Statement: “We invited private firms to bid on services performed for us by the San Diego Data Processing Corporation, which had a virtual monopoly on our information technology needs — to the tune of $42 million a year,” Mayor Jerry Sanders said at his Jan. 13 State of the City speech.
Determination: Barely True
Analysis: Here’s what we want to examine: Does DPC have a virtual monopoly on city IT?
The city paid Data Processing about $42 million last year and spent another $23 million on other information technology services, according to budget documents and city officials. So Data Processing does not have a monopoly on the city’s IT needs with 64 percent of total expenses.
City officials also describe Data Processing as a monopoly, though, because it works as the city’s primary agent for acquiring and managing IT services. In that regard, Rachel Laing, the mayor’s spokeswoman, said Data Processing has a hand in more than 95 percent of the city’s information technology services.
OK, but let’s take a step back: Why is the mayor even calling Data Processing a monopoly?
It’s no secret that Data Processing has played a longtime role in San Diego’s IT services. After all, the city actually created the nonprofit in 1979 for the purpose of being its exclusive IT services partner. It hasn’t had an exclusive contract since the 1990’s, but its board of directors is still appointed by the mayor.
Saying Data Processing has a monopoly on IT services is like saying the Fire Department has a monopoly on fighting fires, the Police Department has a monopoly on writing traffic citations and engineering has a monopoly on inspecting roads. The city created those departments, in part, to be the sole providers of those services.
But it’s easy to figure out why the Mayor called Data Processing a monopoly. The word conjures the impression of a business that has somehow carved its way into the industry, destroyed the competition and driven up costs.
Sanders, by the way, advocates for outsourcing more IT services and made that point clear after calling Data Processing a “virtual monopoly.”
“This competition will save the city millions of dollars we can put to use in our neighborhoods. And I intend to see our city realize additional savings by allowing free and honest competition to determine the costs of other city functions,” Sanders said. “This change in how we do business is long overdue.”
— KEEGAN KYLE