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$8,848 10
Percent to 30 Percent $1.1
Billion 85
Percent 16 |
| NOTE
ON FOOTNOTES: The San Diego Citizens' Budget Project is committed to presenting accurate, methodical research. The Citizens' Budget Plan contains more than 100 footnotes, all of which can be found in the print and full PDF versions. |
| QUOTABLE: "The places many children pass the afternoon -- libraries, parks and recreation centers, city swimming pools, and city-funded day care programs -- would see major cuts. One proposal calls for some parents to pay $1,500 a year per child to attend the popular 6-to-6 program before and after school." - San Diego Union Tribune, May 16, 2004 |
Create
a Competitive Bid Process to Make Support Services Efficient
Design
and Use a Fair Process for Comparing Outside Bids with Internal City
Costs for Providing Services 
Competitive sourcing is a proven approach to achieving substantial cost savings and performance improvements in government. Indeed citizens of San Diego use competition every time that we go to the grocery store, pick up the phone, or visit the car dealer. Where there is no competition, monopolies provide poor performance at higher rates. The same is true in government.
Competitive sourcing in a government setting is NOT the same thing as privatization. Moreover, competitive sourcing does not always lead to outsourcing a function—although contracting a function out is one possible result of a competition. Competitive sourcing basically asks government to become a “smart shopper” by examining whether it should make or buy certain support functions. In making that determination in a city government, a competitive sourcing process is used to compare the costs of having city workers perform a certain function (like mowing park lawns) versus the cost vendors would charge for the same service. Competitive sourcing works best when two ingredients are in play: clear quality standards for services and giving existing city workers a fair chance to reform their own function to beat the outside competitive bid.
Regardless of who wins a competitive sourcing initiative (public, private or non-profit provider) the taxpayer wins every time — with cost efficiencies and improved performance.
The City of San Diego used to have a “competition” program, but abandoned it in the 1990s under immense pressure from the City’s powerful employee unions. Indeed, not ONE position has been competitively sourced in the past five years in San Diego City government. The reality is a lot of work has been “in-sourced” in San Diego in recent years—with the Mission Bay Golf Course operations function being just one such example in the FY 2005 budget proposal alone. Quite the opposite! As a result of the City canceling the contract for this service, an additional 16 City workers must be transferred into the golf management function provided primarily by commercial vendors for most golf courses.
A very compelling illustration of the potential of competitive sourcing comes from a report released in May 2004 by the White House Office of Management and Budget which demonstrated that in the 662 competitive sourcing initiatives conducted by the federal government in FY 2003, taxpayers saved a net of $1.1 billion—representing 15 percent cost savings on every function that underwent competitive sourcing! Indeed, the Office of Management and Budget itself used competitive sourcing to use private bids to compete with the Government Printing Office's deal for printing the FY 2004 federal budget. GPO federal employees responded to these bids by reducing its price 23 percent and saving more than $100,000 on the printing of the budget alone!
A huge potential exists in San Diego City government for substantial cost savings. Take auto maintenance at the Police Department for example. This function costs the City a whopping $12,700,000 per year—at a cost of $8848 per vehicle serviced per year. No one in their right mind would pay this exorbitant cost for vehicle maintenance. With no competition, City employees in this function have never had to reconsider how they have organized their work to achieve cost efficiencies. While the City claims it needs to do all of this auto maintenance work itself because of around-the-clock maintenance needs, a survey of police substations by the Citizens’ Budget project revealed that many areas no longer had weekend service staff. Moreover, round-the-clock support could be a provision of the competition and any resulting vendor contract.
• Create a Competitive Sourcing
Initiative to Compete at Least Seven City Support Functions in FY 2005
Based on the Citizens’ Budget review of City operations, a number
of functions have been identified that would be ripe for competitive
sourcing initiatives. These are functions that are routinely provided
by commercial vendors and do not have a public safety component to them.
As such, the City Council should instruct the Manager to review these
and other functions with instructions to prepare competitions on at
least seven major City support functions. The functions could not involve
public safety (e.g. police patrols and emergency response) but could
involve support services within any City department.
In conducting competitions, the Manager would be instructed to use “activity-based costing” and performance measures to ensure that competitions focus on the best value for the taxpayer on cost and quality standards. Finally, the winner of the competition would be subject to a performance-based service contract to lock in cost and quality accountability.
