Agenda - Council - 03/24/1987 - Laserfiche WebLink

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4 / Management In~ormltloa Service Cost comparison, s need lo examine total costs, non- recurring ts well as recurring; nee~ to cover several years, not just the first year; and mu-~t include the cost of administering the contract ts well as the cost of the contract itself. Assuming a switch froz~ public to private provision, the following public service delivery costs should be include: *-Direct wage costs ,~ Benefits including workers compen;ation, unemploy- ment compensation, pension and t~iforms - Service, supplies and maintenance ~osts * Anticipated futt~re capital costs · Direct overhead costs The public se~wice costs need go be compared with the following contact costs: · ~ of payment for service (cont~ ac/costs) · Cost of preparing and monitoring the contract · Co~t of preparing and implementhtg a plan for alter- native service provision if the contrac~ is terminated · Cost of funding alternative job~. for the current workers, termination pay~ and ott~er ~ if the service is switched. Effects of Service Levels, Quality, ;~d Effectiveness. Service levels, quality, and effectiven-~ss ~xe output con- ~iderations that are important in ever/; lo~zl government service. The frequency of service, thorc~ughness of service, timeliness of response to requests for service~ and error rates nrc o__nmplez in this area. One l~dmary problem in contracting is how to specify and co~trol these factors. Quality and service are difficult to define, difficult to measure once defined, and difficult to enforce in con- tracts once meas~ed. Unle~ a loc~d government can specify and enforce performance, it .~nd its citizens are likely to be short changed. Whether gover~tment service prov~de~ better quality and ~-vice than does contract servic~ is debatable. The argument normally advanced in this ~r~ in favor of in- house performanc~ is that government employees are not subjected to competition and the profit motive, and ~as a result provide a better level of ~ervice then docs a contractor. Other~ argue that government 'employees, protected by elaborate civil .~'rvice ~Ic~ and regulations vn'll not be any more interested in providing service than will contractors. Also, a favorite way ~o handle increased workload in public service ~ to cut back service quality and levels, an option a contractor m~y or may not have depending on the contract. If it is po~ible to adequately specit ~' Quality s~ndards in a contract, and the contract is ~roperly enforced, then the conununity will probably h~v¢ ~ superior level of service to what would be provic~cd by the govern- ment, since the sc~vice level will not t~e left up to admin- istrative decisions.. The difficulty in specifyin~ service leve~ and q~ standards varies draxnatically by service area. For some of the more tangible services, such as street sweepin~ and relatively easy to appl~. For less ta~'ble serviees, such as social servke, performance levels a~ often lack- ing, and those that exist are not easy to &pply. The cru- cial ingredients here are the contract specifications, how well they are written, and how well they are enforced. Responsiveness to Citizens. Closely aligned to service levels and quality standards is contractor responsiveness to citizen complaints and requests for service. The ques- tion here is whether the private contractor w~l respond as rapidly and satisfactorily to citizen requests for ser- vices and complaints concerning service as ~ the pub- lic manager. It is not obvious beforehand that a contractor w~l or w~l not be any more or less responsive to the public than wffl the government and its employees. It depends on the local government, the contractor, and the contract. Some con- tracts funnel requests for service and dtizens' complaints to local government officials rather than contractor~, thereby allowing officials to track contractor perform- ance. Other contracts require the contractor to maintain records of requests for service and their disposition. Some contracts tssess monetary penalties for com- plaints and others award bonuses for no complaints. Ade- quate techniques exist for monitoring the contractor's responsiveness, but issues to be addressed include whether these techniques ~ be used and the cost involved. Impact on Delivery of Other Services. Contracting for a service will have side or spillover effects on many parts of the local government. One positive impact will be on city support costs. The personnel and payroll costs should drop if there is a shift from public to private pro 'vu/on. On the other hand, the time required of the government counsel and the purchasing office is likely to increase. If an existing service is contracted then there may be large impacts on government employees outside the immediate service area through layoffs, transfers, and "bumping" of employees. This is likely to be a problem in the smaller jurisdictions where employees perform several different jobs. Contracted support services may have a trickle-down effect. Contracting of vehicle maintenance may improve the availability of the fleet and reduce the need for some vehicles. Contracting for data processing may result in individual departments being charged for their data processing needs. There may be spill-over effects into - direct services too. If sanitation equipment is used to remove snow then a solid waste collection contract have to include a section on snow removal, or some other provisions will have to be made by the local government. Spillover effects must be considered carefully in evah- ating the potential for contracting. Most of the important