Objectives, Issues and OptionsCity Council Workshop October 13, 2007

Contracting for Public Services: Objectives, Issues and Options

Responsive Service

Employee Fairness

Socially Responsible

Financially Feasible

Objectives Issues

Current practiceWhy contracting fails

Why contracting worksIssues with bringing services in-house

Current practice Employee concerns

Other issues

Living WageHealth Care Issues

Contracting cost savingsOther efficiency reasons

Options

Continue + Improve (A1)Restrict to Criteria (A2)

Retrict All (A3)Hybrid A1+A2 (A4)

Cap (A5)

Continue (B1)Continue + Waive probation (B2)

Layoff policy (B3)Flexibility (B4)

Define “core” (B5)

Continue (C1)Require health care coverage (C2)

Increase Living Wage rate (C3)Continue + Monitor State Legislation

(C4)

Continue within existing resources (D1)

Change and evaluate financial or service tradeoffs (D2)

Policy

Option A2 (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.

IntroductionClarity

Staff workplan and performanceEmployee certaintyBudget preparation (Priority?)

Purpose todayUnderstand current practice Review Policy Paper

Goals, issues and optionsDevelop policy (return for formal approval)

Council Workshop October 13, 2007 1

Policy Development

Council Workshop October 13, 2007

PolicyPolicy

Agreement?Others to consider?

ExamplesHistory

Data

Pros or ConsOthers to consider?Impacts

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Current Practice“Contractual” vs.

“Professional”

Small percentage (4%-5%)

No involuntary employee job loss

Current Major Contracts

Over $1 M annually:Lifeguards

LandscapingTree TrimmingParking Citation

ProcessingParking Operations

Council Workshop October 13, 2007 3

What other cities do

Council Workshop October 13, 2007

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)

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Policy ObjectivesResponsive Service/PerformanceEmployee FairnessSocially ResponsibleFinancially Feasible

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Issues – Responsive ServiceChallenges BenefitsPoor serviceQuality controlUncontrollable costOver relianceNot invested -> poor

customer serviceAdministrative problems

PoolingSpecializedAllocation of routineEmergency/interimSpace and capitalTransfer of risk or

uncertainty

Council Workshop October 13, 2007

Key: Adequate supervision, monitoring, measuring and reporting

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Example – Pier Custodial ServiceJanuary 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 oversightOngoing 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 ServiceStaff angst of bringing services in-house

Time and complexity of Civil ServiceLengthen processing time

Example - Progressive discipline stepsSpace!

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Issues – Employee FairnessHistory – last 20 years

No involuntary terminations due to contractingPlacements

Employee Group ConcernsProbation waiverSeniorityOther

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Issues – Social ResponsibilityMixed benefit levels

Living Wage

Health Care

Living Wage Rates (FY 07/08)

City Hourly w/health care

Hourly Rate w/o health care

Santa Monica

$12.48 $12.48

Los Angeles

$9.71 $10.96

West Hollywood

$8.84 $10.12

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Issues – Financial FeasibilityFive Year Forecast – little capacity

for ongoing costsLong term cost effectiveness –

mixed“In source” example

Why less expensive?Benefit levels – 40%Structural - pooling, cost spreading

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Options – Responsive Service

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Options – Employee Fairness

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Options – Social Responsibility

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Options – Financial Feasibility

Council Workshop October 13, 2007

(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

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SummaryExisting 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

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SummaryDevelop a formal

policy

Right Goals?

Issue ClarificationDiscussion of Options

Council Workshop October 13, 2007

Direction for draft policy

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Contracting for Public Services: Objectives, Issues and Options

Responsive Service

Employee Fairness

Socially Responsible

Financially Feasible

Objectives Issues

Current practiceWhy contracting fails

Why contracting worksIssues with bringing services in-house

Current practice Employee concerns

Other issues

Living WageHealth Care Issues

Contracting cost savingsOther efficiency reasons

Options

Continue + Improve (A1)Restrict to Criteria (A2)

Retrict All (A3)Hybrid A1+A2 (A4)

Cap (A5)

Continue (B1)Continue + Waive probation (B2)

Layoff policy (B3)Flexibility (B4)

Define “core” (B5)

Continue (C1)Require health care coverage (C2)

Increase Living Wage rate (C3)Continue + Monitor State Legislation

(C4)

Continue within existing resources (D1)

Change and evaluate financial or service tradeoffs (D2)

Policy

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