Problem Identification:
The current costs of providing a multitude of City services exceed the costs that would be charged by private and non-profit service providers. The City lacks a formalized process by which to evaluate the benefits of utilizing managed competition strategies.

Recommended Action:
Create a standing committee comprised of key City decision makers to develop formal guidelines by which opportunities for managed competition will be evaluated, to identify municipal services that could benefit from managed competition, and to oversee the managed competition process from the development of requests for proposals, through proposal evaluation, contract negotiations, and performance monitoring.

Cost Savings, Organizational, Revenue Enhancement, and Service Improvement

Functional/Operational Area:

Estimated Annual Impact:
The estimated annual impacts of specific functions that are recommended to be subjected to managed competition are included throughout this report. The formation of a managed competition committee and the development of guidelines by which to evaluate the desirability of pursuing managed competition as a strategy for the procurement of select services would produce no direct annual financial impact although the application of managed competition strategies could significantly impact the cost, efficiency, and effectiveness of services delivered to the public.

Estimated Implementation Costs:

Barriers to Implementation:
Developing and utilizing a managed competition approach for the procurement and delivery of services traditionally provided by the government is almost universally opposed by municipal labor unions that are unaccustomed to having the cost efficiency of their service delivery judged against private and non-profit providers.

Projected Implementation:
15 days to identify the City decision makers to be appointed to a managed competition committee; 30 – 45 days to develop guidelines by which to evaluate the application of managed competition strategies; 90 – 120 days to begin developing and issuing requests for proposals.

Next Steps:
Designate key City decision makers to serve on the managed competition committee. Instruct the committee to develop guidelines for the application of managed competition strategies. Identify services where the City could potentially achieve cost reductions or service improvements through managed competition.

In general, the City of Baltimore has been reluctant to embrace managed competition as a strategy for the delivery of municipal services. While the City has contracted with the private sector to provide some limited services, particularly in the areas of health, aging, and housing and community development, there remain a host of services (identified throughout this report) where the City could achieve significant cost savings, revenue enhancements, and service improvements through the application of managed competition principles.

Unfortunately, terms like ‘privatization’ and ‘competitive contracting’ have become threatening to public employees and are viewed as synonymous with ‘union layoffs.’ This need not be, and should not be the case in Baltimore. Baltimore’s elected leaders have a fiduciary responsibility to ensure that its taxpayers receive the most effective and efficient services at the lowest possible costs. Creating a managed competition committee and establishing guidelines by which to apply and evaluate the strategy would be an important first step. A number of American cities, most notably Indianapolis, have reaped financial and service benefits through the structured injection of competition. In Philadelphia, over $38 million in annual cost savings were achieved by contracting out 46 different services.