San Diego proceeds with outsourcing despite unknown costs and benefits

by on April 28, 2011 · 2 comments

in Civil Rights, San Diego

Council needs answers before approving contract details for vital services

By Center on Policy Initiatives / April 27, 2011

Despite unanswered questions about costs, service quality, risks to public health and more, a San Diego City Council committee today sent the scope of work for outsourcing two city services to the full Council for a final decision.

The Center on Policy Initiatives is urging the Council to resolve serious issues before finalizing what will be required in contracts to run the City’s street sweeping and water customer service:

  • Will the contract for water customer service require that the call center be local, so residents can contact someone with knowledge of the area and local jobs aren’t lost?
  • Will the street-sweeping contract include environmental safeguards and prevent the company from damaging or misusing the expensive city-owned vehicles?
  • How much is outsourcing expected to save taxpayers? Asked point-blank for an estimate of the savings, city administrator Wally Hill said he didn’t have even a rough estimate but relied on projections by the pro-privatization Reason Foundation.
  • How much is the outsourcing process costing taxpayers? The city just wasted $500,000 on consultants in a failed effort to sell off Miramar Landfill, but massive amounts of staff time have not been calculated.
  • How will strong oversight be ensured, given the city’s record of contractor problems? Recent examples include contracts for ambulance service, computer and IT systems, and the fire debris removal.
  • Will contractors have to comply with Public Records Act and other transparency requirements?

Council members on the committee repeatedly voiced doubts that outsourcing would save any money or maintain service levels, but said they were compelled to continue the “managed competition” process because voters demanded it in 2006.

In fact, the voter-approved measure allows outsourcing of City services “if determined to be more economical and efficient while maintaining the quality of services and protecting the public interest.”

“What the voters approved was saving money, if possible, while keeping the quality of services intact,” said CPI Executive Director Clare Crawford. “Contracts must be very carefully worded to enforce environmental and quality standards. We are concerned that the cost of negotiating and overseeing these contracts may exceed any savings and worsen the city’s budget problems.”

Elanor Starmer, Western Region Director of the consumer advocacy group Food & Water Watch, told the committee that 20 US cities have recently brought their water systems back in-house because of poor service and high costs from private operators. She said in-sourcing significantly lowers costs and is now as common as outsourcing.

“San Diego is rushing to outsource essential services without stopping to check if it will actually benefit residents,” Starmer said.

With six city services going through managed competition at once, CPI submitted a memo to Council today documenting the need for greater caution and strong oversight.

The Center on Policy Initiatives is a San Diego research and advocacy center dedicated to the needs of working families.

{ 2 comments… read them below or add one }

avatar JEC April 28, 2011 at 11:34 am

Kevin Faulconer made the motion to move toward outsourcing in part because he said he was mad that since going into affect in January, 2007, the voter approved initiative supporting Managed Competition has not resulted in a single outsourcing. His statements at yesterday’s meeting showed a tilted interpretation – no competition, just outsource, give it away.

CPI raises valid points concerning the quality of possible private contractors. One point, is the function/service too important to do without? The city is the government, not some business, they are the first responders and the last resort. The lose of water, to an individual, neighborhood or city, can be devastating. Cities exist because of water/sewer systems AND the skill set to maintain and operate. Companies can and do go out of business. Make sure the profit motive will serve the function under consideration.

But Councilperson Faulconer, consider that maybe no function has been outsourced since 2007 is that first all the good stuff, the low hanging fruit has already been picked. And it could be that today, when the private sector options are compared to doing it in house the numbers do speak. Can the city reduce costs by contracting out, all service levels remaing the same? No. To carve out the private sector expenses of debt, profit, overhead and taxes companies have two options – and they employ both; reduce service, reduce pay to those actually doing the job.


avatar Andy Cohen April 28, 2011 at 12:37 pm

Just because it’s done by a private company doesn’t mean that they do it better or more cost effectively. Often times their “cost savings” measures are to merely cut corners, which end up costing the public MORE in the end than to do it right the first time.


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