Governments Save Money Using Managed Competition

Governments reduce costs by letting the public and private sectors compete for the same contracts.

by / January 17, 2011

Drawbacks and Responsibilities

The process has its drawbacks, however. For instance, citizens ultimately hold the city responsible for trash collection, no matter who’s performing the service.

“If there’s a complaint or something happens with that private area, the calls come into our call center,” Trujillo said.

Agencies also must deal with low staff morale and potential layoffs if they’re on the losing end of the competition. “If we lose a bid, we lose employees, so we have to work around that process as we go through it,” Trujillo said.

That possibility could endanger some San Diego jobs when managed competition gets under way. Voters approved the process in 2006, but it never started because of years of political disagreements and failed negotiations. Not all city officials wanted the competition, and those who supported it couldn’t reach an agreement with labor unions on how to implement the process.

San Diego finally created an official managed competition guide in 2010 after reaching an agreement with members of the Municipal Employees Association, a union for local white-collar workers; and the American Federation of State, County and Municipal Employees Local 127, a union for blue-collar workers.

“I think managed competition means different things to different people, and for a lot of people, it really means outsourcing and privatization — and outsourcing and privatization are both concepts and practices that we specifically oppose,” said Mike Zucchet, general manager of the Municipal Employees Association. “Managed competition is supposed to be a more level analysis of who can provide the service the best, [the] cheapest and preserve the public service.”

With the guide in place, bidding companies must provide a savings of at least 10 percent against bids submitted by the city. However, the companies don’t have to include health-care costs.

According to local news outlets, San Diego Mayor Jerry Sanders, who’s long supported managed competition adoption, met with the City Council last December to build support for a specific managed competition plan. Sanders announced a month later that functions such as street sweeping and street and sidewalk repair would be open to private-sector bids.

Photo: San Diego Mayor Jerry Sanders announced Jan. 13 that the private sector would be allowed to compete to provide the city with street sweeping, street and sidewalk maintenance and public utilities.

“We’re in the process of seeking bids on our fleet maintenance services,” said Alex Roth, a spokesman for the mayor. “We’re also seeking bids for our publishing services — they handle a lot of photocopying, and they do graphic work for different city departments.”

Hilton Collins

Hilton Collins is a former staff writer for Government Technology and Emergency Management magazines.

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