POSTED ON JUNE 15, 2011:
Open for Bid-ness
New department saves city money by encouraging private vs. public competition
There was no shortage of smiles two weeks ago when Tulsa officials held a press conference at City Hall to unveil one of the first success stories to emerge from a much-ballyhooed audit of city services that was completed last fall.
That review of city services by the independent firm KPMG indicated there was a potential for many city services to be put up for "managed competition," a phrase that officials of Mayor Dewey Bartlett Jr.'s administration intend to use a lot in the years to come.
Vickie Beyer, the director of the city's new Management Review Office -- the department that oversees and explores the opportunities for greater efficiencies in municipal government that were uncovered by that report -- describes managed competition as a situation in which city teams bid against private sector firms to provide services at best value. Best value is not only about price, she says. It's also about quality of service.
Put another way, if you go through the Yellow Pages and find a company that offers a service also performed by a city department, says Terry Simonson, the mayor's chief of staff, there may an opportunity for managed competition.
The first instance of managed competition paying off for the city was at that June 2 press conference, where the mayor revealed that a city team currently responsible for building maintenance and operations at One Technology Center -- home of City Hall -- had outbid 11 other firms for a contract to perform the work in the future. The 10-employee group submitted a winning bid of a little more than $977,000 to perform the electrical, mechanical, plumbing and carpentry work -- a savings of more than $115,000 compared to the amount currently budgeted for those tasks.
"What's great about this is, it was our very first managed competition project. I was so proud of them," Bartlett told Urban Tulsa Weekly, referring to the city employees who came up with the winning bid while competing against a number of national firms, including several from New York City.
"That would not have happened if it weren't for the Management Review Office," Terry Simonson, the mayor's chief of staff, said of the new One Technology Center arrangement. "They have one very clear mission -- go through the KPMG opportunities and find ways to save money and ways to make the government more efficient."
As pleased as administration officials were to make that announcement, they're even more excited about the potential for additional savings in the future. Simonson said 298 city services were identified as candidates for managed competition in the KPMG report, and the MRO staff is engaged in the process of going through that list now in hopes of finding ways to save more money for the city.
He is confident that will happen.
"I am quite certain that by October of this year, the Management Review Office will have found enough savings to cover their entire costs for a year," Simonson said, estimating the cost of operating that office at $340,000 annually. "If this was a private business, that's what we'd call a profit center."
Beyer is even more optimistic.
"I think it'll be even sooner than that," she said, explaining that her office has had a role in the planned reorganization of the Public Works Department, which the administration estimates is going to save $500,000 to $800,000. "With the resignation of (Public Works Director) Charles Hardt, it's a real opportunity to step back and see how we might organize that department differently."
Beyer said her office -- which employs three project managers, one of who has an information technology background while another has contract management experience -- is making considerable progress on other potential managed competition projects in such areas as the city's animal shelter, facilities maintenance, horticulture and equipment maintenance, which she said could be a particularly big-ticket item. Her office also is working on combining the city's utility call center with the Mayor's Action Center, she said.
Simonson said the MRO is working out a school crossing guards proposal, as well, which could save the city as much as $200,000.
Not all of her office's work is focused on managed competition, Beyer emphasized. The implementation of a new automated time and attendance system for city workers should save another $400,000, she said, and she said a request for proposals for that contract should be released by the end of the year.
Beyer said $2.5 million is a conservative estimate of the kind of savings she believes her office will identify for the city just over the next 12 months.
"I have no idea on our ultimate savings, but I know there are so many projects in the city, the savings are going to be significant," she said.
The team of city employees that put together the winning bid for the One Technology Center contract was assisted in its effort by other city employees with process improvement training and cost analysis, but the mayor said ultimately the group reached its own decisions about to save money and lower its bid.
"They got to the point where they realized how to generate savings," he said.
That included eliminating one position -- mechanical journeyman -- that exists now but which has been vacant. The city team also is relinquishing two vehicles to save more money. Beyer said the team also is purchasing a software upgrade that will allow customers to do online entry of service requests. After that move, she said, the team will re-evaluate its staffing level and determine if another position can be eliminated to generate more savings.
"We're beginning to change the mindset of how people approach work so it becomes very efficiency minded," she said.
The city's contract with the employee team on the OTC project also will feature a "gainsharing agreement," which will incentivize the team to produce even greater savings and efficiencies.
"If they beat their own bid, the team has an opportunity ... to earn up to 50 percent of the additional savings," Beyer said.
The mayor expects his administration will be ready shortly to announce other projects that have resulted in savings.
"Oh, I think within a couple of weeks, we'll have four to six other projects where city employees have been supplying bids," he said. "It takes a little bit of time because we want to make sure city employees in this situation are taught how it works. It's not fair to just throw them in against experienced bidders."
Administration officials carefully avoid using the term privatization when discussing the work of the MRO and the trend toward managed competition, but Bartlett said concerns by many city employees about the KPMG study being used to simply implement layoffs largely have been allayed over the past few months.
On the contrary, the mayor said, many employees now feel a sense of ownership in the city of Tulsa and are feeling empowered to make their own suggestions about how to save the city money.
That doesn't mean the city is always going to opt for the cheapest alternative, Beyer said.
"One thing we're not going to let go of is quality," she said. "In everything we do, quality is as important as price."
URL for this story: http://www.urbantulsa.comhttp://www.urbantulsa.com/gyrobase/Content?oid=oid%3A40039