When the city of Brookhaven begins providing services to citizens it plans to outsource most of them to private firms.
Public-private partnerships are the template for Georgia’s new cities. Sandy Springs pioneered this approach to government when it incorporated in 2005. Other new cities have imitated it, spending millions of taxpayer’s dollars to pay private firms to do everything from running courts to paving streets.
“Our initial contract was with CH2MHill, and they provided all of the outsourced services under a single contract,” Sandy Springs City Manager John McDonough said in an email. “At the city’s five year mark, the Mayor and Council saw that the private sector model worked for Sandy Springs, and wanted to see if we could realize additional savings by breaking out the service areas and bid out those contracts individually.”
The city reported saving $7 million annually by awarding contracts to five different companies instead of using one.
One notable exception to this model is police and fire services. In Sandy Springs and Dunwoody, public safety employees work for the city.
“Georgia doesn’t allow for outsourcing police and fire,” Dunwoody City Manager Warren Hutmacher said. “The Legislature is not comfortable with for-profit firms providing public safety services.”
The contracts are selected using a public bid process, with city council members awarding contracts to selected firms. Sandy Springs Assistant City Manager Eden Freeman has assisted Brookhaven with its bid process, setting the city up to us a task-order model similar to Sandy Springs.
In Sandy Springs and Dunwoody, the city manager is a city employee, like police officers and firefighters, and the city manager’s team makes sure the contracts are fulfilled.
Dunwoody and Sandy Springs have a different approach to dealing with contractors that don’t live up to expectations.
Sandy Springs gives contracts to multiple firms for each service, creating a runner-up system that allows the city to switch contractors without rebidding the contracts.
“The work is assigned annually through issued task orders,” McDonough said. “If a company’s work does not meet the city’s requirements, the city can issue a task order to one of the other contracted companies without having to start over in the procurement process.”
Hutmacher said Dunwoody’s approach allows the city to find another firm while keeping the current contract.
“We’ve got six month clauses in the contract so that if we wanted to let somebody go we can require them to stay with us for six months and that gives us time to find the next firm,” he said. “ … We know the market place can respond very nimbly when there’s a need.”
The two city managers also have different opinions about how much money taxpayers save using outsourcing versus the traditional city model.
McDonough said cost savings is one of the main advantages of outsourcing.
Oliver Porter served as Sandy Springs interim city manager in the early days and helped bring the city’s unique public-private partnership model to life. He said it had been done on a more limited basis in other cities, but the scope of Sandy Springs outsourcing was revolutionary.
The biggest advantage, he said, was avoiding the long term costs of hiring employees.
“Sandy Springs has no long-term liabilities,” Porter said. “That means no debt, and no unfunded liabilities for pensions and other benefits and that’s the problem that has been dragging other cities into bankruptcy.”
Hutmacher said he sees the advantage of outsourcing as getting more value for the money cities spend, saying it would be cheaper to go the traditional route.
“If you’re comparing it to a bloated, inefficient government structure, sure it’s cheaper to outsource,” he said. “But if I have to build from the ground up I’m not going to build a pension program and all the programs that go with that.”
To explain why the higher costs of outsourcing are worth it, Hutmacher compared it to managing a football team.
“For example, in public works we have a very lean staff that’s assigned to us on a full time basis,” he said. “However if we get into a complicated situation, we can bring in somebody from that firm as part of the flat fee that we’re paying to do that work that’s on the bench who provides us expertise we wouldn’t have access to otherwise.”
While Hutmacher held a more nuanced view of the practice, McDonough and Porter said there are no drawbacks to outsourcing Sandy Springs services.
“I haven’t been able to find any yet,” Porter said.