After a voter initiative, lawsuit, conflict of interest problems and thousands of hours of negotiations, it was probably the only avenue left for the city of San Diego’s stalled outsourcing program: Impasse.

This morning, the city’s blue-collar workers union issued a press release stating the union and the city had indeed reached that point in negotiations over the implementation of the outsourcing program, known as “managed competition.” The city’s Municipal Employees Association also is included in the impasse declaration.

Managed competition, a signature Mayor Jerry Sanders program passed by voters in 2006, seeks to subject city services to a bidding process that could result in the outsourcing of those services. Proponents cite substantial cost savings if it were implemented.

The unions say managed competition, as Sanders is pushing it, could erode many protections that civil service workers now have.

The two sides reached impasse last week. Local 127 stated that Sanders had changed his stance on healthcare and job security issues, according to its release:

After much give and take on both sides, the [American Federation of State, County and Municipal Employees] Local 127 bargaining committee came to the conclusion that the remaining issues on which the City and the Union did not reach agreement were fundamental and that progress would not occur with further negotiations.

City Human Resources Director Scott Chadwick issued a memo to City Council today that served as a written request for an impasse hearing before council. He detailed the city’s positions on those issues — such as no bid adjustments for healthcare costs — in the memo.

The city is planning to hold final impasse meetings with labor unions next week, Chadwick’s memo said. If the disagreements are not resolved, then the issue will go before City Council, with council members voting whether to impose Sanders’ managed competition plan, go with the union alternative or send both sides back to the table with instructions. This could happen as early as Oct. 13.

Local 127 representative Damian Tryon said he believed the disagreements could have been handled through negotiation. “I think we could have solved them and just implemented them, and got this done sooner,” he said.

But Tryon and others say they are pleased that managed competition will receive a public forum.

Last month, Councilwoman Donna Frye and Councilman Carl DeMaio issued a joint memo asking Sanders for a status update in a closed council session, though they have different ideas on how the program should be implemented. They received that update within the last two weeks, and are looking forward to airing the issues in open session.

“It’s overdue that we have these discussions,” Frye said. “Do I believe that we can do things better? Yes. Do I believe managed competition is a panacea that will solve all the problems facing the city? To believe that is to believe a fairy tale.”

Frye emphasized her concern about the city’s oversight of internal and external contracts. She also called DeMaio’s criticisms of council members who don’t support the program without citing specifics, “irresponsible.”

“If you want to have a debate, fine,” she said. “If you want to use inflammatory statements, not fine.”

DeMaio stood by his comments and called out council members Marti Emerald and Todd Gloria as being against the program entirely.

He said if council doesn’t side with the mayor then he will support a stronger managed competition ballot measure to put before voters.

“I believe the people must rise again,” DeMaio said.

Update: Just got off the phone with Scott Chadwick, the city’s human resources director. He said the mayor’s office believes it has put the best offer on the table for the city’s taxpayers and it is something the City Council can approve. Chadwick also took issue with a 2008 Independent Budget Analyst reportreferenced in Local 127’s press release this morning. The report says, “There is agreement by all parties that health care costs will be excluded from consideration.” The mayor’s office never agreed to do so, Chadwick said.

— LIAM DILLON

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