Faulconer Sticking by Managed Competition

Faulconer Sticking by Managed Competition

Photo by Sam Hodgson

San Diego Mayor Kevin Faulconer

City Councilman Kevin Faulconer has long been one of the city’s chief advocates of a voter-approved process to put some city services out for bid.

That hasn’t changed as he campaigns for mayor. Faulconer has repeatedly pointed to managed competition as a way to eke out cash for neighborhood needs even in the wake of two recently unveiled city reports that raise questions about the program’s effectiveness.

“It’s not about cutting. We have five managed competitions that are on the mayor’s desk, that were on the mayor’s desk the day that Jerry Sanders left office that Bob Filner did not move forward with,” Faulconer said at an Oct. 9 mayoral forum. “Ladies and gentleman, if we restart that process, conservatively speaking, there’s $20 million that we can reinvest into our neighborhoods.”

Meanwhile, a city auditor’s report revealed the first city function to go through the process actually increased costs for other city departments despite overall cutbacks that save the city about $1 million annually. City reviewers found the city’s print shop was forced to up its rates by an average of 15 percent in an effort to reconcile a 58 percent drop in ordered copies, design work and other services.

A separate review of the managed competition process conducted under Filner’s watch was even more critical. A draft report written by a former Filner administration official, first obtained by CityBeat, concluded the time and cost associated with implementing the bids – all of which have been won by city staffers – cut into the program’s projected savings and that the process itself had a chilling effect on at least one city department.

The review described a drawn-out process to implement a whittled-down fleet maintenance division as part of managed competition, which inspired many workers to leave their jobs. In the process, the report said, the city was unable to maintain enough reserve fire engines to handle potential wildfires.

Faulconer has not addressed those concerns in debates. Instead, he’s focused on what he dubs a “conservative estimate” of a potential $20 million in savings associated with five managed competition contracts Filner halted.

Other mayoral candidates have remained mostly mum on managed competition.

Their positions on the issue are crucial. The managed competition process voters approved in 2006 simply gives the city the option to allow outside groups to bid on city services. The next mayor will ultimately decide whether to proceed with the program.

Only Faulconer appears certain to do so.

Faulconer told Voice of San Diego Friday that the managed competition process should remain the city’s strongest tool to save cash. But he acknowledged the program could be improved.

“It’s a new program in this city, it’s a change of business as usual for this city,” Faulconer said. “What we cannot do is stop that program. What we should do is to make sure that’s working the best that it can, make any changes that are necessary to make sure it’s implemented, and implemented correctly.”

Faulconer didn’t offer any specifics on necessary changes but said he’d be open to formal talks with city unions to make necessary tweaks to the program.

A Faulconer staffer later revealed the source of the councilman’s $20 million estimated savings claim. The councilman projected the outcome of future competitions by assessing the estimated savings associated with five managed competitions Sanders pushed forward that are now on hold. Faulconer’s staffers compared each corresponding city department’s budget and came up with an average of 18.6 percent savings for past competitions. Faulconer assumed the five on-hold competitions would bring similar savings. The average 18.6 percent savings translates into $26.1 million but Faulconer has opted to use a more conservative $20 million estimate, a spokesman said.

(The potential managed competition functions that remain in queue are public utilities’ customer service, capital improvement program delivery, transportation engineering operations and solid waste collection. Interim mayor Todd Gloria recently halted a storm-water facilities operations and maintenance competition.)

Other mayoral candidates are less convinced managed competition is the best way to accomplish such savings.

Former Assemblyman Nathan Fletcher said Friday he wouldn’t rule out managed competition as an option but views it as a last resort.

“You can achieve savings and efficiencies in a quicker, faster way,” Fletcher said. “I would argue through (better) management we could achieve greater savings at a quicker rate in a much less contentious process.”

Councilman David Alvarez was also skeptical of managed competition. He said the fact that employees have won each bid thus far shows the city should focus on other approaches.

“These savings could have been achieved through the city’s normal budget process without the cost and acrimony of managed competition,” Alvarez said in a statement. “The budget process has the added benefit of being much faster and more flexible in response to changing circumstances.”

Former City Attorney Mike Aguirre, who supported the managed competition ballot measure in 2006, said he’d prefer to have the city auditor’s office review each city department and decide whether managed competition or other efficiency programs make sense.

Faulconer, however, remains committed to the program.

“Managed competition is one of the most important things that we can be doing as a city to save dollars so we can reinvest those dollars in the neighborhoods, and we need a mayor who is going to support this program, that is going to make any necessary changes but will not go backwards,” he said.

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Lisa Halverstadt

Lisa Halverstadt

Lisa Halverstadt is a reporter at Voice of San Diego. Know of something she should check out? You can contact her directly at lisa@vosd.org or 619.325.0528.

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11 comments
Don Wood
Don Wood

Wonder what would happen if the city subjected the mayor and city council members jobs to private sector competition?

Don Wood
Don Wood subscriber

Wonder what would happen if the city subjected the mayor and city council members jobs to private sector competition?

Joe Point
Joe Point

Mr. Jones (who tends to monopolize comment sections) appears to have a particular affinity for sock puppet imagery when referring to Mr. Alvarez .......regardless of the article topic. Perhaps while next listening to his favorite talk radio he should take a look in the mirror? He just might see a sock puppet up close.

Jim Jones
Jim Jones

Alverez is funny. He says reductions in city departments can be done without acrimony. Even he can't be wet behind the ears enough to believe that, could he? No one is that clueless, are they? Managed competition is mandated by the voters, and it has one enemy, greedy union employees who will do everything they can do to get more of our money. The battle is to make the process sabotage proof, and you can't do that with people like Alverez who are nothing more than union prepped sock puppets.

Jim Jones
Jim Jones subscriber

Alverez is funny. He says reductions in city departments can be done without acrimony. Even he can't be wet behind the ears enough to believe that, could he? No one is that clueless, are they? Managed competition is mandated by the voters, and it has one enemy, greedy union employees who will do everything they can do to get more of our money. The battle is to make the process sabotage proof, and you can't do that with people like Alverez who are nothing more than union prepped sock puppets.

Mark Giffin
Mark Giffin

Managed competition If implemented correctly, with the political will to do it correctly, will lead to savings. Just the specter of competition by itself will cause a "sharpening of pencils" in generating cost savings. Its human nature.

Mark Giffin
Mark Giffin subscribermember

Managed competition If implemented correctly, with the political will to do it correctly, will lead to savings. Just the specter of competition by itself will cause a "sharpening of pencils" in generating cost savings. Its human nature.

Bill Bradshaw
Bill Bradshaw

First, let’s forget the Citybeat interpretation of an unfinalized report; it’s nonsense to even talk about it based on the information presented. Let’s boil this discussion down to the basics: Anyone who is counting on union votes to get elected, whether it’s for mayor, city council or any other city elected position is not going to embrace managed competition. Why? Because, regardless of the outcome, there is at least a threat that some union worker will lose his or her job, and city jobs are supposed to be permanent sinecures. This explains why Filner stonewalled it, why Alvarez is doing the Jackie Gleason “humma, humma” routine, and why Fletcher cites the good old solution, “better management” as the real answer (I’d love to ask him how he’s going to achieve that). The real issue here is whether the city has the unfettered right to subcontract work, even if it results in the layoff of employees currently doing the work. As I recall, the City Attorney answered the question in the affirmative. If this is the case, managed competition as a way of accomplishing savings, is simply fluff. Faulconer has the most honest approach, he’s for it because he knows it’s going to save money if it’s done right. So far, there have been problems, and they will continue until some disinterested third party gets involved. Workers and their managers are going to fudge the calculations, just like teachers help their students cheat on tests when it threatens their security. I’d recommend a citizens committee heavily laden with people with actual experience in the function involved be the judge of the competitions. In the private sector, where cost is often the overriding issue, you can usually be sure of savings. In the public sector, not so much. This city is NOT out of the woods financially yet, although progress has certainly been made. Every body you can get off the payroll as fast as you can helps the situation. The fact that, on average, city employees cost far more than in the private sector ought to be motivator enough. That is cold, of course, but that’s where we actually are. We can’t afford to keep kicking the infrastructure can down that road indefinitely, and the quickest way to generate the funds necessary is to drastically reduce the payroll, which constitutes by far the largest share of costs.

Bill Bradshaw
Bill Bradshaw subscribermember

First, let’s forget the Citybeat interpretation of an unfinalized report; it’s nonsense to even talk about it based on the information presented. Let’s boil this discussion down to the basics: Anyone who is counting on union votes to get elected, whether it’s for mayor, city council or any other city elected position is not going to embrace managed competition. Why? Because, regardless of the outcome, there is at least a threat that some union worker will lose his or her job, and city jobs are supposed to be permanent sinecures. This explains why Filner stonewalled it, why Alvarez is doing the Jackie Gleason “humma, humma” routine, and why Fletcher cites the good old solution, “better management” as the real answer (I’d love to ask him how he’s going to achieve that). The real issue here is whether the city has the unfettered right to subcontract work, even if it results in the layoff of employees currently doing the work. As I recall, the City Attorney answered the question in the affirmative. If this is the case, managed competition as a way of accomplishing savings, is simply fluff. Faulconer has the most honest approach, he’s for it because he knows it’s going to save money if it’s done right. So far, there have been problems, and they will continue until some disinterested third party gets involved. Workers and their managers are going to fudge the calculations, just like teachers help their students cheat on tests when it threatens their security. I’d recommend a citizens committee heavily laden with people with actual experience in the function involved be the judge of the competitions. In the private sector, where cost is often the overriding issue, you can usually be sure of savings. In the public sector, not so much. This city is NOT out of the woods financially yet, although progress has certainly been made. Every body you can get off the payroll as fast as you can helps the situation. The fact that, on average, city employees cost far more than in the private sector ought to be motivator enough. That is cold, of course, but that’s where we actually are. We can’t afford to keep kicking the infrastructure can down that road indefinitely, and the quickest way to generate the funds necessary is to drastically reduce the payroll, which constitutes by far the largest share of costs.

Tony Manolatos
Tony Manolatos

Lisa- Good story but I'm not sure why you didn't include the info I shared w/you last week. I think it adds to your reporting, so here it is. | Hi, Lisa: In case you haven't seen this, here's something for your piece from Todd Gloria, who was a skeptic but is now a supporter of putting city services out to bid. Todd has been at the city for several years, so he knows what works and what doesn't. Anyone who doesn't have that experience and is critical of this program should talk to Todd and Kevin. From the U-T: “I definitely came in incredibly skeptical of managed competition,” Todd Gloria said. “But the savings have been undeniable and they’ve been incredibly helpful as we’ve weathered some of our budget needs. I think that what we have to do is continue on the path that we have been on.” The city faces a deficit of as much as $84 million in its $1.1 billion operating budget, according to the independent budget analyst, so Gloria said the search for savings needs to continue. “When you look at the potential of what we’re facing in terms of the worst-case scenario, managed competition is one of the options that we have that is more palatable than drastic reductions to neighborhood services or tax increases,” he said. “Obviously I know (Filner) has opinions on managed competition, but he and I probably started out in the same place on the issue. I’ve just had more exposure with it and have been supportive of all but one of the competitions that have come forward.” http://www.utsandiego.com/news/2012/Dec/08/filner-faces-dispute-over-bidding-city-services/2/?#article-copyFilner faces dispute on fiscal reformhttp://www.utsandiego.com/news/2012/Dec/08/filner-faces-dispute-over-bidding-city-services/2/?#article-copyGloria once opposed managed competition but said he's evolved on the issue and now sees it as a valuable cost-saving tool. "I definitely came in incredibly skeptical of managed competition," he said. "But the savings have been undeniable and they've ...

Tony Manolatos
Tony Manolatos subscriber

Lisa- Good story but I'm not sure why you didn't include the info I shared w/you last week. I think it adds to your reporting, so here it is. | Hi, Lisa: In case you haven't seen this, here's something for your piece from Todd Gloria, who was a skeptic but is now a supporter of putting city services out to bid. Todd has been at the city for several years, so he knows what works and what doesn't. Anyone who doesn't have that experience and is critical of this program should talk to Todd and Kevin. From the U-T: “I definitely came in incredibly skeptical of managed competition,” Todd Gloria said. “But the savings have been undeniable and they’ve been incredibly helpful as we’ve weathered some of our budget needs. I think that what we have to do is continue on the path that we have been on.” The city faces a deficit of as much as $84 million in its $1.1 billion operating budget, according to the independent budget analyst, so Gloria said the search for savings needs to continue. “When you look at the potential of what we’re facing in terms of the worst-case scenario, managed competition is one of the options that we have that is more palatable than drastic reductions to neighborhood services or tax increases,” he said. “Obviously I know (Filner) has opinions on managed competition, but he and I probably started out in the same place on the issue. I’ve just had more exposure with it and have been supportive of all but one of the competitions that have come forward.” http://www.utsandiego.com/news/2012/Dec/08/filner-faces-dispute-over-bidding-city-services/2/?#article-copyFilner faces dispute on fiscal reformhttp://www.utsandiego.com/news/2012/Dec/08/filner-faces-dispute-over-bidding-city-services/2/?#article-copyGloria once opposed managed competition but said he's evolved on the issue and now sees it as a valuable cost-saving tool. "I definitely came in incredibly skeptical of managed competition," he said. "But the savings have been undeniable and they've ...