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Commentary: Outsourcing must make sense, or we don't do it

February 21, 2014|By Rush Hill

Newport Beach residents have recently questioned the city's efforts to outsource certain services. I appreciate their concerns and thought it would be helpful to clarify our approach to outsourcing.

The community has seen us review outsourcing for street sweeping, tree trimming, residential refuse collection and, most recently, lifeguarding at Corona del Mar. The decision to outsource a service or keep it in-house always stems from a rigorous review of whether an outsourced model can provide the same or better level of service (than that currently provided by the city) at a lower cost.

In each case, we ask our staff to follow a clear evaluation process that includes:

•Determining our own direct and indirect costs for the specific service.

•Determining if there are legal requirements that keep a service in-house.

•Investigating if there are enough providers out there — private or public sector — to make a competitive bidding environment.

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•Checking if the providers have the technical skills and history of providing strong service.

•Evaluating the service proposed to see if it is, indeed, the same or better.

•Questioning if the cost of the new service will be lower than the city's costs to provide that service, in the short- and long-terms.

As a result of this process, the city has reduced its costs by millions of dollars in recent years, and has been able to reduce personnel (primarily through attrition) by about 100 full-time positions since 2009.

However, it's important to note that the evaluation process doesn't automatically result in outsourcing. After conducting a careful analysis, we chose not to outsource our jail operations, in part because the legal protections with an outside firm were not as strong as we would have liked.

And we recently completed an analysis of the firms and an agency proposing outsourcing ocean lifeguarding at Corona del Mar. Our staff has determined that the proposals are not more cost effective than our current in-house model.

I respect that we have residents who do not support outsourcing. That tells me that those citizens are happy with the service provided by the city, and I like to see that as an endorsement of the good work accomplished by our staff.

Conversely, I hear from residents who want us to pursue outsourcing. They see it as a way to reduce the city's expenses, particularly when it comes to employee-related costs like pensions. I respect that point of view as well.

The challenge for us is to make the right decision on a case-by-case basis. That can best come from a thoughtful and deliberate process like ours.

I believe that our approach to outsourcing is sound and that this is the kind of regular and diligent process that we should follow as a government. Regardless of the outcome, the fact that we go through this process is a strong management practice in our community's best interest.

RUSH HILL is the mayor of Newport Beach.

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