Contracting for Public Services Objectives, Issues and Options City Council Workshop October 13, 2007
Contracting for Public Services: Objectives, Issues and Options
Option A 2 (Criteria) Restrict use of contracting to certain circumstances or criteria (below). Staff would return with an evaluation of which currently outsourced services do not meet the criteria, and what the service and financial impacts would be of transitioning those services in-house. a. Pooling of contracted employees would provide significant benefits that City staffing could not provide. b. Service requires technical or special expertise that City staff could not or do not provide, and is outside of core service mission of the department. c. Service by contractor staff does not have significant interaction, communication or engagement with the community, and service is not expected to significantly affect customer service provided. d. Service is needed on an interim or emergency basis, or for a pilot period of time. e. The service requires substantial space to house the staff and/or equipment to provide the service, which is not available within City facilities or cannot be leased. f. The service requires significant equipment or other capital investment and maintenance, which a private contractor could better amortize the costs or maximize use of the equipment compared to the City. g. Service is new or uncertain, and the City would rather transfer that uncertainty to another entity until more information or experience is gained. Or the service is assessed to entail a certain level of risk that the City would rather transfer to an outside party. Specific risk issues would always be evaluated by staff and incorporated as part of budget development for workers compensation and liability exposures. h. Service would supplement City jobs by having contractors perform more labor-intensive, rudimentary tasks, freeing up City employees to perform more skilled functions. An accompanying reduction in work-related injury, public liability claims and employee lost time would be expected.
Introduction Clarity Staff workplan and performance Employee certainty Budget preparation (Priority? ) Purpose today Understand current practice Review Policy Paper Goals, issues and options Develop policy (return formal approval) Council Workshop October 13, 2007 1
Policy Development Objectives Agreement? Others to consider? Issues Examples History Data Council Workshop October 13, 2007 Options Policy Pros or Cons Others to consider? Impacts 2
Current Practice “Contractual” vs. “Professional” Small percentage (4%-5%) No involuntary employee job loss Council Workshop October 13, 2007 Current Major Contracts Over $1 M annually: Lifeguards Landscaping Tree Trimming Parking Citation Processing Parking Operations 3
What other cities do Custodial* (10) Landscape*/Tree Trimming *(7) Print Shop/Water Billing (4) Vehicle Maint/Street Maint/Parking Lot Ops* (3) Facility Maint (2) (*Services provided partially by contract in Santa Monica) Council Workshop October 13, 2007 4
Policy Objectives Responsive Service/Performance Employee Fairness Socially Responsible Financially Feasible Council Workshop October 13, 2007 5
Issues – Responsive Service Challenges Poor service Quality control Uncontrollable cost Over reliance Not invested -> poor customer service Administrative problems Benefits Pooling Specialized Allocation of routine Emergency/interim Space and capital Transfer of risk or uncertainty Key: Adequate supervision, monitoring, measuring and reporting Council Workshop October 13, 2007 6
Example – Pier Custodial Service January 2007 Concern - level of service, flexibility of workforce, Pier Maintenance succession planning March 2007 –“core concern key and policy issue of the PRC was the delivery of the highest possible level of service. ” 30 -day cancellation, accountability and oversight Ongoing financial and operational analysis
October 2007 – high quality of service “For the first time in recent memory, the condition of the restrooms was not a source of complaints during peak summer months. In fact, several comments were relayed that people actually didn’t mind using the restrooms on the Pier, truly a first. ” Checklist, grading, oversight
Issues – Responsive Service Staff angst of bringing services in-house Time and complexity of Civil Service Lengthen processing time Example - Progressive discipline steps Space! Council Workshop October 13, 2007 7
Issues – Employee Fairness History – last 20 years No involuntary terminations due to contracting Placements Employee Group Concerns Probation waiver Seniority Other Council Workshop October 13, 2007 8
Issues – Social Responsibility Mixed benefit levels Living Wage Rates (FY 07/08) City Living Wage Hourly w/health care Hourly Rate w/o health care Council Workshop October 13, 2007 $12. 48 Los Angeles $9. 71 $10. 96 West Hollywood Health Care Santa Monica $8. 84 $10. 12 9
Issues – Financial Feasibility Five Year Forecast – little capacity for ongoing costs Long term cost effectiveness – mixed “In source” example Why less expensive? Benefit levels – 40% Structural - pooling, cost spreading Council Workshop October 13, 2007 10
Options – Responsive Service (1) Continue existing services + Improve Monitoring and Measurement (2) Restrict Use to Criteria (3) Bring all in-house (4) Hybrid – continue + improve existing; follow criteria for new (5) Set a cap or limit Council Workshop October 13, 2007 11
Options – Employee Fairness (1) Continue existing – no involuntary terminations (2) Add waiver of probation (3) Make identical to layoff (4) City Manager flexibility (5) Define “core” services Council Workshop October 13, 2007 12
Options – Social Responsibility (1) Continue with LW and access to health insurance (2) Require contractor provide some health care coverage (3) Increase Living Wage rate (4) Continue existing and monitor or advocate for state legislation Council Workshop October 13, 2007 13
Options – Financial Feasibility (1) Continue with existing contracts within planned resources. No significant tradeoffs; manage with budget process (2) Change practice and evaluate tradeoffs in services or identify new revenues Council Workshop October 13, 2007 14
Summary Existing Practice Policy + Improve Monitoring, Measuring and Reporting “No involuntary terminations” + probation waiver * Advocate for and/or monitor health care legislation Stay within planned resources – no significant tradeoffs (*) Recommendation CMO presented to MEA Council Workshop October 13, 2007 15
Summary Develop a formal policy Responsive Service Right Goals? Issue Clarification Discussion of Options Financial Feasibility Direction for draft policy Council Workshop October 13, 2007 Socially Responsible Employee Fairness 16
Contracting for Public Services: Objectives, Issues and Options 17
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