
principles. Furthermore, they can be used to undertake citywide planning on what can
effectively and affordably be outsourced and what should be retained in-house. The net
result might not always be the large-scale outsourcing of major city functions, but rather
a fundamental examination and reorganization of current business practices, policies,
and modes of organization in line with what is competitive.
Outsourcing in Colorado Springs
Colorado Springs currently makes extensive use of outsourcing. A significant portion of
the City budget is allocated to contract expenditures. In 2008, the City spent $178.1
million on outsourcing, including 410 contracts, 3,370 purchase orders, and over 55,000
credit card transactions. By comparison, the 2008 All Funds budget was $359.8 million31.
In the past, the City has tried to strike a balance between outsourcing contracts and in-
house work, as each option has certain advantages and disadvantages.
Below is an overview of the use of outsourcing in each selected City department or
division:
• City Clerk- The City Clerk's Office limits its use of outsourcing to ballot processing
and printing.
• Engineering- In the Engineering Division, outsourcing is used extensively for
design and construction work as well as for some project management.
Approximately 80% of engineering project work is outsourced. Some signal
construction and maintenance, the school safety program, the traffic count, and
much public infrastructure work for new developments are also typically
outsourced. In addition, project studies, reports, analyses, and designs are
typically contracted out to private vendors.
• Fire- Outsourcing in the Fire Department is limited to contracts for recruitment
exam testing, facility maintenance and repair, and engineering, and construction
31 Fiscal Year 2008 accounts for the period of July 1st, 2007 through June 30th, 2008. Outsourcing
expenditures are only for calendar year 2008.
Colorado Springs Sustainable Funding Committee - Services Subcommittee Page 19 of 21
services. However, emergency medical transport is outsourced by El Paso County
to a private operator, American Medical Response
• Parks, Recreation, and Cultural Services - Parks, Recreation, and Cultural
Services uses outsourcing in areas such as recreation programs, median mowing,
fence repair, and golf course operations.
• Fleet Management- Fleet Management uses contractors for some vehicle repair
work and inspections as well as all towing, acquisitions and disposals, and fuel
site maintenance.
• Streets - The Streets Division makes very limited use of outsourcing, engaging
Colorado Springs Utilities for major facilities work.
• Police - The Police Department uses outsourcing for non public related functions
such as IT, document shredding, towing, janitorial services, uniforms, fleet
equipment, property code violation clean-up, facilities repair and maintenance,
and outstanding fee collection. In addition, CSPD uses private security guards at
its vehicle impound lot.
• Transit - All Transit Services operations are contracted out to First Transit and
Veolia Transportation. These operators are responsible for all operations,
management, equipment, and maintenance of transit vehicles.
Outsourcing in Colorado Springs has historically been used for a variety of reasons,
ranging from the inability for the City to directly use unionized workers to a lack of in-
house time and expertise to provide a service. Although the City in the past has used
outsourcing on a case by case basis to reduce costs and the burden on in-house staff,
there remain select opportunities for expanded use of outsourcing, discussed in the
expenditure chapters. This would be greatly helped by a systematic examination of the
City's current use of outsourcing, the costs and benefits it imposes, and how it can be
better tailored to meet the city's service needs. The net result might not necessarily be
an increase in outsourcing expenditures, but perhaps a recalibration of the city's
outsourcing practices to produce better results.
Conclusion
In sum, outsourcing can be a powerful tool to improve municipal performance. Cities
across the nation have successfully used it to improve quality of service, raise new
revenues, reduce costs, and refocus on more critical priorities. When executed carefully
with certain guidelines in mind, outsourcing can be effective in achieving the City of
Colorado Springs' service delivery goals. Outsourcing is not something that can be done
passively; it requires a significant amount of preparatory work, management, and
attention to ensure it yields positive results. Although not always the best solution for
Colorado Springs Sustainable Funding Committee - Services Subcommittee Page 20 of 21
the City's service delivery problems, it can yield positive results when applied to select
service areas needing improvement. The City already makes very extensive use of
outsourcing; however there is an opportunity to use it a smarter and more effective way
to target areas in need of genuine improvement or significant cost savings. Selectively
harnessing the power of the private sector to add public value can only make Colorado
Springs a better place to live, work, and play.
Colorado Springs Sustainable Funding Committee - Services Subcommittee Page 21 of 21
Managed Competition...An "Outside-In"
Perspective
3 July 2006
At the direction of the Mayor and City Council, the city of Carrollton, TX (pop. 118,576) is in
the process of transforming the city's organizational culture from a traditional government model
to a strategically led competitive "service business" model.
At the direction of the Mayor and City Council, the city of Carrollton, TX (pop. 118,576) is in the
process of transforming the city's organizational culture from a traditional government model to a
strategically led competitive "service business" model.
To start this process, the city has created an internal Managed Competition program, which is a
competitive process where private service providers are encouraged to compete with city departments for
the opportunity to provide similar services,
What is Managed Competition?
Managed Competition means, quite simply, that each employee takes responsibility to manage service
delivery and internal operations in such a way to ensure that the city is competitive: that is, competitive
with the private sector; competitive with other organizations in the public sector; competitive within
Carrollton's own organization; and competitive in the sense that the city can demonstrate that they are
the very best at what they do in striving to offer the "best value" to their customers. City managers are
trained to look at their operations from an "outside-in" perspective. This means looking at service delivery
from both customer- and competitive service provider perspectives to ensure that city services are
provided efficiently and effectively.
"The primary objective of our Managed Competition process is not outsourcing but to ensure that the city
is receiving the "best value" service available in the marketplace from all city operations," said Tom
Guilfoy, Director of Competition for the city. "We help our internal units become more competitive by
helping them identify and benchmark against best-in-ciass competitors (both public- and private-sector),
restructure and re-engineer business processes and operating practices and improve management and
leadership capabilities. We involve front-line employees in the solution-building process and create more
of a 'one team' approach."
How does it workPThe continued provision of services through public employees must be justified
through the competitive evaluation process. Unlike traditional privatization or outsourcing, managed
competition allows for the governmental business unit currently providing the service(s) to participate in
a competitive bidding process with the private-sector to retain the right to continue providing services.
Each bidder is evaluated on the same service requirements including price, quality, competency and
capability of the provider, etc. The winning bidder is awarded the business for a defined period of time by
a written contract including measurable performance standards and budget parameters.
Business resources suggest that the presence and degree of competition leads to improved service
quality and lower service costs. A 2003 BusinessWeek article argued that "the public sector has not been
able to improve productivity as fast as the private sector - and certainly not fast enough to hold down
fiscal pressures." This may be true of other cities, but Carrollton is different.
The introduction of a "competitive mindset" within the city and the utilization of tools like benchmarking
and performance management have contributed to significant productivity gains in many city business
units. Rather than simply cutting services or service levels in response to budget constraints, city
managers are finding creative ways to restructure their operations and maintain or improve services by
"doing more with less."
A great example of the Managed Competition program is its effect on the city's Water Utilities Division
(WUD). An extensive 3-year managed competition process has resulted in Carrollton's Water Utilities
Division being declared substantially competitive. The endeavor involved a nine-member employee
committee—the Competitive Readiness Team—comprised of line and staff support personnel across the
city. Project milestones included:
• From 2001 to 2004, several internal and external operational studies and pre-competition assessments
were conducted that identified strengths and weaknesses and resulted in changes to work processes and
staffing levels to improve quality and cost-competitiveness.
• An internal Managed Competition Feasibility Study found WUD to be 'partially competitive' in December
2004.
• A WUD Re-engineered Work Plan was completed in January 2005 and the annual operating budget was
reduced by $605,000.
• Water operations management consulting firm, Brown and Caldwell, was hired to further define service
levels, performance measures and targets and to evaluate WUD's market competitiveness. Brown &
Caldwell's final report was issued in August/September 2005.
• The Managed Competition feasibility study team recommended to the city manager that WUD be
declared 'substantially competitive.'
• The City Council declared WUD competitive on November 1, 2005.
• In December, 2005 the City Manager's Office signed a five-year service and maintenance agreement
with the Water Utilities Division. All managers and employees signed the agreement.
"The Water Utilities Division is running like a business!" - Carl Carpenter, Water Utilities service
technician
"Employee attitudes have changed for the positive." - Tracy Moore, Wastewater Vactor Operator
Guilfoy said, "Over the past four years, we have evaluated the competitiveness of four city business units,
outsourcing one (our Solid Waste Division) and retaining three (Traffic Operations, Parks Maintenance
Operations, and Water/Wastewater Utilities). Currently, our internal Facility Services unit is preparing for
a competitive bidding process later this year to determine the 'best value' provider. We are also
evaluating the competitiveness of our Utility Billing and Collections operation."
In addition, Carrollton's Water Utilities Division is piloting a new "Employee Gainsharing" program, in
which "net gains" from internally generated cost reductions and incremental earned revenues are shared
equally between the employees and the city. If this program is successful, it will be expanded to other
business units that have proven they are "market competitive."
The Benefits of Managed Competition include:
• Reducing Waste, Surplus Assets and Inefficiencies - "Doing More with Less"
• Operating with a Greater Sense of Urgency
• Improving Inter-departmental Cooperation and Coordination
• Involving and Empowering Front-line Employees
Today, the city's public services are delivered in a variety of ways: by public employees, by contractors,
through partnerships, grants, inter-governmental agreements, contracts and regional collaborations. As
City Manager Leonard A. Martin has said, "The city's responsibility is not to provide all services internally
but to ensure that reliable, quality services are provided to our customers in the most cost efficient and
effective means possible. Our goal is to produce a value-driven government product—the highest quality
service at the lowest price possible." To that end, the city of Carrollton now utilizes many approaches to
deliver a variety of customer services - from solid waste, to parks mowing to water line replacement to
traffic operations and on and on...
Carrollton also provides services under contract to Denton County, The Colony, Farmers Branch and other
public entities.
"The city already competes, and very successfully in providing a variety of services," said Guilfoy. "We are
becoming a high-performance service business. It is important that we continue this effort, and utilize all
the tools at our disposal to adopt "best practices," learn new things, and continue our legacy of change
and innovation."
"Our city's Managed Competition has been a great success in helping city business units operate more
efficiently and effectively, which translates into better services for our customers at a lower total cost for
our taxpayers," he said.
For more information, contact Tom Guilfoy, Director of Competition for the City of Carrollton, TX at
972.466.3015 or email torn, auilfov&citvofcarrollton. com.
CARROLLTON
TEXAS
Creating Competitive and
Sustainable Communities
Washoe County/Reno/Sparks NV Briefing
April 19-20, 2011
Tom Guilfoy, Director of Competition
Desired Outcomes
• What Is Managed Competition(MC)?
• Why others have Implemented MC?
• What are the Results and Benefits of MC?
• What are Critical Success Factors?
• Carrollton's MC Process
• Employee roles & responsibilities
• Outsourcing - Pros & Cons
• Answer your questions and concerns
How our journey started...
City Council Strategic Goals FY2001-02:
1. Transform city organization to a service business
• Managed Competition program and attitude
• Create a sense of urgency among staff
• Stop studying things to death
• Focus on essential services
• Provide services with a large customer base
• It's OK to say 'No' politely and explain why
• If a service competes with the private sector -- drop it or price it
at market
• Create business plans for all departments
Only Two Choices?
1. Cut services or programs?
OR
2. Raise Taxes?
3. Transform culture to a Competitive
Service Business -- reduce costs,
streamline processes, adopt best
practices, leverage technology and
increase employee productivity...
The operating environment
Outstanding
People
Regular
Improvement
Flexibility
What do
today's
citizens expect of
city government ?
Accuracy
Seamless
Delivery
Competitive
Customized
Solutions
AAZIMUTHGROUP
Key Leadership Challenges
* Tighter budgets will be the norm for several years
* Need to separate essential from non-essential services
* Efficient and competitive service delivery is more critical
than ever
* Lower revenue and reduced staffing when citizen
demands are increasing
* Citizens are demanding higher government
accountability (No new taxes!)
* New service-delivery models needed to balance budgets
* Change the culture to a competitive "service business"
What is Managed Competition?
"A guided process where private-sector
providers are encouraged to compete with city
departments to provide public services/'
Our goal is not outsourcing but getting the
Best Value available in the marketplace
MC- A Brief History
Pioneered by the City of Phoenix's Public
Works Department in the late 1970s
Indianapolis's competitive services program
success (Mayor Stephen Goldsmith, 1992-
2000)
Other cities: Atlanta, GA; Chicago, IL;
Jacksonville, FL; Charlotte, IMC; San Diego, CA;
Arlington, TX; Glenview, IL; Germantown, TN
How is MC different than
Outsourcing and Privatization?
In outsourcing; the organization has already made
the decision to use an outside contractor but is still
responsible to ensure customer satisfaction
In privatization, the organization sells the operation's
assets and exits the business
In managed competition, in-house units restructure,
innovate and compete against external contractors to
provide services under contract
MC Toolkit
Operational Assessment/Best Practices
Competitive Assessment/Benchmarking
Cost-of-service analysis
Performance improvement plan & coaching
Competitive safeguards in place
Competitive readiness period
Performance measures and targets
Signed service agreements
Contract management
<v CARROLLTON
A' TEXAS
Managed Competition Process
Step 1: Select a candidate for evaluation
Step 2: Conduct in-depth operational and competitive
assessment
• Define all current services and functions. Group into
lines-of-business
• ID service costs; allocate all equipment & personnel.
Determine costs by LOB
• Benchmark against competitive service providers; ID
competitive gaps
• ID industry best practices and trends; ID gaps.
CARROLLTON
TEXAS
Managed Competition Process
Step 3: Strategic review with CMO; Options considered:
• Reengineer
Compete
• Retain as is
• Outsource/Partner
• Privatize
Step 4: Develop RFP or Reengineering work plan during
Competitive Readiness Period (3 mos- 3 years)
Step 5: Implement Work Plan; close gaps; measure results
Step 6: Sign Service Agreement; monitor contract
Managed Competition Progress
2002-2010
The Honor Roll
1. Solid Waste Operations (2002-03)
2. Traffic Operations (2004)
3. Parks Maintenance Operations (2004)
4. Water/Waste water Operations (2005)
5. Utility Billing & Collections (2006)
6. Facility Maintenance Services (2007)
7. Workforce Services (2008)
8. Payroll Accounting (2009)
9. Fleet Maintenance (2010)
10. Building Inspection & Planning (2010)
11. Risk Management (2010)
Cost Savings = $25+ Million and counting
Preparing Government Units for
Competition
Questions about current operations:
• What core businesses are we in?
• What level of service is currently being provided?
What is mandated by law?
• When was the last time we calibrated our current
service levels?
• What levels of service should we be providing?
Customer/Council expectations?
• What are our full costs?
• How can we streamline our internal business
processes to deliver services more efficiently?
Costs & Benefits of Allowing In-house
Competitive Bidding
Advantages of MC:
- Provides access to alternate suppliers
- Provides a level of safety when unsure of external market
- Spurs more internal reforms, culture change
- Gives in-house provider a chance to retain the business
- Employees are actively involved
Costs of MC:
- Increased costs for internal unit to prepare for competition
- Perception that in-house unit will get preference
- Competitive bidding process needs to be carefully managed
MC: Critical Success Factors
• Political leadership must be committed and involved
• Community political climate must be open to change
Stability = high probability for success
• Favorable marketplace dynamics
• Top management must be courageous and leaders of
change
• Employee communication, involvement, motivation
are key
How to Change the Culture...
1. Educate to the need for change
2. Define the new culture (vision and values)
3. Create strategic alignment at all levels
4. Build leadership/management skills and solve
problems (application)
5. Communicate continuously (never ending)
6. Systematize (implement changes in
measurements, systems and processes)
7. Coach to the desired behaviors
tt te a taw
iive
one ttvie fo
-President John F. Kennedy
Change is a Process
Awareness
Interest/Desire
Knowledge
Ability
Reinforcement
Shifting the Paradigm...
Traditional Gov't -> Service Business
• Service Based on • Business Based on
Tradition Community Needs
• Compare to other cities • Compare to private-
sector
• Expenditure focused • Cost conscious, creative
solutions
Meeting Citizen Needs with Fewer Employees
130,000
120,000
60,000
-
CTl (7> Ol Oi CT1 Ol Ol s §
t Population ••fitotfulltlme Equivalent
1050
1000
700
Cost Savings & Efficiencies
Since 2001
Business Unit j
Reductions
Accounting & Budget
Facilities Maintenance
Fleet Services
Public Works
Library
Parks
- FY2001FTES
••^••^i^raMMMHi^^^P^i^BMIBMBiMHVH^MMiMHMHMMHBi^B^BH
12
11
22
151
66.5
121.5
S^yaoiiFTEs .'
•(^•^•^^HBHBRaMKMMHMHMIMBMMIHHM^BMMHMMBMM^HMH^
10
7
11*
115.5
37.75
84.25
Increases:
388 420 FT
* Outsourced in 2010
1000
FTE Comparison by Type
900
800
700
600
500
400
300
200
100
FY04 FY07 FY10
Managed Competition Scorecard
Outsourced or Subcontracted
IT Operations (1998, 2010)
Solid Waste (2003, 2010)
Golf Course Maintenance (2006)
Fleet Maintenance (2010)
Risk Management (2010)
iI
Insourced & Retained
Traffic Operations
Parks Maintenance
Water & Sewer Line Maintenance
Utility Billing & Collections
Facility Services
Workforce Services (HR)
Payroll Accounting
Building Inspection & Planning
••""••ramnB*""^
COPY
Effective City Leaders
Visionary ("Create the Future")
- Grounded in reality
- Creative, "out-of-the-box" thinking
- Action-oriented
Team Builders ("Develop Partnerships")
- Internal cooperation and resource sharing ("One Team")
- Networked at the local, regional and state levels
- Works with public & private partners to get results
Re-engineering & Restructuring ("Continuous
Improvement")
- Streamline business processes
- Focus on core businesses
MC Program Building Blocks
A strong leader/communicator and a political
champion
Council Buy-in & Consistent Message
Must have uniform guidelines for how to conduct
fair, transparent public-private competitions
Change management is ultimately the
responsibility of senior leadership
Training for staff
Managed Competition Guide and Oversight Team
Cost Analysis, Benchmarking
Strong contract management
Q&A
Contact Information:
TOM GUILFOY
*> Director of Managed Competition, Strategic
Planning and Organizational Development
CITY OF CARROLLTON, TEXAS
972-466-3015
TOM.GUILFOY@CITYOFCARROLLTON.COM
* Managing Partner
THE GUILFOY GROUP LLC (OPERATIONAL AND COMPETITIVE
ASSESSMENTS, LEADERSHIP DEVELOPMENT)
972-571-7174
T.GmLFOY@VERIZON.NET
CITY OF BLOOMINGTON
City Manager's Office
Managed Competition
thSeptember 13m, 2010
Prepared By:
Ben McCready, Administration
Todd Greenburg, Corporation Counsel
CITY OF BlOOMiNGTON
Managed Competition
Executive Summary
Managed competition is an "umbrella" term, which describes the practice of conveying
competitive market principles to specific quantifiable services provided by the public
sector. The purview of managed competition includes many unique approaches to
introducing competitive market forces into the provision of public services. Not
necessarily intended as a means to remove a service from public provision, managed
competition often reflects the dynamic relationship between the public and private
sector1. Managed competition encourages a service to be provided at a competitive and
cost effective rate, outperforming private sector counterparts. It encompasses multiple
approaches and is beholden to no one paradigm. Managed competition is capable of
being applied to a number of services. A successful managed competition program is
characterized by the significant investment in time, staff, and resources utilized to design
guidelines that will insure both quality and dependability.
Definition
Although the term "managed competition" is often associated with "privatization", the
two concepts imply distinctly unique approaches to altering the relationship between
government and the provision of services. Managed competition provides government the
opportunity to test the market for improved service delivery and pricing options by
allowing both public and private entities to compete1. Business process re-engineering
(BPR) is a constant companion to managed competition, a process by which processes
are mapped and improvements are initiated2. BPR, acting as the base of a competitive
program, provides the quantifiable measures and analysis an organization requires to
remain competitive and innovative in the search for greater efficiencies.
In a simple view, "managed competition" is a term which falls under the umbrella of
privatization. Privatization by itself refers to a change in the producer or arranger or
public goods8. Just as the services provided by government are heterogeneous in nature,
there are many methods by which privatization takes places in the public sector. There
are three types of privatization; delegation, divestment, and displacement8. Managed
competition would best be described as "delegation". Under delegation a government
body maintains an active role, weather by promoting consumption of the service or
regulating its production via contract oversight and management.
Managed competition theory is rooted in the belief that if a private firm can successfully
reduce costs and return a profit, then government should be able to reduce costs by an
even greater degree3. The practice of managed competition is supported by the belief that
the private sector may be capable of adopting new technologies and implementing
innovative operating procedures that the public sector may be reluctant to adopt due to
policy constraints. The fundamental basis for managed competition requires that the costs
CITY OF BLOOMJNGTON
and benefits of providing a service via contracting and providing a service in house be
objectively compared. This has been the case in Charlotte, North Carolina, where a
combination of appointed committee members and audit staff continually revisit services
and assess their eligibility for managed competition. Managed competition works with
the dynamic nature of municipal organizations, revisiting, reexamining, and altering the
provision of services on a continual basis. In the Charlotte model, a service provided by
managed competition is not destined to be indefinitely provided by private sector
competitors, while no service provided by City staff is guaranteed to continually be
provided by the public sector.
Managed competition theory does not assume private business can perform more
efficiently at providing all services. By competing against the private sector to provide
services, the public sector gams the opportunity to challenge well established rules,
regulations, policies, practices, and organizational culture that creates the "way things
have always been done". Private providers often have a far greater degree of control
regarding pay and benefit structures compared to public sector organizations9. The nature
of the private sector relationship with labor allows private organizations to be more
flexible and respond to changing market conditions quickly9. Competition fostered by
managed competition is intended to provide the highest level of service at the lowest cost
possible. Managed competition is the means to an end, a way to infuse market-based
competition into a public service without promoting the wholesale transition of all public
services to private providers.
Process (See attached chart for more information)
The implementation of managed competition is a process, which is tailored to the
services and cities where it is being utilized. Guidelines should be detailed and
understandable4. The process typically begins with the creation of a committee, the
composition is determined by staff and elected officials, whose mission is to evaluate the
merits of service provision by both the public and private sector. The process also
includes a cost analysis phase, dependent upon industry data or local pricing. A detailed
cost analysis includes evaluating the total cost of ownership, taking into account the
direct and indirect costs11. After conducting a thorough cost analysis and audit of eligible
services, those identified as having a higher in-house cost compared to private sector
providers may be given a number of options. Staff may be afforded the opportunity to
improve operations or reduce costs, an informal bidding process may take place, or a
formal bidding process may begin. An informal bidding process evaluates fixed prices
provided by private firms to cost estimates from in-house departments. The formal
bidding process makes a fair and equal comparison between bids submitted by in-house
departments and private firms. Indianapolis experienced outstanding levels of success
introducing a managed competition environment to their fleet services division, without
ever contracting the service to an outside organization. City leadership allowed the
division three years to become competitive. After three years the in-house service not
CITY Of BLOOM1NGTON
only produced a winning bid by a $76,000 margin, but found an additional $75,000 worth
of efficiencies throughout the next year5.
The managed competition process does not end with the award of a contract. Managed
competition involves time, expertise, and staff to continually audit, benchmark, analyze
costing methodology, standards, evaluate proposals, and make recommendations to
service providers. Managed competition does not always result in the selection of the
"lowest" bid6. Municipalities may choose to take several factors in consideration. Factors
that the City of Charlotte consider include; past performance, financial stability, staffing
levels, and contract language exceptions6.
The implementation process takes time. In order to gauge efficiency, foster innovation,
and gauge responsiveness, assessments are required. The initial stage of managed
competition is characterized by awarding competitive contracts to one or more service
providers for short periods of time covering different segments of the community. This
method allows a municipality to adapt to the new environment, lowering the risk of
failure due to oversight or inexperience. A mature program will implement these reforms
on a broader basis.
Evaluating
Each step in the implementation process is unique and should be able to meet high
standards of reliability. Glenview, a community which has implemented some managed
competition programs, spent a significant amount of time reviewing candidate services
prior to implementing managed competition in select departments. The process is
described as being both length and painful9. Glenview relied on a Process Evaluation and
Efficiency Team (PREET)9. The team was responsible for answering difficult questions
which included;
• Are the levels of service appropriate for the needs of the customers?
• Is the service necessary?
• Is this the best way to provide the service?
• Are there efficiencies that are not being realized?
Determining the answers to difficult questions provided Glenview with the justification
for changes in service level, changes in the provision of a service, or the continuation of a
service. This phase laid the foundation for the cost accounting and implementation of
performance standards which would be used to guide any competitive bidding between
the traditional public provider and private sector counterparts.
Services
Creating a managed competition program involves addressing multiple issues. One of the
most prevalent issues is selecting the services which are most likely to achieve positive
results in a competitive environment. Municipalities provide a wide array of services,
staff with expertise in street paving, teaching swim lessons, preparing budgets, and
CITY OF BLOOMINGTON
writing tickets are all part of a municipal organization. Although most services deemed
eligible for managed competition tend to be ancillary services, an extensive list of
services are eligible for consideration. A service which already has reliable performance
indicators is likely to be a successful candidate for managed competition. A recent study
conducted in Seattle revealed that 67 services were identified as gooa candidates, but
only 23 of them were compared to the private sector. After completing their studies, 10 of
the services remained in house, 5 were awarded to outside contractors, and 8 are now
provided by a mix of public and private staff7. Some services which are often cited as
candidates for "managed competition" include: solid waste collection/disposal, custodial
services, printing services, street sweeping, sewer maintenance, security, vehicle
maintenance, billing, and public transportation. Indianapolis began developing a managed
competition program in the 1990's. Throughout the life of the program Indianapolis
experienced an average 25% cost savings for services eligible, overall Indianapolis has
credited a 7% reduction in their overall budget between 1992 and 1997 to managed
competition7.
Considerations
A successful managed competition program requires commitment and that leaders
confront contentious issues. Multiple areas of concern are brought to the forefront when
considering managed competition; leaders are often faced with difficult decisions
between lower costs and policy priorities. One area of concern is "flexibility", while
government employees are capable of making immediate changes in service delivery a
private contractor may require changes in service level be negotiated. Additionally a
private contractor may not place the same emphasis on community goals that the
leadership values. Contracting with a vendor always involves the potential risk of vendor
failure, creating a situation where the City would immediately become responsible for the
continued provision of a service4.
Managed competition inherently implies additional contract administration, transition,
and monitoring expenditures. In order to foster an innovative and competitive
environment, staff must routinely negotiate, interpret, and monitor contracts. The costs of
contract administration should be factored into the cost analysis. Investments in other
resources may include staff to conduct internal audits, provide legal expertise, manage
procurement, and other department specific staff. These resources are often required to
enable the municipality to negotiate with contractors on equal terms. Additional
considerations may include legislative restrictions, resistance to change, and public
perception. Moving a service from public to private provision may also carry with it a
"go away" cost, or any costs associated with labor contracts, selling equipment, or
meeting other statutory obligations.
Managed competition is not often described as a "silver bullet" or "one size fits all"
solution. The examples cited in this report are excellent examples of the many
alternatives, processes, and wide ranging applicability of managed competition. The
CITY OF BLOOMiNGTON
diversity of these examples includes not only their geographic location, but their
population and state legislative environment. In contrast to Illinois, North Carolina is a
"right to work" state. In Illinois, Washington and Indiana some employees may be
required to be part of a union as a condition of employment, in North Carolina this is not
the case. The City population and "right to work" status are outlined here;
Charolette, NC* 630,478 *Right to Work State
Seattle, WA 582,454
Indianapolis, IN 785,597
Bloomington, IL 74,975
Managed competition may precipitate changes in the provision of traditional publically
provided services. When a public organization provides services, it is often provided to
"residents", while when a private company provides a service that service is provided to
"customers". At a philosophical level how the "end users" of a service are viewed may
imply other changes. There are social values that are implicit with the provision of a good
or service, which may extend beyond the provision of the service10. Managed competition
inherently alters the role of government in the provision of a service and thus perceptions
of accountability. Under the guise of managed competition, local government transitions
from being a provider of a service to that of a roll of an observer.
EmpJoyee Union Impact
Two major laws regulate the relationship between Illinois governmental employers and
their employees; the Illinois Public Labor Relations Act (5 ILCS 315) and the Illinois
Educational Labor Relations Act (115 ILCS 5). These two acts are quite similar.
When a union is certified as the exclusive representative of a unit of public workers, the
governmental employer must bargain all decisions involving those workers which
directly affect the "wages, hours, and terms and conditions of employment" of the
represented workers. It must also bargain management decisions which impact wages,
hours and terms and conditions of employment. If a governmental employer refuses to do
either of these actions, it can be found guilty of an unfair labor practice, which could
results in the employer having to rescind the unlawful action and, possibly, having to pay
the legal expenses of the union in obtaining the judgment.
In all of the current City union contracts, the contract lists the workers classifications
represented by that particular union. The union contracts currently in effect permit the
City to decide how many workers are needed to perform the tasks those workers perform.
The union contracts also give the City the ability to lay off unionized workers. However,
the City does not have the ability under any of the current collective bargaining
agreements to lay off workers and then outsource jobs to outside contractors. Requiring
unionized employees to compete in the future with private vendors for the privilege of
continuing to provide services currently provided by those City employees is possible
6
CITY OF BiOOMINGTON
under Illinois labor law, but current law will not permit the City to undertake managed
competition in a unilateral manner.
In some cases the City must raise the issue of possible outsourcing during collective
bargaining, and the current contract language probably permits the union to refuse to
discuss outsourcing until negotiations commenc-? on the terms of a new collective
bargaining agreement. The City may raise the issue of possible outsourcing in its current
negotiations. Once negotiations commence on the issue of outsourcing union jobs, the
City could not commence bidding or procurement procedures with third parties which
could lead to possible outsourcing until agreement or impasse with the union(s) had been
reached.
Summary
As previously stated, managed competition is intended to expose a public organization to
private sector market forces. Managed competition is a means by which the public sector
may challenge the status quo or "the way things have been done". As a managed
competition program matures it begins to face a new gauntlet of obstacles, one being the
availability of participating vendors. Throughout the life of the program organizations
will ideally adapt and become increasingly efficient, with the potential to realize a natural
competitive edge which the private sector may be unable to duplicate. If the private
sector can perform more efficiently and earn a profit, then the public sector should be
able to perform equally as well at a lower cost3.
CITY OF BLGOA'UNGTO^
1. Deloitte & louche LLP Website (2008). Managed Competition: Proceed with Caution.
http://wvv'w.deloitte.com//view/en_CA/ca/;mdustries/govemment/0290a7d2770fbl
1 OVgnVCM 1 OOOQOba42fOOaRCRD.htm
2. City of San Diego (2007). Managed Competition Guide v 6.4
http://www.sandiego.gov/mayor/pdf/mcguide
3. Jensen, Ron. Managed Competition: A Tool for Achieving Excellence in Government
4. Braun, John (2009). Office of the Inspector General, City of Jacksonville, Florida.
5. Hai-Chiao Chang, Youhei Itou, Velika Kabakchieva, Lesia Lozowy, Ramon Munoz-
Raskin, Rene Ramos, Mark Seaman, Yasemin Tugce Turner (2005). Managed
Competition in Indianapolis: The Case of Indianapolis Fleet Services.
6. Elmore, David (2007). City of Charlotte's Privatization and Competition Advisory
Committee. httD://reason.org/news/show/1002747.html
7. Making Effective Use of Managed Competition (1995). Office of the City Auditor,
City of Seattle.
http://www.seattle.gov/audit/report files/950 l-ManageCompete.pdf
8. Savas, E.S. (2000). Privatization and the Public-Private Partnerships, Chatham House.
9. Piercy, Kate. (2009). Beyond "Business as Usual". Illinois Policy Institute.
10. Warner, M.E. and Robert Hebdon. (2001). Local Government Restructuring:
Privatization and Its Alternatives. Journal of Policy Analysis and Management
20(2)
11. Government Finance Official's Association. (2008). An Elected Officials Guider:
Competitive Options From Managed Competition to Privatization.
Managed Competition Process
*77us document reprcsnvs an example of a managed competition pwctss and is not intiicatrve of all managed comptatiior. programs
AH Receive
For the Information of the: %l CITY OFCITY COUNCIL V CARLSBAD
ACM
Tt <> Ci
Memorandum
July 15, 2011
To: Lisa Hildabrand, City Manager
From: Craddock Stropes, Management Analyst
Greg Hermann, Senior Management Analyst
Re: _ APPROACHES TO DELIVERING BEST VALUE SERVICES __
The City of Carlsbad, like public agencies throughout the country, is challenged to maintain its
high quality services with fewer resources. The prolonged economic downturn coupled with
the city's transition from a growing city to one focused on maintenance requires the city to
make a permanent shift in how it does business. Cost has become an even greater focus while
city leaders remain committed to meeting the community's high expectations for top notch city
services.
In February 2011, the Carlsbad City Council directed staff to research how other cities have
approached cost-effective service delivery as a first step in identifying possible models that
could be considered a good fit for Carlsbad. This report contains the findings of this research.
City of Carlsbad »1200 Carlsbad Village Drive » Carlsbad, CA 92008 » www.carlsbad.ca.gov
(t
CITY OF
CARLSBAD
Approaches to Delivering
Best Value Services
July 19, 2011
BACKGROUND
In this challenging economic climate, cities must re-examine their business models, processes and
capabilities to maximize efficiencies in service delivery. Innovation, flexibility and best practices must
be embraced in this new era of accountability and austerity.
Today cities are considering a broad array of alternatives to the traditional government model of
service delivery. Because cities vary widely in their service portfolios, relationships to other agencies,
and community values and expectations, no one method works across the board. Instead, successful
cities have chosen a combination of approaches tailored to their needs.
This report presents several approaches cities have taken toward delivering best value services. The
research examined how cities go about evaluating services; who the key decision makers were; and the
resulting service delivery options. This report is not intended as an exhaustive study of all options
available, but rather a summary of some of the prevalent strategies in use.
Service
Evaluation
Processes
Internal review
Competitive analysis
Managed
competition
Process Owners
Staff
City Council /
Elected officials
Citizen committees
Service Delivery
Options
• In-house services
• Contracted services
• Shared services
• Privitization
SERVICE EVALUATION PROCESSES
Performing a service evaluation, or assessment, is a critical first step toward identifying areas in which
cities may improve their ability to provide best value services. Service evaluations typically include:
• Analysis of current service levels and their alignment to community values and expectations
(should we be in this business?)
• Evaluation of current methods of service delivery: quality, costs, unique circumstances
• Analysis of current business processes and areas for increased efficiency
• Development of future service delivery expectations (benchmarks and quality measures)
• Completion of fully loaded cost analyses by service
Cities typically employ one of the following processes in order to evaluate their services.
Internal Review
An internal review provides a self-assessment of a service's current level of effectiveness and
efficiency. Internal review may include an evaluation of current performance measures, benchmarking
against other agencies, and application of best practices.
For example, the city of Vista recently used a peer-review process for evaluating a department's
effectiveness. Departments were asked to examine what services are provided and evaluate the
reasons why the service is being offered, along with a services cost analysis. The information was then
reviewed by two other department heads to provide an outside perspective to the department's
operations.
A common resource used by cities performing internal reviews is the International City/County
Management Association (ICMA) Center for Performance Measurement. This organization is dedicated
to helping local governments measure, compare, and improve municipal service delivery and regularly
produces reports and analysis on best practices in benchmarking and business process review.
Competitive Analysis
A competitive analysis compares a city department's current capabilities, costs and performance with
other potential providers to determine the city's level of competitiveness. Often potential providers
participate in an RFP (Request for Proposal) or RFQ (Request for Qualifications) process to allow cities
to assess current market pricing for a service.
In the city of Vista, comparisons to private sector providers through a RFP process revealed
opportunities for cost savings in public works, parks maintenance, recreation, janitorial and street
striping. In addition, a reduction in service levels was accepted in some cases. A comparison of in-
house Information Technology.(IT) services to private sector providers did not show significant cost
savings would be achieved by contracting out the services. By contrast, in the city of Costa Mesa, city
staff were asked to perform analyses after receiving layoff notices, which resulted in a severe
undermining of staff morale and public trust.
Atypical competitive analysis process is illustrated below.
Perform Services
Assessment
Service remains in-
Determine
candidates for
competition
Conduct
competitive
analysis
Develop
competition
materials
Solicit and
evaluate only
external
proposals
Select vendor Develop
transition plan
Monitor cost
performance
measures for
accountability
Managed Competition
Managed competition is a guided process in which private-sector providers are encouraged to
compete with city departments to provide public services. While internal review and competitive
analysis are fairly common practices among cities, managed competition is less familiar and requires
greater explanation. Managed competition allows city departments to compare efficiency and
effectiveness to "best in class" service providers, regardless of whether they are in the public or private
sector. While competition may lead to an alternate service delivery option, such as contracting out,
the ultimate goal of managed competition is to receive the "best value" available in the marketplace
no matter who provides the service.
Under managed competition, a business unit or department is selected for evaluation based on the
potential for cost savings and performance improvements. An in-depth operational and competitive
assessment is performed that includes comprehensive cost-accounting analysis, competitive
benchmarking against private sector competitors, and comparisons to industry best practices and
trends. If the unit is not deemed to be sufficiently competitive with the private sector (within 10
percent cost margin), then the unit is given a competitive readiness period in which unit managers may
work on ways to become more competitive, such as changing business processes or staffing re-
organizations. The competitive readiness period may vary from a few months to a few years. During
this period, the city will develop an RFP outlining the performance expectations. At the end of the
competitive readiness period, if the unit is deemed "competitive" it may win the contract and all
employees in the unit sign the service agreement with the city.
Managed competition began in 1978 with the city of Phoenix, AZ. The initial efforts were in the field of
solid waste collection. After losing several bids, the city's Public Works Department increased its
efficiency by introducing new skill sets, changing systems and using new technology. Over time, the
department won back all of the contracts previously lost to private firms. Since that time a number of
other cities including Indianapolis, IN, Philadelphia, PA and San Diego, CA have all implemented forms
of managed competition.
The City of Carrollton, TX has become a model for managed competition in mid-sized cities. Carrollton
has a population of 129,209 and a general fund budget of $74.9 million for fiscal year 2010-11.
Following a population boom in the 1980s, city residents enjoyed a high quality of life with services
provided primarily by city employees. As the city approached build out, the severe downturn in the
dot-corn and telecom industries left city officials looking for more efficient solutions for service
delivery. Several City Council members supported the city manager's new approach: to hire a director
of competition to develop a managed competition program. The program would change the culture
from one of entitlement to a "service business" model, in which everyone strives to deliver the highest
quality of service at the lowest cost.
Over the past nine years, the City of Carrollton has successfully evaluated 11 areas under managed
competition. Of those, five areas were ultimately contracted to the private sector: IT, solid waste, golf
course maintenance, fleet maintenance and risk management. The result has been a reduction of
118.5 FTE and more than $25 million since 2001. The six areas retained in-house were traffic
operations, parks maintenance, water/wastewater operations, facility services, payroll accounting, and
building inspection and planning.
By contrast, managed competition in the City of San Diego has become a politically charged, slow-
moving process. In November 2006, San Diegans voted to approve Proposition C by a 60 percent to 40
percent margin, thereby allowing the city to utilize competition among city agencies and the private
sector with the goal of delivering quality services in the most efficient and economical means possible.
Objections by city employees' labor unions, dissention among city staff and elected officials, and
mismanagement of consultants has resulted in a contentious Managed Competition Guide that stirred
public controversy over the guide's fairness and effectiveness. In the City of San Diego, managed
competition is a public process managed by a seven-member Managed Competition Independent
Review Board that advises the city manager whether a city department's proposal or an independent
contractor's proposal will provide the services to the city most economically and efficiently while
maintaining service quality and protecting the public interest. The first managed competition process
was completed in May 2011 for printing and reprographic services. The city department won the bid
by reducing its budget by $1.08 million. Other services to be examined include fleet, public utilities,
street sweeping, street and sidewalk maintenance, and landfill operations.
A typical managed competition process is illustrated below. The differences between this flowchart
and the previous competitive analysis flowchart are the additions of the business process analysis,
competitive readiness period and the ability for internal groups to submit proposals.
Perform Services
Assessment
Service remains in-
Determine
candidates for
competition
Conduct business
process analysis
Implement new work
plan/ competitive
readiness period
Develop
competition
materials
I
Solicit and evaluate
employee and
external proposals
Select vendor
Service remains in-
Develop
transition plan
Monitor cost and
performance
measures for
accountability
mmm^
The table below summarizes some considerations for each service evaluation process:
Considerations
Internal review Typically part of regular annual review
Focus on continuous improvement
Offers perspective on performance as compared to other cities
Typically only compares cities to other cities, rather than to best in class
providers
Challenging to ensure consistent methodology across all departments
Due to routine nature, tendency to continue "business as usual"
Competitive
Analysis
Provides snapshot of potential cost savings
Limited time frame
Allows for isolated examination of very specific areas of service
Can be performed by in-house staff
Short-term approach
May not lead to sustained effort
In-house analytical tools may not be comparable to private sector
Comparisons may not be "apples to apples," as in-house service delivery
model will likely differ from private sector
Managed
Competition
Long-term strategy
Transforms the organizational culture
Improves internal coordination and cooperation and empowers
employees
Creates desire for innovation and change
Requires significant time investment
Can negatively impact morale in the short-term
May cause reductions in staffing or increase employee turnover
Perception that in-house unit will receive preference
PROCESS OWNERS
Cities have made different choices regarding the roles of staff, elected officials and citizens in the
service evaluation process and the selection of appropriate service delivery options. Rigorous and
thorough analysis using valid methodologies is vital to the ultimate success of any effort, no matter
who performs the analysis.
Staff
Staff typically plays a critical role in service evaluation processes, providing the data and background
knowledge necessary for the evaluation. Some cities have engaged staff at all levels, from line workers
to department heads. Many cities studied for this report utilized teams of analysts across various
departments supervised by an administrative services director or deputy city manager to perform the
services evaluation. Often the lead role in these teams was assumed by staff from finance or the
department head of the service area being studied.
A city manager, or executive team, may be a final decision maker for staffing and contracting decisions
that fall within their range of authority.
Engaging staff throughout the services evaluation process and selection of service delivery options
builds buy-in, and creates a sense of transparency and fairness that contributes to the success of any
effort. A perception of favoritism may exist when staff is exclusively responsible for evaluating their
own performance; therefore a mechanism for independent audit is also necessary, whether the
auditor is internal or external to the organization.
City Council / Elected Officials
A city council or other elected officials are typically responsible for making final policy decisions
regarding service delivery methods. As stewards of taxpayer resources, a city council or elected body
often initiates efforts to improve a city's effectiveness and efficiency in response to community needs,
economic realities, or a desire for continuous improvement. The council or elected body then
approves policies regarding various service delivery options, and awards contracts.
The degree to which elected officials become directly involved in service evaluations and selection of
service delivery options varies. In Redding, CA, all five city council members served on a privatization
committee along with two former city council members, a former city department head and two
former mayors to identify outsourcing opportunities. However the committee disbanded within a few
months due to an overly broad scope. Some city councils designate a council liaison to work with staff
or a citizen committee to perform research and make recommendations on service delivery options.
The city council in the City of Rockford, IL tasked its Budget and Finance Advisory Committee to create
an Outsourcing Subcommittee to select and work with a contractor to identify and study potential
service delivery options and opportunities. Subcommittee members included three council members
and five community members with staff support from the city's director of administrative services.
After delivering the results of the consultant's assessment and making recommendations to the City
Council the Outsourcing Committee continued to meet, monitor progress and provide guidance as
services moved from RFP to contract.
City Councils provide leadership and guidance to an efficiency effort; however elected officials should
take care to avoid any conflicts of interest that may arise from their involvement in the research and
services evaluation process. Maintaining openness and transparency throughout the process is vital to
the credibility of the outcome.
Citizen Committees
Some cities have utilized citizen committees to advise them on identifying appropriate service levels,
efficiencies and outsourcing opportunities. Such committees can be used to coordinate and sustain
broad efficiency efforts, and offer leadership for advancing efficiency initiatives.
In Charlotte, NC, the Mayor and City Council appoint an 11-member Privatization and Competition
Advisory Committee. Members include three technology professionals, two bankers, two small
business owners, two real estate professionals, one attorney and one purchasing professional. Staff
support is provided by the assistant city manager and two department heads. The full committee
meets monthly, while sub-committees assigned to specific key business units (departments) meet on
an ad hoc basis. The role of the committee is to evaluate the city's five-year competition plan to
determine which services should be considered for competition. The committee monitors staff reports
on benchmarking, MOUs, costing methodology, production standards as well as development and
evaluation of RFPs and final selection of service providers. The committee also has oversight of
department performance, and may influence service delivery levels.
The City of Colorado Springs, CO, appointed a 20-member Sustainable Funding Committee to study
ways the city could become more self-sustaining through adoption of operational efficiencies and
innovation, outsourcing and consolidation of services, and new revenue sources. The committee met
over the course of a year and worked with a financial consulting firm to deliver a comprehensive list of
recommendations to achieve financial sustainability.
SERVICE DELIVERY OPTIONS
The results of a service evaluation often cause cities to further examine the feasibility of various service
delivery options. During the process of identifying appropriate service delivery options, cities have
generally focused on the following key factors:
• Potential for cost savings and performance improvements as identified through operational
assessments;
• Availability of reasonable competitors;
• Ability to clearly articulate desired outcomes through clear performance measures;
• Level of expertise in contract negotiations, management and monitoring
Although some cities may favor one approach to service delivery more than others, most cities use a
combination of methods to deliver services in the most effective and efficient manner in line with their
community's values.
In-House Services
In-house services are those provided by entirely by city staff. Functions such as budget control,
business planning, policy making, and performance management are typically considered best
performed by city staff to hold contractors accountable and maintain public trust.
A 2007 study by the International City/County Management Association (ICMA) revealed the most
common services provided in-house included: inspection and code enforcement; crime prevention;
traffic control and parking enforcement; administrative support; personnel support; public
information; water distribution; fire suppression; recreation facilities operation and maintenance; data
processing and building security.
Retaining services in-house affords greater direct control over employee work assignments and
availability, and allows agencies to immediately deploy resources in the event of an emergency. It also
facilitates the growth of historical or institutional knowledge, which supports a sense of continuity of
services. In-house staff generally has a greater sense of pride and ownership over their work, which
contributes to high quality levels and customer service. Fostering staff loyalty to a common
organizational vision, mission and strategic goal creates a team environment that often allows agencies
to leverage shared knowledge and quickly repurpose available staff that is already familiar with the
agency's values and expectations.
Contracted Services
Contracting typically involves a competitive bidding process in which requests for proposals or bids are
disseminated to eligible vendors. Proposals are evaluated and a contract is awarded to an appropriate
vendor is selected to perform the work. Contractor performance is monitored and managed by city
staff with pre-defined performance standards.
Contracting is used by cities across the country to reduce costs, improve or maintain quality of service,
and raise revenue. Contracting services, however, does not relieve cities of the responsibility for the
quality, responsiveness and cost of a service; but rather allows cities to provide the services with
external rather than internal resources. According to the 2007 ICMA study, half of all chief
administrative officers have studied the feasibility of contracting services within the past five years.
Although nearly 80 percent of cities that have moved toward contracting have reported cost
reductions of an average 15 to 20 percent, 22 percent ended up returning contracted services in house
due to unsatisfactory service quality and insufficient cost savings.
Common services that are contracted include: building inspection, collections, cultural arts programs,
fleet management, IT, parks maintenance and tree trimming, senior services, sewage collection and
treatment, solid waste, street sweeping and maintenance, tax assessments and bill processing, utility
billing, water treatment, and workforce training and development.
Contracting services carries benefits such as access to specialists who would not normally be on staff;
shifting of liability risks; and the potential for significant cost savings. Among the disadvantages are
loss of direct control over staff availability; loss of city identity or character as a result of diffused
service providers that residents may not associate with the city; and the increased risk for contractors
10
to be subjected to economic impacts on their businesses that may in turn impact their ability to fulfill
their contract obligations.
A thorough and accurate analysis of internal cost-of-service that calculates the "true" fiscal impact of
going to an outsourced model, including contract administration costs, is a necessary first step toward
adopting a contracted services model. Complete evaluation of procurement requirements, legal
limitations and other requirements is also valuable.
Success factors for a contracted services model include developing measures and standards that hold
contractors accountable to performance levels; clearly articulating outcomes such as improved
effectiveness, improved efficiency or new capabilities; continuous communication with contractors
over performance expectations and regular re-evaluation of contract scope; and keen oversight and
monitoring of contractor performance, including prompt corrective actions when contract
performance measures are not met.
Shared Services
Shared services, or consolidation, is a collaborative strategy that concentrates related resources
performing like-activities, to service multiple partners at lower cost and with higher service levels.
Services may be shared among cities, with a county or state agency, or private entities.
Implementation methods include sharing functions between entities, merging multiple entities into a
single entity, transferring management and execution to an outside provider, or creating a new entity
to serve a specific purpose.
In order to successfully implement a shared services solution it is critical that agencies find partners of similar
size and capabilities and define power and cost sharing structures early in the relationship. It is also important to
engage or gain public credibility regarding the feasibility or appropriateness of a particular shared service. An
inappropriate assessment of the scope of services or selecting partners incompatible with organizational values
and expectations can lead to inconsistent levels of service and a severing of the relationship.
Shared services are common in service areas, such as records management, human resources and
finance. These areas allow agencies to realize cost savings through consolidation of management FTE
and balancing of workloads for line staff.
Privatization
Privatization refers to a shift in responsibility for service provision from the public sector to the private
sector. In general, there is no control by a public agency over how services are provided or if they are
provided at all. One form of privatization are franchise agreements which typically award a private firm
an exclusive right to provide a public service or operate a public asset, usually in return for an annual
lease payment (or a one-time, upfront payment) and subject to meeting specific performance
expectations. In many jurisdictions common utility services—such as telecommunications, gas,
electricity and water—are provided through long-term franchise agreements. Franchise-based
privatization initiatives may involve the privatization of an existing government asset, such as a toll
road, water/wastewater plant or airport, though similar arrangements can be used to finance, build
and deliver new infrastructure assets as well. Chicago's $1.8 billion lease of its Chicago Skyway toll
11
road, $1.15 billion lease of its downtown parking meter system, and $560 million lease of four
downtown parking garages are recent examples of the franchise approach.
Privatization may involve government getting out of a service, activity or asset entirely. This is
accomplished by eliminating a service (such as recreation programs) and referring the public to private
providers, or through sales of aging or underutilized land, buildings, and equipment and returning the
assets to private commerce where they may be more productively used.
SERVICE EVALUATION AND DELIVERY IN CARLSBAD
The City of Carlsbad has held a steadfast commitment to continuous improvement, and offering top
quality services.
Steps the city has taken over the years to maintain or improve effectiveness and efficiency include:
• Citywide annual performance measurement system
• Annual citywide surveys
• Citywide staff realignment
• Routine benchmarking against other cities/agencies
• Routine reviews and updates of business policies, processes and procedures
• Contracted services totaling approximately $25 million in FY 11 in operating costs (see Appendix
A)
• Shared services examples include Encina Wastewater Joint Powers Authority, Fire Service
Boundary Drop, Carlsbad Watershed Urban Runoff Management Program
In addition, a team of city staff worked on a goal team to study managed services. The team produced
a manual containing consistent guidelines departments can use to evaluate the costs and benefits of
providing programs and services in-house versus through a contractor. It was determined that at a
minimum, the managed services process would be used when departments need additional resources
to implement new mandates or introduce new or expanded programs or activities. The services
assessment and cost analysis tools from the managed services process could serve as a good first step
in evaluating existing programs for their appropriateness for alternative methods of service delivery.
SUMMARY
The City of Carlsbad is committed to providing excellent service at the best value to taxpayers.
Although the recession is officially over, the economic environment is forever changed. Economists
predict a long, slow recovery. Residents are demanding more accountability than ever from local
government. High levels of service are expected, despite fewer resources available to provide them.
Ensuring the city's long term financial health requires a permanent shift in how the city does business.
The city is transitioning to a new model for local government that combines the spirit of public service
with an increased focus on innovation, efficiency and value for the taxpayer's dollar. The city's
12
ultimate goal is to continue to deliver the same high levels of service and resident satisfaction, but at
lower cost to taxpayers.
Research conducted for this report offers several approaches cities have taken toward delivering best
value services. Approaches varied depending on several conditions, including but not limited to,
community values and expectations, economic need and availability of reasonable competitors. The
first step is a service evaluation process which may take the form of an internal review, competitive
analysis or managed competition. Stakeholders in this process include staff, elected officials, citizens
and businesses; the level at which each stakeholder group is involved has varied among cities with the
city council or an elected body typically taking on the ultimate responsibility for accepting the results of
a service evaluation and making policy decisions regarding service delivery options. Following the
completion of a service evaluation, cities determine the appropriate mix of service delivery options.
Many cities opt for some combination of in-house, contracted and shared services; although some
cities have gone a step further and made policy decisions that indicate a preference for a particular
service delivery approach. The cities most successful at sustaining the delivery of best value services
routinely undergo consistent service evaluations to achieve their goals.
13
KEY TERMS
Internal Review
A service evaluation process that involves a self-assessment of a service's current level of effectiveness
and efficiency; often includes performance measurement systems, benchmarking against other cities,
or best practices
Competitive Analysis
A service evaluation process that compares the city department's current capabilities, costs and
performance with other potential providers, often through an RFQ (Request for Qualifications) process
Managed Competition
A service evaluation process that guides city departments through competition with the private sector;
typically provides guidance for restructuring, training, innovation or other support necessary to
become competitive
In-House Services
A service delivery option that utilizes city staff exclusively
Contracted Services
A service delivery option that involves a competitive bidding process in which RFPs (Requests for
Proposals) or bids are disseminated to eligible vendors and a contract is issued to the successful bidder
Shared Services
A service delivery option that concentrates related resources performing like-activities in order to
service multiple partners at lower cost and with higher service levels
Privatization
A service delivery option in which service provision is completely transferred from the public sector to
the private sector, i.e. franchising, sales, divesture
14
METHODOLOGY
The research presented in this paper was distilled from a broad review of available data, including:
• Quantitative and qualitative research studies conducted by other cities and trade organizations
• Academic research
• Articles from newspapers and trade publications
• White papers compiled by industry experts
• Case studies from other cities and public agencies
• Interviews with representatives of cities
Resource Articles and Presentations
Accenture, "Cross-Jurisdictional Collaboration: New Models for the New Normal", presentation for Alliance for
Innovation Alternative Service Delivery Options workshop, Feb. 17, 2011
Breier, Michelle, San Diego Union-Tribune, "Escondido identifies potential services for outsourcing," April 11,
2011
Brown, Trevor and Potoski, Matthew, Public Administration Review, "Contract-Management Capacity in
Municipal and City Governments", March/April 2003
Brown, Trevor; Potoski, Matthew, and Van Slyke, David, "Managing Public Service Contracts: Aligning Values,
Institutions and Markets," presented at 2005 National Public Management Conference
City of Colorado Spring Sustainable Funding Committee, "Outsourcing Methods & Case Studies", April 10, 2009
Deloitte & Touche LLP, "Managed Competition: Proceed - But With Caution", 2005
Elmore, David, "City of Charlotte's Privatization and Competition Advisory Committee", 2007
Foley, Sarah, Caller.com, "Privitization: the outsourcing of some city-run service," Jan. 30, 2011
Gilroy, Leonard, Reason Foundation, "Annual Privatization Report 2010: Local Government Privatization"
Government Finance Officers Association, "Managed Competition as a Service Delivery Option", Oct. 6, 2006
Greenburg, Todd and McCready, Ben, City of Bloomington, IL Managed Competition report, Sept. 13, 2010
Guilfoy, Tom, American City & County, "Managed Competition: An 'Outside-in' Perspective", July 3, 2006
Guilfoy, Tom, "Creating Competitive and Sustainable Communities," presentation to Washoe
County/Reno/Sparks, NV, April 19-20, 2011
Howland, Lance, Public CEO, "Cities move towards contracting out library systems", Nov. 22, 2010
ICMA Profile of Local Government Service Delivery Choices, survey of county and municipal chief administrative
officers, 2007
Jensen, Ron, Michigan State University, "Managed Competition: A Tool for Achieving Excellence in
Government", 1995
Johnston, Jeff, American City & County, "New City, New Rules", Dec. 7, 2010
Lauria, Paul, Automotive Fleet, "Fleet Management Functions T hat Should Never Be Outsourced", September
2002
Lobeck, Joyce, Yuma Sun, "City found outsourcing would increase cost of services," Feb. 5, 2011
National Council on Public-Private Partnerships, American City & County, "6 Keys To Public-Private Partnership",
April 21, 2010
Padovani, Emanuele and Young, David, "Managing High Risk Outsourcing", presentation to International
Research Symposium on Public Management, April 8, 2005
15
Serna, Joseph, Daily Pilot, "Almost half of city work force gets pink slips," March 2, 2011
Staley, Samuel, Reason Foundation, "Cities Privatize to Fill Budget Gaps", Aug. 22, 2010
Thrive Washington/Washington Research Council, "The Case for Contracting Out: A Vital Tool to Help Balance
Washington's Budget and Improve Public Services", December 2010
Titch, Steven, Reason Foundation, "How IT Outsourcing Succeeds", March 30, 2011
16
APPENDIX A
Contracted Services
CATEGORY FY 10 FY 11
ACTUAL ESTIMATE
Administrative Support
Animal Control Services
Arts/Entertainment
Audio/Visual
Equipment
Benefits Administration
Building Maintenance
Catering Services
Classes/Camps/Leagues
Coastal Monitoring &
Issues
Communications
Concrete Saw Cutting
Custodial
Design Services
Electrical Services
Engineering Services
Equipment
Maintenance
Fence Work
Financial Services
Graphic Design
HHW Programs
Hiring Recruitment
Inspection Services
Lab Testing
Landscape Maintenance
Landscaping
Legal Services
Legislative Programs
Management
Consulting
$ 17,100
$ 500,849
$ 247,550
$ 43,500
$ 193,732
$ 480,875
$ 184,000
$ 573,100
$ 40,000
$ 146,077
$ 10,820
$ 242,730
$ 7,026
$ 293,719
$ 164,665
$ 563,326
$ 16,070
$ 641,341
$ 80,050
$ 216,988
$ 16,311
$ 195,597
$ 85,036
$ 730,000
$ 47,784
$ 181,314
$ 144,845
$ 216,350
$ 24,000
$ 495,970
$ 242,290
$ 47,000
$ 214,000
$ 460,610
$ 184,000
$ 609,000
$ 52,000
$ 69,815
$9,127
$ 244,718
$ 5,184
$ 270,335
$ 59,198
$ 619,616
$ 12,000
$ 649,700
$ 82,000
$ 200,712
$ 13,500
$ 135,747
$ 93,404
$ 854,000
$ 61,882
$ 177,343
$ 122,940
$ 63,520
Misc. Outside Services
Misc. Prof. Services
North County Dispatch
JPA
Plan Check Services
Planning Services
Printing Services
Recycled Water Facility
Regulatory Compliance
Security
Software Hosting
Software Programming
Solid Waste
Storm Drain
Maintenance
Street Maintenance &
Repair
Street Sweeping
Study/Analysis
Survey
Technology Services
Testing
Traffic Signal
Maintenance
Training/Certification
Tree Trimming
Vehicle Maintenance
Video Production
Wastewater
Maintenance
Wastewater Treatment
Water Maintenance
Web Services
$ 777,723
$ 302,676
$ 439,144
$ 319,805
$ 304,529
$ 66,434
$ 846,013
$ 238,272
$ 202,840
$ 142,200
$ 138,034
$8,491,955
$ 105,476
$ 151,830
$ 278,823
$ 348,561
$ 83,965
$ 175,385
$ 19,510
$ 487,536
$ 218,803
$ 129,000
$ 645,291
$ 142,000
$ 31,877
$3,134,528
$ 134,688
$ 48,600
$ 766,444
$ 273,964
$ 443,000
$ 690,000
$ 415,048
$ 69,000
$ 800,000
$ 185,110
$ 210,342
$ 143,325
$ 135,561
8,511,947
$ 118,240
$ 164,915
$ 282,000
$ 264,381
$ 58,555
$ 137,614
$ 25,000
$ 611,590
$ 244,791
$ 329,000
$ 510,913
$ 205,500
$ 86,386
$3,075,830
$ 298,132
$ 74,000
Grand Total $24,686,2$! $25,204,199
17
AMENDED IN SENATE APRIL 25, 2011
SENATE BILL No. 833
Introduced by Senator Vargas
(Coauthor: Assembly Member Hueso)
February 18,2011
An act to amend Section 44002 of add Section 44000.6 to the Public
Resources Code, relating to solid waste.
LEGISLATIVE COUNSEL'S DIGEST
SB 833, as amended, Vargas. Solid waste: disposal facilities permit.;
San Diego County.
1 nc
(1) The California Integrated Waste Management Act of 1989
regulates the management of solid waste. The act authorizes that the
California Integrated Waste Management Board may designate and
certify a local enforcement agency within each county to cany out
SpCCinCQ pOvVCiS (ItlQ OilLlC3? atlQ rCCjUlrCS IfiC DOclrCl flJlCi CCfilTlCu 10C9.J.
cniorccmcirc agencies to pcnorin spcciiicci ruiiciioiis iviiii rc^cirQrio iric
regulation of solid waste management, including the issuance of solid
waste facilities permits.
Existing law prohibits the operation of a solid waste facility without
a solid waste facilities permit and authorizes an enforcement agency to
issue 3. soiiQ vVcistw inciiitics pciiiiii oniy ir it dciciiiiiiics trizit ixic pcrmiT
application is consistent with the requirements of the act prohibits a
person from disposing of solid waste, causing solid waste to be disposed
of, arranging for the disposal of solid waste, transporting solid waste,
or accepting solid waste for disposal, except at a permitted solid waste
disposal facility. A violation of the provisions prohibiting the disposal
of solid waste is a crime.
98
SB 833 — 2 —
This bill would additionally prohibit an enforcement agency from
issuing a solid waste facilities permit, on or after January 1, 2012, if
thai permit would allow the disposal of solid waste within 500 feet of
a river that supplies any aquifer that provides drinking water for more
than 50,000 persons, or within 1,000 feet of a site considered to be
33.CFCCL cHlQ OI SplTlvUcil llllporiclilCC lO ft ICQCiclIiy rCCOglllZiCCl IriQlclIl LI IDC.
prohibit a person from constructing or operating a solid waste landfill
disposal facility located in the County of San Diego if that disposal
facility is located -within 1,000 feet of the San Luis Rey River or an
aquifer that is hydrologically connected to that river and is within 1, 000
feet of a site that is considered sacred or of spiritual or cultural
importance to a tribe and is listed in the California Native American
Heritage Commission Sacred Lands Inventory.
The bill would require the enforcement agency to enforce a violation
of this prohibition by the immediate issuance of a cease and desist
order, thereby imposing a state-mandated local program by imposing
a new duty upon local agencies.
The bill would make a declaration of legislative findings regarding
why a general statute cannot be made applicable within the meaning
of Section 16 of Article IV of the California Constitution.
Because a violation of this bill 's requirements would be a crime, the
bill would impose a state-mandated local program.
(2) The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the state.
Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this act
for specified reasons.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program:
The people of the State of California do enact as follows:
1 SECTION 1 . Section 44000. 6 is added to the Public Resources
2 Code, to read:
3 44000.6. (a) Notwithstanding any other provision of this
4 division, a person shall not construct or operate a solid waste
5 landfill disposal facility in the County of San Diego if that disposal
6 facility meets both of the following conditions:
98
— 3— SB 833
1 (1) Any portion of the disposal facility is located on or within
2 1,000 feet of the San Luis Rey River or an aquifer that is
3 hydrologically connected to that river.
4 (2) The disposed facility is located on or within 1,000 feet of a
5 site that is considered sacred or of spiritual or cultural importance
6 to a tribe, as defined in Section 44201, and that is listed in the
1 California Native American Heritage Commission Sacred Lands
8 Inventory.
9 (b) This section does not apply to a permitted disposal facility
10 at which solid waste was disposed of before January 1, 2012, or
11 to the expansion of that facility.
12 (c) The enforcement agency shall enforce a violation of this
13 section by the immediate issuance of a cease and desist order
14 pursuant to Section 45005.
15 SEC. 2. The Legislature finds and declares that, due to the
16 unique circumstances arising from a proposal to construct and
17 operate a solid waste landfill that would be located adjacent to
18 the San Luis Rey River and its drinking water supplies and to sites
19 considered sacred by numerous Native American tribes, and given
20 the unique relationship between the state government and tribal
21 governments in the state, a statute of general applicability cannot
22 be enacted within the meaning of subdivision (b) of Section 16 of
23 Article IV of the California Constitution, and therefore this special
24 statute is necessary.
25 SEC. 3. No reimbursement is required by this act pursuant to
26 Section 6 of Article XIIIB of the California Constitution because
27 the costs may be incurred by a local agency or school district
28 because this act creates a new crime or infraction, eliminates a
29 crime or infraction, or changes the penalty for a crime or
30 infraction, within the meaning of Section 17556 of the Government
31 Code, or changes the definition of a crime within the meaning of
32 Section 6 of Article XIIIB of the California Constitution or because
33 a local agency or school district has the authority to levy service
34 charges, fees, or assessments sufficient to pay for the program or
3 5 level of service mandated by this act, within the meaning of Section
36 1 7556 of the Government Code.
37 SECTION 1. Section 44002 of the Public Resources Code is
38 amended to read:
98
SB 833 —4 —
1 44002. (a) (1) A person shall not operate a solid waste facility
2 without a solid waste facilities permit if that facility is required to
j iicivc ci pciiiiit pu.rsv*tirii TO inis Qivision.
4 (2) The prohibition specified in paragraph (1) includes, but is
5 not limited to, the operation of a solid waste facility without a
6 required solid waste facilities permit or the operation of a solid
7 waste facility outside the permitted boundaries specified in a solid
8 waste facilities permit.
9 (b) If the enforcement agency determines that a person is
10 operating a solid waste facility in violation of subdivision (a), the
11 c 11 tor cement tiscncysriciiiiiiiiiiCQicirciy issuedcctisc3.110.desist
12 order pursuant to Section 45005 ordering the facility to
I j Hiiiiicciicitciy cCcisc ail flciiviiics lor \vmcn « soiict AVctsic iciciiin.cs
14 permit is required and desist from those activities until the person
15 obtains a valid solid waste facilities permit authorizing the activities
16 or has obtained other authorization pursuant to this division.
17 (c) Notwithstanding any other provision of this division, an
i o cniorcciTicrii u.£cncy snail nor issue n soiio. vvcisic lacmiics pcnnic^
17 t?n or iiitcr jciii\i«.ry i, £\) JTX», 11 trifli pcriniz would aiiow inc ciispos3.t
2t\j 01 soiiQ. Vvflstc wiiriiii DUU icci oi ail ticjuiicr Liicii provicics «. source
21 of drinking water for more than 50,000 persons, or within 1,000
22 feet of a site considered to be sacred and of spiritual importance
2f3 \\j oi icdtriii.iy ivw
o
98
COUNCIL PRIORITY PROJECTS
FY 11/12
Priority Goal/Project Title Status Responsible Dept.Team Leader
Current
Milestone
Complete
(month/year)
Estimated Project
Completion
(month/year)
CORE WORK
ECONOMIC DEVELOPMENT
*
*
*
*
Partner with property owners in the Village to create a
"Main Street" type program to spur local investment and
foot traffic.
Launch a business attraction and retention program.
Streamline city processes to support faster turnaround
times & more efficient handling of business requests:
- Development Review Process Recommendations
- Prop D Implementation - CCC Process
- Business License Process Streamline
- Car Country Carlsbad Working Group
Expand the amount and quantity of useful city
information available to businesses:
- Economic Development Communications Plan
- Development Services Manager Communications Plan
CURRENT MILESTONE: Request for Proposals issued June 1 with responses due August 1 .
Housing and Redevelopment Commission to appoint three to five citizens to join sub-
committee and review proposals.
NEXT MILESTONE: Seat citizen members on sub-committee, receive and evaluate proposals,
recommend successful proposal to HRC.
CURRENT MILESTONE: Outreach visits ongoing - next scheduled visits are with CRC (07/13)
& ViaSat (08/30). Analyzing city's existing business segments to determine best types of
companies to attract and grow in Carlsbad.
NEXT MILESTONE: Develop list of target type companies for attraction & develop a
communication outreach strategy.
CURRENT MILESTONE: Title 20 CMC amendments for Vesting TM's scheduled for 07-26-1 1
CC Hearing.
NEXT MILESTONE: Submit LCPA CMC Amendments to CCC.
CURRENT MILESTONE: Preparing submittal of LCPA to California Coastal Commission.
NEXT MILESTONE: Submit LCPA to CCC in July 201 1 .
CURRENT MILESTONE: Review & document existing Business License process.
NEXT MILESTONE: Identify improvement and streamlining measures.
CURRENT MILESTONE: Staff working on work program schedule and cost estimates for CC
consideration in 1st Quarter FY 11/12.
NEXT MILESTONE: Work program schedule and cost estimates to CC for consideration by
end of 1st Quarter FY 11/12.
CURRENT MILESTONE: Developing and refining Economic Development Communications
Plan to expand the amount, quantity, and accessibility to useful business information.
NEXT MILESTONE: Complete development of ED Communications Plan.
CURRENT MILESTONE: CBJ article to run in July edition. Developing a "how to" guide for
homeowners and developers explaining the development permit process and the types of
available services and assistance.
NEXT MILESTONE: "How to" guide available in July. Update website pages to provide clear
information.
CM
CED
CED
CED
CED
CED
CED
CED
J.Coates
K. Dodson
G. Barberio
G.Barberio
K. Dodson
G. Barberio
K. Dodson
M. Peterson
Aug. 2011
Sept. 2011
July 2011
July 2011
Sept. 2011
Sept. 2011
Sept. 2011
July 2011
Jan. 2012
June 2012
Dec. 2012
Dec. 2012
June 2012
June 2012
June 2012
June 2012
= FY 11/12 Priority 07/22/2011
1 of 5
COUNCIL PRIORITY PROJECTS
FY11/12
Priority Goal/Project Title
Proposed Power Plant
- Power Plant State permitting
- Power Plant Land Use Amendments
Westfield Lease and Project Review
Envision Carlsbad Phase II - General Plan Update
Status
CURRENT MILESTONE: Energy Commission Deliberation.
NEXT MILESTONE: Regional Water Quality Control Board NPDES Permit
CURRENT MILESTONE: Draft text changes for PC considersation in Sept. and CC
consideration in Oct. Final report on moritorium to CC on Oct. 11.
NEXT MILESTONE: PC hearing in Sept.
CURRENT MILESTONE: Finalize lease deal points with Westfield.
NEXT MILESTONE: Return to Council in closed session to review final deal points.
CURRENT MILESTONE: Task II - Land Use Alternatives underway; PC to brainstorm
alternatives on 07/13. New re-evaluation of scope, schedule, & budget, proposal to CC for
consideration on 07/26.
NEXT MILESTONE: PC alternatives brainstorming workshop in July. New proposed scope,
schedule, & budget to CC in Aug. 201 1 .
Responsible Dept.
PEM
CED
PEM
CED
Team Leader
J.Garuba
D. Neu
J. Garuba
G. Barberio
Current
Milestone
Complete
(month/year)
Nov. 2011
Oct. 201 1
July 2011
July 2011
Estimated Project
Completion
(month/year)
TBD
Dec. 2012
TBD
Dec. 2013
= FY 11/12 Priority 07/22/2011
2 of 5
COUNCIL PRIORITY PROJECTS
FY 11/12
Priority Goal/Project Title Status Responsible Dept.Team Leader
Current
Milestone
Complete
(month/year)
Estimated Project
Completion
(month/year)
FINANCIAL HEALTH
*
*
*
Streamline city operations to ensure balanced budget &
most efficient use of resources:
Complete a plan to maximize the value & use of city-
owned real estate
Implement golf course operational improvements to
reduce operating subsidies
Constituent Relationship Management Program
Maintenance and Operations Center Construction
Desalination Plant Review
Human Capital Management System
Hydro Electric Project
Labor Negotiations
CURRENT MILESTONE: Present research findings at 7/19 workshop.
NEXT MILESTONE: Dependent on direction given at workshop.
CURRENT MILESTONE: Prepare RFP and solicit for financial property consultant firm.
NEXT MILESTONE: Retain financial property consultant and initiate highest and best use
analysis.
CURRENT MILESTONE: Council Workshop to discuss dedicated player's lounge.
NEXT MILESTONE: 18th hole green design.
CURRENT MILESTONE: Release RFP for CRM solution.
NEXT MILESTONE: Evaluate CRM proposals and negotiate with vendor; secure services of
external proiect manaqer.
CURRENT MILESTONE: Prepare Design-Build performance specifications and complete the
Request for Proposal documents for the M&O Center Design-Build contract.
NEXT MILESTONE: Establish the competitive prequalification selection process and criteria for
the desiqn-build entities.
CURRENT MILESTONE: Revising proposed agreement with CWA. Meet w/ CWA
representatives to resolve outstanding issues.
NEXT MILESTONE: Take agreement to CWA Board for approval.
CURRENT MILESTONE: Finish integration testing.
NEXT MILESTONE: Go live with all of Phase I deliverables no later than January 1 , 201 2.
CURRENT MILESTONE: Working with Canyon Hydro and Zeropex to refine their generator
equipment submittals. Resolving outstanding F&WS issues to complete FERC process.
NEXT MILESTONE: Select power generation equipment, finalize design and advertise project.
CURRENT MILESTONE: Finish contract reopener with Police to address retirement formula
for CPOA-represented miscellaneous members and HCMS changes for all CPOA represented
employees.
NEXT MILESTONE:
CM
PEM
PARKS & REC
LIBRARY
PEM
UTILITIES
HR
UTILITIES
HR
CMT
D.Hauser
C. Hazeltine
D.Curtis
J.Garuba
G. Pruim
J. Clark
B. Plummer
J. Clark
Aug. 2011
July 201 2
Sept. 201 1
Aug. 2011
Oct. 2011
July 2011
Aug. 2011
July 2011
Aug. 2011
Ongoing
Winter 20 11
Apr. 2012
Oct. 2012
Winter 201 5
Sept. 201 1
TBD
Aug. 2012
Aug. 2011
= FY 11/12 Priority 07/22/2011
3 of 5
COUNCIL PRIORITY PROJECTS
FY11/12
Priority Goal/Project Title Status Responsible Dept.Team Leader
Current
Milestone
Complete
(month/year)
Estimated Project
Completion
(month/year)
TRANSPORTATION AND CIRCULATION
*
*
Improve traffic flow by upgrading & synchronizing all
traffic signals on major thoroughfares throughout the
city, beginning with Palomar Airport Road and El
Camino Real.
Install lighted, pedestrian friendly crosswalks along
Carlsbad Boulevard in the Village & other areas with
heavy foot traffic.
La Costa Avenue Traffic Calming
CURRENT MILESTONE: Received bids for wireless and video detection equipment.
NEXT MILESTONE: Council award contracts for wireless and video detection equipment.
CURRENT MILESTONE: Prepare staff report outlying ped crossing options.
NEXT MILESTONE: Present staff recommendations to TSC.
CURRENT MILESTONE: Interim re-striping plan. Submit community vision plan for La Costa
Ave. for Council consideration.
NEXT MILESTONE: Depends on Council direction.
TRANSPORTATION
TRANSPORTATION
TRANSPORTATION
D.Bilse
Bryan Jones
D.Bilse
July 2011
July 2011
Sept. 2011
7/2013
12/2012
9/2011
PARKS, OPEN SPACES AND TRAILS
*
*
*
Alga Norte Community Park:
- Finalize Alga Norte Park operating plan
- Construct Alga Norte Park
Create new coastal land for recreation & economic
development by completing land exchange w/ the state
for the Manzano property & realigning Carlsbad Blvd.:
- Carlsbad Blvd. Preliminary roadway design and
environmental review to facilitate land exchange
Expand the amount of open space & trails in the city
through active monitoring of potential acquisition sites
and partnering with others, where possible, to leverage
taxpayer funds.
- Lake Calavera Master Plan Implementation
Landscape improvements to Pine Park (Madison
Property)
New restrooms at Pine Park
CURRENT MILESTONE: RFP currently being developed and will be distributed in July 201 1 .
NEXT MILESTONE: Pre-submittal meeting 8/1 1/11.
CURRENT MILESTONE: Approve contract amendment with architect to update plans
NEXT MILESTONE: Update plans and have Council authorize project bidding.
CURRENT MILESTONE: Complete appraisal of lands.
NEXT MILESTONE: Identification of lands to be exchanged.
CURRENT MILESTONE: Submit PSA contracts for CC consideration.
NEXT MILESTONE: Consultants update land exchange schedule.
CURRENT MILESTONE: Staff continues to explore potential open space acquisition and
partnerships as opportunities become available.
NEXT MILESTONE: Scheduled first of on-going quarterly meetings with appropriate staff.
CURRENT MILESTONE: Submit permit applications for wetland boardwalk.
NEXT MILESTONE: Authorization to bid for wetland boardwalk.
CURRENT MILESTONE: Four bids received June 28th, low bid $28,000.
NEXT MILESTONE: Award of contract and complete landscape improvements.
CURRENT MILESTONE: Prepare plans and specifications.
NEXT MILESTONE: City Council to authorize bid.
PARKS & REG
PEM
CM
TRANSPORTATION
PARKS & REC
PARKS & REC
PARKS & REC
PARKS & REC
C. Hazeltine
D. Mauser
C.Haas
S. Hammann
C. Hazeltine
L. Ketabian
M. Steyaert
M. Steyaert
July 2011
July 2011
Sept. 2011
July 2011
Aug. 2011
Oct. 2011
July 201 1
Oct. 2011
Dec. 2011
Fall 2014
Ongoing
July 201 3
Ongoing
May 201 2
Sept. 2011
Aug. 2012
BALANCED COMMUNITY DEVELOPMENT
Housing Element Program Implementation
CURRENT MILESTONE: Preparing amendment to HE to update timelines as directed by court
order in Friends of Aviara lawsuit; to be considered by CC On 07/26.
NEXT MILESTONE: Implement various programs in adopted Housing Element.
CED D. de Cordova July 2011 Apr. 2013
= FY 11/12 Priority
07/22/2011
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COUNCIL PRIORITY PROJECTS
FY11/12
Priority Goal/Project Title Status Responsible Dept.Team Leader
Current
Milestone
Complete
(month/year)
Estimated Project
Completion
(month/year)
ENVIRONMENTAL MANAGEMENT
Agua Hedionda dredge project
Solid waste strategy and contracts
Vista-Carlsbad interceptor
Sewer Master Plan
CURRENT MILESTONE: Secure agency permits.
NEXT MILESTONE: Council approve plans and authorize project bidding.
CURRENT MILESTONE: Prepare long term collections and disposal draft agreements with
WM and Allied.
NEXT MILESTONE: Approval of agreements by Council.
CURRENT MILESTONE: Planning Commission Approval of Mitigated Negative Declaration.
NEXT MILESTONE: Council approval of MND, resolve outstanding utility issues, acquire
necessary easements.
CURRENT MILESTONE: Complete Encina Canyon Multi-Agency Relief Sewer Study.
NEXT MILESTONE: Integrate above study into Sewer Master Plan and prepare required EIR.
UTILITIES
UTILITIES
UTILITIES
UTILITIES
G. Pruirn
C. Ruess
T.Smith
T.Smith
Sept. 2011
Oct. 201 1
Oct. 201 1
Aug. 2011
Aug. 2012
TBD
May 201 3
Dec. 201 1
SAFE COMMUNITY
Joint First Responders Training Facility (JFRTF):
- Construct JFRTF
- Prepare Operations Plan
Fire Station 3 relocation
CURRENT MILESTONE: Under construction - completion scheduled for 1st Qtr. 2012.
NEXT MILESTONE: Deliver project to owner for operation.
CURRENT MILESTONE: Obtain approval for Operation Manager job specification.
NEXT MILESTONE: Prepare draft Operations Plan.
CURRENT MILESTONE: Execute design contract with architectural firm.
NEXT MILESTONE: Complete project design.
TRANSPORTATION
PEM
PEM
P. Vaughan
D. Mauser
D. Mauser
Mar. 2012
Aug. 2011
Aug. 2011
Mar. 2012
Spring 2011
Summer 2013
WATER
Water Master Plan
Recycled Water Master Plan
Recycled Water Phase III Feasibility Study and North
County Cooperative Use Project
CURRENT MILESTONE: Complete Draft Master Plan.
NEXT MILESTONE: Obtain CEQA clearance (1 2/201 1 ).
CURRENT MILESTONE: Complete Draft Master Plan.
NEXT MILESTONE: Obtain CEQA clearance (12/2011).
CURRENT MILESTONE: Complete Phase III Feasibility Study.
NEXT MILESTONE: With Council approval, select preferred project, apply for grants/loans,
obtain agreements/letters of intent from recycled water purchase partners.
UTILITIES
UTILITIES
UTILITIES
B. Plummer
D.Ahles
D.Ahles
July 2011
July 2011
Aug. 2011
Dec. 2011
Dec. 201 1
Dec. 201 1
= FY 11712 Priority 07/22/2011
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