7-B – 7-F
Problem Identification:
The costs of providing a multitude of services currently provided by DPW probably exceed the costs that would be charged by private and non-profit service providers. In the absence of competition, existing workforces have only minimal incentives to increase productivity and decrease operating costs.

Recommended Action:
Utilize competition and outsourcing as a catalyst to encourage City managers and workers to enhance productivity and improve efficiency. Specifically identified opportunities identified within DPW include:- Utilize managed competition to select the providers of custodial services in City facilities.- Utilize managed competition to select the providers of building security services in City facilities.

– Utilize managed competition to select the providers of security services at City-controlled watersheds.

– Utilize managed competition to select the providers of tree trimming and turf maintenance services in the City.

– Utilize managed competition to select the provider of laboratory services for the Bureau of Water and Wastewater.

Cost Savings, Organizational, Service Improvement

Functional/Operational Areas:
All Departmental Operations

Estimated Annual Impact:
While the financial impact of applying managed competition principles to the selection of service providers will vary with each function, the experience of other cities indicates that managed competition and outsourcing typically results in service cost savings that range between 5 and 20 percent.

Estimated Implementation Costs:
Not Determined

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:
90 – 180 days

Next Steps:
Beginning with the services listed above, begin collecting and analyzing direct and indirect cost data against which to evaluate opportunities for the application of managed competition. Develop requests for proposals for appropriate services.

Increasingly, public sector entities are looking to private and non-profit service providers to replace or augment the delivery of traditional public sector services. Cities such as Indianapolis and Philadelphia have received considerable attention for their efforts in this area. During the course of the DPW project team’s and subcommittees’ work, the experiences of these cities were reviewed for insight into the possible beneficial application of a similar approach in Baltimore. Additionally, the previous mayoral administration convened the Baltimore City Government Millennium Group to look at the City’s current operations in the areas of personnel, fleet management, worker’s compensation, building maintenance, and solid waste collection. The Millennium Group’s corresponding FY99 report was reviewed and provided excellent insight into the opportunities and risks associated with pursuing managed competition as a strategy for selecting service providers.

Managed competition (and other catch phrases such as ‘competitive reengineering’, ‘privatization’, and ‘outsourcing’) is admittedly a tremendously controversial issue due to concerns regarding the potential for job loss. When the topic is broached, most attention turns to targeting the largest of municipal functions.

While the project team and its subcommittees explored the concept of applying managed competition to wholesale operations such as the City’s water and wastewater utility, the determination was made that such initiatives required considerably more investigation before an informed decision could be made (see Recommendation 2-F). The project team did conclude, however, that there exists a number of smaller, discrete functions currently being performed by DPW where an abundance of private and non-profit sector providers might be able to provide similar or enhanced service at a reduced cost.

By focusing the application of managed competition principles on discrete services, DPW can still achieve operational cost savings and the potential displacement of municipal workers can be minimized. In Philadelphia, where between FY92 and FY99 nearly 50 municipal functions were eventually contracted out to third party providers, only four instances resulted in the elimination of more than 100 employees. Given the relatively modest scope of the initiatives undertaken, not one of its displaced workers was involuntarily separated from City employment without being offered employment with the new service provider. Additionally, some employees were shifted to other opportunities in the municipal government’the majority at equal or increased pay levels.

Recommendation 4-A of the Citywide section of this report proposes the creation of 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. This recommended approach should provide a suitable administrative mechanism to evaluate and pursue the opportunities included in this set of recommendations.