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

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$ / Mana~emeat laformatloa Ser~ and awarded. Does ~he lowest bidder I~ the job or are competitive contractx in fact sole-~ttrc~ oontract~? Is it possible for n contractor to buy in and ~he~ renegot/ate the price? What is the length of the omtract and is it rebid or simply venegothted? There are important trade-offs be~w~ competition and other considerations. For exa~ple~ wh~re there are economies of gale a ~overnment may have to decide whether 'to capture the economies and desd with a few firms, or further competition tad deal with a number of firms. Dealing with a number of finm =~t~! also compli- cate contract admin/stratlon. However~ additional sup- pliers should reduc~ the risk of non~formance to a local government. Revenue Generation. Costs comprise or~e fide of the set. vice equation, outputs thc other. Both s/d~s need to be examined when evaluating the feasibiiity of switching from public to private provision or vic~ versa; Some local government services such ns ta~ collection and fund investment have revenue gener~tior~ (output) ns their primary purpose. When ev~luath~g contracting in the~e areas revenue enhancement may b~ more impor- tant thau cost reduction. There is another group of local govermuent services that gsnerate local government revenue tha/are operated for reasons other than revenue generation. Most services that hnpose fees or charge~, such ns ~ramsit or recrea- tion, fall in this caiegory. Evaluating the feas~ility of contrnc~ing for these serv/ces must ac~tmt for the reve-. hue impact although it w~! probably pla. y a subsidiary role in nsses,sinR outputs. A~other grt:,~up of local gov- TABLE 4. CONTRACTED SERVICES THAT NAVE AN Ii, PACT ON PUBLIC REVENUE parking met~ revenue collection. Pa~king meter nmintennnce. Vehicle towi~ and storage. Solid waste ~ and collectio~, Parking lot n~d ~m~ge operation. Operation of transit or pa~ransit Operatiott of a~x~rt. Animal control and shelter. Operation of day care. Tax bill procc.~.~g. Tax Delinquent tax collectiov.. Utility mete~ Ut~ty Operation of cultural arl~ faCl'E-tie ,. Operation of l~braries. Operation of mustang, eminent services thai will exert an indirect impact on revenue generation include such functions ~ meter read- i~ and maintemmce. Table 4 Usts local government services that may con- tain a component, direct or indirect, that produces reve- nue or hu an impact on revenue. The ar~unents in favor of contracting in revenue pro- ducin~ areas are similar to general arguments in favor of contracting. Contractors use the optim~a source~, draw on economies of scale, use labor with highly spedalized skills, and the llke. A finnndal institu- tion that routinely invests funds is likely to do a superior job compared to the local government that does it peri- odically. A firm that routinely conducts property assess- ments is likely to do a better job than one that under- On the other hand, there are four bade arguments against using private contractors to enhance revenue collection: · Contractors may do a poorer rather than a better job. · Contractors are more prone to fraud than are local lovernment personnel. · A contractor that sets out to maximize revenue gener- ation can create real problems for a local government. * Contracting in this area requires careful auditing to ensure that the contractors do not have their hands in the ~l, a job that requires sp~a]iT~:d skills in itself. Guidance for local governments wishing to contract or compare contracting with in-house provision of revenue enhancement is sparse, Potential for Fraud and Corrapflon. Bribery, kickbacks and payoffs have long been problems in local govern- ment contracting. There are literally hundreds of exam- pies of such shenanigans,u Fraud and corruption are potentially serious problems for each and every $overn- merit contract. If a scandal does occur, and this is always a distinct possibility, it can have extremely detri- mental effects on not just that contract, but all govern- ment opens. There are proced___ures to guard against corruption such ns police checks, citizen panels, and high perform- ance bonds~but each raises the cost of contracting, pos~"oly el~ml._nth~$ savings that would have accrued to the local jurisdiction. While local governments can take a variety of steps to reduce the poss~ility of fraud, it is difficult to prevent entirely. Probably the best insurance is simply open, competitive bidding and tightly written and closely monitored contracts. Fmnlly, it/s important to remember that thousands of service contracts are written every year for which no questions are raised about pasta"vie fraud and corruption. Capital Investment Reqnirements. The impact of capital investment on contracting will be a fun~on of the gov- ernment service and its capital requirements, the utiliza-