collection: City's Managed Competition Model Tops Private Sector

Chesapeake, Va.'s public works department has faced the competition in municipal garbage collection and has come out on top. On July 1, the department's solid waste division will begin collecting refuse, yard waste and bulky waste four days a week in the city's Western Branch area (whose 12,000 households represent 25 percent of the city's service area).

The assignment is not a new one, since the division already provides collection service city-wide. What is new is the status of the division and the public works department as lowest bidder in a managed competition.

In 1995, in an effort to determine the most economical and efficient collection method, the city council directed public works to request cost proposals from the private sector for collection in the Western Branch area. At that time, Western Branch represented the solid waste division's Monday collection area.

"We developed a 'managed competition' model which could be used to determine the lowest cost to the city for the service," says Thomas West-brook, assistant director of the public works department. "The bottom line cost to the citizens was the most im-portant consideration."

The request for proposal included a specific definition of current collection service tasks for the Western Branch area. This was important, from the public works department's perspective, because it already was providing a higher level of collection services than the city ordinance required, according to Westbrook.

Newport News, Va.-based consultant Malcolm Pirnie managed the competition process for the city. Gershman, Brickner and Bratton, Falls Church, Va., helped review and analyze Chesapeake's current system and assisted in developing the solid waste division's cost proposal.

"We felt that we were as cheap as private industry and we wanted to be able to bid on the service as well," Westbrook says.

Proposals from the solid waste division and three private firms were received. The solid waste division's proposal was audited to ensure that all costs were appropriate. This in-cluded taking into account the city's transitional and differential costs (i.e. rerouting 75 percent of the city, selling surplus trucks, notifying the public, and handling contract administration and procurement) if a contract were to be awarded to a private firm. The auditor applied these adjustments to make the solid waste division's proposal comparable with the private-sector proposals.

According to Westbrook, the evaluation team included officials not involved in creating the solid waste division's proposal, including the city purchasing director, the assistant city attorney, the assistant finance director, the public works director, and the city's private consultant.

Bill Davis, Chesapeake's purchasing director, notified the public works department that the evaluation team had determined that "the proposal submitted by the city's public works department, solid waste division, was the most responsive and responsible offer and represents the least expensive and most advantageous situation for the city."

After all the proposals were re-viewed, the bottom line showed that the city would save 39 percent over a five-year period by continuing to provide collection services in-house.

The solid waste division had strengthened its bid by finding a way to reduce the vehicles and personnel needed for collection: The division decided it could use a single, split packer to follow its lead truck and collect both overflow garbage and yard waste. In the past, two trucks had been used for these functions.

Even without this change in methods, the solid waste division's collection was cheaper than the second-lowest bidder in the managed com- petition, according to Westbrook. This came to light when, after the evaluation team made its recommendation, the city council asked that the division's service before the competition be compared to that offered by the lowest private bidder.

This practice of managed competition between the public and private sectors is not uncommon. Phoenix has been using this concept for several years. Charlotte, N.C., competitively bid 25 percent of its services to a private firm a year ago, and Chesa-peake consulted with Charlotte officials in developing its own efforts.

For local governments feeling pressure to improve efficiency (and that includes just about all of them), managed competition is so far proving to be worth a serious look.

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