Collaboration in Civic Spheres

City of Yakima tries ‘managed competition’ experiment

by John Stang October 13th, 2012

The Yakima City Council has unanimously approved a resolution opening the door to competitive bidding between in-house departments and outside contractors. The resolution OK’d October 2 says that because the city, state and national economies “are experiencing sustained economic losses resulting in decreased revenues” to governments, such competition is worth exploring because it could help bring savings and efficiency to Yakima’s operations. A memo to the council from city purchasing manager Sue Ownby says the first city division likely to use the process may be the airport, “based upon the Airport Board’s interest in considering both public and private sector management…”

It is unknown whether Yakima is the first Washington city to adopt this approach, but the Association of Washington Cities and the Municipal Research and Services Center are not aware of it being used elsewhere in the state.

The concept is not new and has been used in many cities across nation since 1980s. However, no organization tracks and studies the concept on a national basis, said Leonard Gilroy, director of government reform at the California-based libertarian Reason Foundation think tank.

The idea behind managed competition is to trim government costs by forcing the public sector to compete with private companies. “In terms of saying this saves you X percentage (of dollars), the numbers don’t exist. …. There’s no cookie-cutter approach,” Gilroy said. “It’s hard to quantify this stuff. No one really tracks this.”

Gilroy added: “The public seems to win more often than not.”

Yakima has a new city manager, Tony O’Rourke, who first tried managed competition in the 1990s and used it at his previous two city manager posts at Coral Springs, Florida, and South Lake Tahoe, Californna. The concept worked well in those two cities, he said. O’Rourke estimated that Coral Springs reduced costs by $500,000 with this approach. He estimated that city departments turned in winning bids about 60 percent of the time when competing against outside contractors. The competing city departments often cut overhead in order to compete with the outside firms, with O’Rourke estimating they trimmed those costs by 28 percent when they successfully obtained bids.

Managed competition could be used on almost any city project in Yakima, he said. O’Rourke said the details would vary on a case-by-case basis, especially since Yakima has contracts with roughly 15 unions that will govern the nitty-gritty details of seeking bids, awarding them, and dealing with city workers who end up not working on a project. One way to have city workers avoid idleness if an outside team wins a job is for the city to require the winning bidder hire city employees that would have been otherwise laid off, Gilroy and O’Rourke said.

Quality control would be built into the contracts so outside companies should not be able to low-ball on bids and then turn in inferior work, O’Rourke said.

A detailed Yakima city guide to managed competition will be used to oversee the process. It covers competition planning, solicitation development, employee proposal preparation and development, the selection process, transition planning and performance monitoring.

RELATED:

Public Workers Bid For Their Jobs,” Governing magazine, October, 2012.


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