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99-549Council File # 9 9� S�� Green Sheet # � +�So RESOLUTION CITY OF SAINT PAUL, MINNESOTA Presented By Referred To 2 RESOLVED, that in order to facilitate the formation and effective work of a labar- 3 management committee on the principles and operation of the Compete St. Paul program, the 4 Council hereby states its intent, and formally requests, that the Mayor put on hold any fixrther 5 actions to implement Compete St. Paul for tree-trimmiug and grass-mowing until such time as 6 the labor-management coxnmittee, or administration and St. Paul Works Alliance sepazately, 7 shall report to the Council on the progress made; and, be it 9 FURTHER RESOLVED, that the labor-management committee, or if no such committee 10 can report, the admirustration and the St. Paul Works Alliance, report back to the Council at its 11 regular meeting on August 4, 1999. 12 13 14 Aequested by Department of: By: Form Approved b iy Attorney �: �.� �tt� G - y -�9 Approved by Mayor for Submission to Council BY� Y: Approved by Mayor: Date By: " �'�"' �' "' \ ' 6 Adopted by Council: Date � \ ` \� \ Adoption Certified by Counci Secretary �q-.��y DEPARTMQJLOFFICNCAUNCIL DATE WmAtED c�t coun��� June 9, 1999 GREEN SHEET No 64050 COMACT PERSON & PFiOtJE InXl�l� uNtlaWme All Councilmembers �,�,�,��� p ,,,� MUST BE ON COUNCIL AGENDA BY (DA7t� AsSlcx June 9, 1999 �� arrwnon�r anurnK rtamxc �� ww�un�aEnncFSOa� wnwcu�mnnaccrc ❑rnrort(oaASLSTAMr) ❑ TOTAL # OF S{GNATURE PAGES (Cl.lP ALL LOCATIONS FOR SIGNATURE) CTION RE�UESTED Requesting that the Mayor put on hold any further actions to implement Compete St. Paul for tree trimming and grass mowing until such time as the labor management committee, or administration and St. Paul Works Alliance separately, report to the Council on August 4, 1999, on the progress made. RECOMMENDATIO Approve(A)orReject(R PEIISONALSERVICECONiAACi5MU5TAN5WER7XEFOLLOWIN6QUE5TION5: 1. Has this persoNfirm e�xr vrorked undx a contracf far this tlepe�fineM7 PLANNING COMMISSION YES NO CIB CAMMITTEE 2. Fiasthis pereaVCrtn ever been a city empbyee? CIVIL SERVICE COMMISSION rES No 3. Dces this persoNfirtn possess a sldll not nwmallypossessed by arry curteM ciF/ emPloyee� YES NO 4. Is tliis persoNfim� a tarpeted vendoY) YES NO E�lain all yes a�v�ers on sepa2te sheet aM attach to green sheet INRIATING PROBLEM ISSUE, OPPORTUNI'fY (Who, What, When, Wliere, Why) ADVANTAGESIFAPPROVED DISADVANTAGESIFAPPROVED � DISADVANTAGES IF NOT APPROVED TOTALAMOUNTOFTRANSACTIONf COST/REVENUEBUDCETED�CIRCLEON� YES NO FUNDING SOURCE ACTIVITY NUMBER FlNANCW.INFORMATION (EXPWN) . �. CITY OF SAINT PAUL 390 Ciry Hai[ Tekphone: (651J 26685l0 Norm Colemart, Mayor IS West Xei[ogg Boulevard Facsimi(e: (651) 266-85l3 Saint Paul, Mi'utesora 55102 June 16, 1999 Deaz Councilmembers: I have received CF 99-549 requesting me to suspend implementation of portions of the Compete Saint Paul process until August 4th. I am extremely disappointed that the City Council felt it necessary to adopt such a resolution and I will not sign it. Compete Saint Paul is a top priority of my administration and will continue to be as long as I am Mayor. When I fust announced this uuriative, I stressed that a focus on competition was necessary to ensure that the important services we provide our public are of the highest quality and the best value to our cirizens. Compete Saint Paul is a means the City must explore to help us become more competirive. We are taking important steps that I believe will make Compete Saint Paul a<, success. Following the CounciPs recommendation, my office has already contacted a number of union leaders to determine what we will need to do to establish a labor-management task force. The response has been positive and I am co�dent we can work together, labor and management, as we embark on this exciting and important project. Change is difficult. I recognize the apprehension among some because Compete Saint Paul will significantly change the way we view our role as a service provider. We are challenging the status quo and the idea that public employees should not have to compete for services they currenfly provide. However, I am dismayed by the words and actions of some who cannot see the enonnous potential for both city employees and Saint Paul taxpayers. � In addition, the Council's request to put a hold on moving forwazd with the tree- himining and grass-mowing projects unril the admuustration and union groups can discuss and report on union issues will slow our efforts to understand how this process can work at the project level. The unions have asked that city employees be thoroughly trained in developing bids and that qualified managers or consultants be available to assist in this process. They also have called for establishing an Activity Based Costing system to provide accurate cost comparisons between city and private bids. r_ -� �19 5 `�� Letter to City Councilmembers June 16, 1999 Page 2 From the outset of this process I have articulated these ideas and have looked forward to implementing them in the context of tl�e inirial services selected for competition. Questions or di�culries that may arise during the costing and trauvng phase could be addressed and resoived at the project level. We wili learn from these initial experiences. We will improve and refine our apprflach with future projects. Furthermore, concems about trauung and costing could be brought to the labor-management committee. My priority now is to proceed with hiring a qualified consulting fum to tr�ain the Compete Saint Paul Executive Board in the Activity Based Costing methodology and develop a training outline and timeline for the initial competirion projects. I will suspend training for city employees on the grass mowing or iree h�imming projects unril we have discussed the "principles of participarion" with labor representarives. However, I will not support any future efforts to delay the process or alter the composition of the Compete Saint Paul Executive Board. I am committed to moving Compete Saint Paul forward and I believe we aze on the right track. I welcome yow continued interest in this process and I ask for yout � openness and cooperation as we work to make it a success for city employees and Saint Paul cirizens alike. Sincerely, �UD Norm Coleman Mayor cc: Compete Saint Paul Executive Board City Council aides y9 �s �4 City of Saint Paul City Council Research 310 City Hall Saint Paul. MN 55102 (612)266-8560 INTER-DEPARTMENTAL MEMORANDUM DATE: May 21, 1999 TO: Susan Kimberly O�ce of the Mayor FROM: Nancy Anderson Assistant Secretary to the City Council SUBJECT: City Council Action. At the City Council Meeting on May 19, 1999, the Council took formal action to refer to the Administration the attached "Principles of Participation" by the Saint Paul Works! Alliance and report back your impressions, etc. to the Council at their June 9, 1999, meeting. This report by the Administration will be listed under "Discussion" on the June 9th Agenda. NA Attachment: Principies of Participation 99 s�9 Princ�ples of I'art�ci�atio� �y the Saint Paui Works! Alliance i. Union (i.e. labor) representatives wiIl be involved in the development and implementation of a competition program that incorporaYes the report of the Compete Saint Paul Task Force who have been selected by their exciusive representational organizations. 2_ As Compete Saint Paul is a collaborative effort between management and labor, employees and union representatives will be allowed to participate in all aspecYs of the competirive bid process during the normal work day and without any loss of pay. 3. City employees currently providing a service will have an opportunity to undertake a competiUve assessment of the service prior to designating that service for public- private competition. Such assessment shali inciude the identification of readily achievable efficiency and effectiveness improvements. 4. Transition costs, administrative costs of contract management, as well as the relinquishing of managerial and operational discrelion will be recognized when transferring public service delivery to private industries. Therefore, the City wili continue to deliver a service in-house where potenrial savings from outside service delivery are less than 10% of the cost of providing the service. 5. Prior to any City service being subjected to a public-private competition, the Mayor will certify to the City Council that the potential economic advantage of contracting out outweighs the public's interest in having a particular service performed directly by City government. After written receipt of such certification from the Mayor, the City Council wiil have 30 calendar days to hoid hearings on the certification and decide whether or not to approve each recoznmendation for public-private competition. 6. City employees, supervisors and managers will be thoroughly trained to effectively prepaze them to develop bids and proposals for publio-private competitions during the workday without loss of pay. 7. Qualified and experienced managers wiil be available to assist in the competitive assessment and the development of bids or proposals. In cases where qualified an� 99 s�9 e�perienced managers aze not available, the City at no additional ezcpense to the groposal will provide a eonsultant. 8. Other necessary resources for the purpose o£ encoura�ng and assisting present city employees to o �aanize, prepare and submit a bid or proposal for services presented for competition will be provided. 9. All contracts entered into as a result of competitive bidding wiil require that the wa�es paid to the occupationai �oup utilized in such work will not be less than the wages and fringes paid to comparabie positions in the classified Civil Service System. In addition, federal, state and local David-Bacon legisla4ion will apply to all covered occuparions. 10. The City wiil establish an Activity Based Costing System that will provide for an accurate comparison of costs between a City bid or proposal and that of a private Contractor. Only costs that wouid be avoided if a service were privatized will be included in those comparisans. 11. When comparing in-house costs and contractor costs, the contraetor's cost of providing a service and any continuing city costs that would be direetly associated with the contracted function, will be included. Continuing costs shall inciude, but not be limited to, inspecrion, supervision and monitoring. 12. No employee wiil be laid off, terminated or reduced in salary as a result of the Compete Saint Paul initiative. 13. Successful contractors wiil be required to offer available posirions to empioyees of the City of Saint Paul doing similar work. 14. Successful contractors will agree to recogiize the Unions representing affected employees, ahide by existing collective bargaining agreements and negatiate successor Agreements. 15. No privatization or comperition for City services will be initiated unYil the conditions of participation have been established and agreed upon. If other major areas of disagreement arise that aze not otherwise covered within these outlined principles, such issues will be resolved through the Labor/Management process as outli�ed above. Rev. Si 17/99 Opeiutc#12LN y9--r�9 ����ciples of Participation By the Saint Paul Works! Alliance 1. Union (i.e. labor) representatives will be involved in the developmeat and implementation of a competition prograzn that incorporates the report of the Compete Saint Pau1 Task Force who have been selected by their exclusive representaxional organizations. 2. As Compete Saint Paul is a collaborative effort between management and labor, employees and union representatives will be allowed to participate in all aspecis of the comperitive bid process during the normal work day and without any loss of pay. 3. City employees currendy providing a service will have an opportunity to undertake a competitive assessment of the service prior to designating that service for public- private competition. Such assessment sha11 include the idemification of readily achievable efficiency and effectiveness improvements. 4. Transition costs, administrative costs of contract management, as well as the relinquishing of managerial and operational discretion will be recognized when transferring pubiic service delivery to private industries. Therefore, the City wiil conrinue to deliver a service in-house where potential savin�s from outside service delivery aze less than 10% of the cost of providing the service. 5. Prior to any City service being sub}ected to a pubtic-private competirion, the Mayor will certify to the City Council that the potential economic advantage of contracring out outweighs the pubiic's interest in having a particular service performed directly by City govemment. After written receipt of such certification from the Mayor, the City Council will have 30 calendar days to hold hearings on the certification and decide whether or not to approve each recommendation for publio-private competition. 6. City employees, supervisors and managers will be thoroughly trained to effectively prepare them to develop bids and proposals for public-private competitions durin� the workday without loss of pay. 7. Qualified and experienced managers will be available to assist in the competirive assessment and the development of bids or progosals. In cases where qualified and 9� 3 s�y experieaced managers aze not available, the City at no additional expense to the proposal will provide a consultant. 8. Other necessary resources for the piupose of encouraging and assisting present city employees to o a�anize, prepare and submit a bid or proposai for services presented for competition will be provided. 9. All contracts entered into as a result of competitive bidding will require that the wa�es paid to the occupational group utilized in such work will not be less than the wages and fringes paid to compazabie positions in the ciassified Civil Service System. In addition, federal, state and locai David-Bacon legisiation will apply to all covered occupations. 10. The City will establish an Activity Based Costing System that will provide for an accurate comparison of costs between a City bid or proposal and that of a private Contractor. Only costs that would be auoided if a service were privatized will be included in those comparisons. 11. When comparing in-house costs and contractor costs, the contractor's cost of providina a service and any continuing city costs that would be directly associated with the contracted function, will be included. Continuing costs shall include, but not be limited to, inspection, supervision and monitoring. 12. No employee will be laid off, terminated or reduced in salary as a result of the Compete Saint Paul initiative. 13. Successful contractors will be required to offer availabie positions to employees of the City of Saint Paul doing similaz work. 14. Successful contractors wiil agree to recognize the Unions representing affected employees, abide by existing collective bargaining agreements and ne�otiate successor Agreements. 15. No privatization or competition for City services will be initiated until the conditions of participation have been established and agreed upon. If other major areas of disagreement arise that aze not otherwise covered within these outlined principles, such issues will be resolved through the Labor/Managemeat process as outlined above. Rev. 5i 17/99 Opeiutc# 12LN 99 � �� Compete Saint Paul Policy Session Agenda L Overview of Privatizarion and Comperirion A. Dr. Beth Honadte, Department of Applied Economics, University of Minnesota II. The Compete Saint Paul Program - Compete St. Paul Execufive Board A. Background B. Goals C. Process D. Future IIL Competirion From a Private Sector Perspective A. Tim Matx, Saint Paul Chamber of Commerce IV. Compefirion From a Labor Perspective A. Dr. Chuck Davis, Director of Private Sector Programming for Labor Education Services, Industrial Relations Center, Carlson School of Management, University of Mimiesota B. Shar Knutson, Saant Paul Trades and Labor Assembly, AFL-CIO V. Public Comment VI. Council Questions 9y-� �y C'rly of St. Pauf Office of the City Council 320 City Hall Saint Paul, MN 55102 (651) 266-8588 INTER-DEPARTMENTAL MEMORANDUM DATE: May 13, 1999 TO: City Councilmembers FROM: Jennifer Rundl�Policy Analyst SUBJECT: Overview of Contracting in Saint Paul Government Tlus memo provides a very brief overview of the practice of contracting wiUun Saint Paul City government. With the recent creation of the Compete Saint Paul Executive Board, the issue of competition has come to the forefront of many discussions, though contracting has been a common practice over time for a number of City services. The Compete Saint Paul Execuuve Board is institutionalizing the practice within the City and allownig City employees to formally bid on contracts, a practice that has historically been missing from the bidding process. The following list is not a complete tabulation of all the services that have been contracted out, but rather it shows the variety of services that have been contracted. These services either have been or currently are being provided by the private sector, though in many cases the entire function has not been completely contracted out, but rather City employees perform the same service in conjunction with the contractors: ❑ Garbage collection - completely privatized ❑ Diseased tree removal - City and private sector contractors ❑ Snow plowing on select routes - City and private sector contractors ❑ Asphalt, sand, salt hauling - City and private sector contractors ❑ Security systems for libraries and recreation centers ❑ Building cleaning far City Hall Annex and RCGC West - private contractor ❑ Towing - private contractors ❑ Office supplies - private contractor ❑ Engineering and design services for construction - City and private contractors ❑ Legal Services - City and private sector contractors ❑ Street paving, lighting, construction - City and private contractors Utilizing a private contractor is not the only way to sa�e taYpayers money and make government more efficient. Contracting among governmental entities through Joint Powers Agreements is a common practice. In some cases, a government will provide a service to another far a fee, such as fire dispatch services provided to Roseville by the Saint Paul Fire Deparhnent. In other cases, the governmental entities may combine their functions, such as the Saint PauURamsey County 99- � ��' Public Health Aepartment. Current efforts aze also underway to examine the feasibility of consolidating the Saint Paul Workforce Development Program and the Rawsey County Job Traiuing Program. TWO SHORT CASE STUDIES Garbage Collection Prior to 1971, the City of Saint Paul collected food waste only, "gazbage," and private haulers collected rubbish, such as paper products. Private incinerafion was banned in 1971, increasing the burden of refuse and gazbage haulers, and the Ciry was told by the Minnesota Pollution Control Agency to examine the adequacy of the hauling system and determine the capability to handled the increased amount of refuse. As a result, a combined collec6on system of private and public haulers was instituted, and the two sectors competed for customers. The City system operated with only small losses throughout the 1970's until 1979, when the losses nearly tripled. Two factors have been attributed to the loss: a sharp rise in fuei costs and rising landfill disposal costs. Private contractors also faced rising costs, but were able to react negotiate some service delivery changes with customers and in some cases even trade customers with other private haulers, creating more efficient routes, to mitigate the rising costs. The City's process for raising charges prevented it from immediately raising rates. The City also paid higher wages and benefits, was unable to mold services to customer needs, and did not advertise because of a concern about using public funds for advertising. The City chose to terminate its collection service beginning May 9, 1980. The affected employees were reassigned elsewhere within Public Works or other City departments. The system of all private haulers competing against each other for business still exists today in Saint Paul. It is interesting to note that the City of Minneapolis has both public and private haulers. The question then arises: why did the combined system work there and fail here? A few factors come into play. First, city crews and private haulers in Minneapolis have designated areas to serve and have concentrated collection areas, which Saint Paul did not. Saint Paul crews and private haulers would collect refuse from all parts of the City, lengthening the distance between stops and increasing fuel costs, particulazly given that at the time, garbage trucks got only three to four miles per gallon. In addition, Minneapolis residents pay for gazbage service as part of their water bill, thus ensuring that everyone has garbage collection service. Differences between revenues and expenditures for gazbage collection are covered by the General Fund. In Saint Paul, residents contracted individually for service, so some residents do not have service. Instead they illegaliy dump their trash in someone else's gazbage cans or in public waste receptacles, or they may even dump it in an empty lot. In some cases, they may have worked out an arrangement with a relative to place their trash in with the relatives', particularly if they do not generate much refuse and do not wish to pay for regular service. - �/Gi-.� �y PubLic Works The Department of Public Works contracts with private fircns for a variety of services. The City will compare a contractor's cost with the City's cost and determine whether the work should be contracted. In some cases, the City simply doesn't have enough staff or equipment to work on all the projects, and it is more economical to hire a contractar fhan to hire temporary empioyees to do the work and rent the necessary equipment. Some snow plowing routes, namely dead ends and cul-de-sacs, aze handled by private contractars. Cost comparisons are also done for these routes. By contracting out some routes, the City does not have to hire as many full time plow drivers, or hire temporary employees. The contractors are hired on a yearly basis. Contracting has proven to be very effective in ensuring that projects aze completed in a timely manner and the costs are kept at a reasonable level. It also ensures a high levei of service for citizens. CONCLUSION Contracting is not the answer to creating efficiency or cost savings in every situation. The City has in the past considered contracting out for animal control services, but found that the City could actually exceed the services a contractor could offer. In other cases, the City has found ways to reduce costs as a result of hiring a contractor or opening a service for bidding. In other instances throughout the City, contracts have been awazded but the contractar has failed to foilow through, thus causing the City to have to resume the function and pursue corrective actions, thus tying up additional staff hours in litigation or other actions against the contractor. Contracting is a common practice in government, and it takes an many forms. The various options should be weighed against each other before any final decisions are made. In many cases government can be a competitor, and in instances where it simply cannot be, other opfions ought to be considered. 9� � 5�y City of St. Paul Office of the City Council 320 City Hafl Saint Paul, MN 55102 (651) 266-8588 INTER-DEPARTMENTAL MEMORA{VDl7M DATE: May 13, 1999 TO: City Councilmembers FROM: Jennifer Rundl�Rolicy Analyst SUBJECT: Suggested Process for Opening City Services to Competitive Bidding This memo outlines some basic information that should be present in any decision-making process to open City services to competitive bidding. The ideas aze gleaned from information provided by the National League of Cities and by the State of Colorado's Commission on Privatization. Step L Identify services that will not be opened to competition. These are most often core services which are imperafive to maintaining life and safety, such as police and fire services. After iden6fying services that will not be opened to competition, ask the following questions to deternune whether or not to privatize the remaiuing services: 1. Should the City be responsible for a given function? 2. Is there a policy reason why the City should perform this function? 3. Is the City currently successful at performing the function? 4. Can the City become more effective and/ar efficient at performing the function? Step 2: Evaluate and priorifize the remanung options available for competition. 1. Identify the functional components of a service - tailor procurement to fit the market 2. Perform a"Yellow Pages TesY' to detemune the potential number of competitars. A Yellow Pages Test is a determination of the availability of similar services in the azea. For exasnple, if a CiTy elects to contract out its landscaping services, it can search for landscapers in the azea. Since there are probably many private sector providers, the private market will probably be very competitive. If there are no private sector providers in the azea, contracting out the service may not be the best oprion for nnproving the service. Step 3: Calculate the cost of providing the service and contracting the service. 1. Utilize Acfivity-Based Costing (ABC): Allocate costs based on activity (such as total cost to fill potholes) rather than by accounting category (such as salaries, equipment, supplies, etc.) 2. Compare the cost of providing the service with the contract cost. �� ��9 contractor cost - Total contract cost = �'e cost } of the contract to the City iinistrahon cost - of procurement, ract negofiation, awazd, processing ndments, change ;rs, dispute �„ :essing invoices, ongoing iitoring and uation of the _ new revenue Calculate the cost savings. Cost savings = avoidable cost - total contract cost (Avoidable costs aze in-house costs that will not be incurred if a target services is contracted out.) Step 4: Determine the options available to provide work for current city workers who face potential outsourcing. Step 5: Developing a Request for Proposals If it is determined that a service will be opened for competition and Requests for Proposals (RFPs) will be solicited, the Request for Proposals specification should be developed by deparhnent heads, supervisors, relevant staff currently providing the service, elected officials, and constituents. It is also important that at least two proposals aze received. If City employees are planning to submit a proposal, they should be provided with expertise to assist them in formulating tha# proposal. It would also be advisable to allow CiTy empioyees the opportunity to change their business practices to be competitive with outside contractors even before soliciting bids or proposals. It if is then proven that the City simply cannot compete with the private sectar, then the process could be opened up to outside contractors. Elements of the RFP: � Scope of services or project requirements - This should inciude technical and functional requirements, time lines, legal requirements, and minimum qualifications. ► Description of the end result or deliverable good. � Benchmazks for standards of performance - minimum qualiTy standards. � Selection process and criteria (see suggested contractor qualificarions below for more information). � Currently, two methods aze used for the purchasing process, bid specifications and Requests for Proposals (RFPs). Tradirional bid specifications aze used to solicit bids when only the contract cost is used to evaluate the bids. Legally, the contract must be awazded to the lowest responsSble bidder meeting the requirements under a bid specification. When an RFP is used, the contract may be awarded based on a number of criteria. RFPs aze typically used for purchasing professional services, commodiries that have complex requirements, or when many possible alternatives exist in the mazketplace. �19- �5�y � Proposal submission requirements - deadlines, number of copies to submit, other details � Provision for hiring City staff who are displaced by contract � Guidelines for outlining the contract cost. Suggested Contractor Qualifications and Requirements � Must not have been a City employee within the last six months. � Must provide campaign contribution disclosure for the last five yeazs. � Must provide three relevant business references. � Must submit financial records to indicate financial viability. � Must provide a description of how the services will be delivered and how the quality standards will be met. � Other Administrative details that should be included: - Number of staff involved in providing services and their wages and benefits. - The location of the administrative offices if they are not provided by the City. - Insurance and liability information. - Equipment requirements and how it is provided (company-owned, city-provided, or rented, etc). 99-sy� CITY of Saint Paul City Council Research 310 City Hall Saint Paul, MN 55102 (612)266-8560 INTER-DEPARTMENTAL MEMORANDUM DATE: August 16, 1999 TO: Shari Moore, Deputy City Clerk FROM: Nancy Anderson '� � SUBJECT: Council Information Presented on August 4, 1999. Attached is a copy of a report that was presented at the City Council Meeting held on August 4, 1999, regarding the implementation progress of Compete Saint Paul. This item is being submitted to you for your records. �n ��C�IVED �UG 17 �ggs CI7Y ���R� Council File # �_ 1=� � � Green Sheet # RESOLUTION CTTY OF SAINT PAUL, NIINNESOTA �( / Presented By Refened To 2 RESOLVED, that in order to facilitate the formation and effective work of a labor- 3 management committee on the principles and operation of the Compete St. Paul program, the 4 Council hereby states its intent, and formally requests, that the Mayor put on hold any further 5 actions to implement Compete St. Paul for tree-trimming and grass-mowing until such time as 6 the labor-management committee, or administration and St. Paul Works Alliance sepazately, 7 shall report to the Council on the progress made; and, be it 9 FUR.THER RESOLVED, that the labor-management committee or if no such committee 10 ¢, +hP arlminictratiott ar e St. Paul Works Allianc , report back to the Council at its 11 regulaz meeting on August 4, 1999. 12 13 14 Requested by Department of: By: Fozm A proved b i Attorney 8,.: �. G-g•9'f Approved by Mayor for Submission to Council By: Approved by Mayor: Date By: Adopted by Council: Date � ` `�� \ Adoption Certified by Counci Secretary q�-5�� Report by Mayor's Office on implementation progress of Compete Saint Paul August 4, 1999 Bruce Engelbrekt Office of the Mayor On 7uly 13�' the Mayor informed city labor representatives and the City Council of a change in direction of the Compete Saint Paul process. The Mayor decided to move the process forward and he set into motion several steps: • First, the City is proceeding with the preparation of Requests for Proposals (RFPs) for select city services; • Second, the City is providing general training in Activity-Based Costing for department and office directors, department accountants and key managers who will be involved in preparing the RFPs; Third, the City is following through on the Mayor's commitment from last February to provide training for city employees in understanding the cost of theu services as a way of helping them prepare competitive proposals. Likewise, the City is ready to provide iraining in contracting procedures and the bidding process to assist city employees in developing responses to the RFPs. • Since July 13"', we have taken several specific actions: We have taken a new look at city services that might be good candidates for bidding out. While we prepared a short list of services to be considered for bidding over the next several weeks, we are looking at all city services, with the exceprion of police and fire. The Mayor has asked his department and office directors to take a closer look at the services they provide to assist him in identifying which would be good candidates for competirive bidding. We have prepazed and issued RFPs for two city services: on July 30`� notices of RFPs for the Watergate Marina (in Pazks & Rec) and Grass Cutting service (in PW-Street Maintenance) were posted in the Saint Paul Legal Ledgez and sent out to a list of potential respondents. DirecCOrs of both Parks & Recrearion and Public Works were given copies of the RFPs that same day. We haue extended the deadline for submitting proposals for the first two RFPs to beyond 60 days to allow adequate time for city employees to be trained and to prepare and submit proposals if they choose. This time frame is double the nonnal response period for RFPs regularly issued by the Conuact and Analysis Division of the Department of Technology & Management Services. � `7 J 1 Finally, we held one general training session on ABC costing for department heads, department accountants and key managers. Approlcimately 40 people attended that session. We will hold another session tomonow (8/5) with the similar attendance expected. We will offer at least one addirionai session - in late August or eazly September for any other city employees who wish to attend. We would certauily welcome City Council members and staff at this session. • Now, in the coming days and weeks we pian to do the following: We wili wark closely with department directors and key managers to prepare additionat RFPs for bidding out. Later this month we expect to issue RFPs for Civil Service testing in the Office of Human Resowces and tree trimm;ng in parks & Recrearion. Begumiug with the Watergate Marina and grass cutting services the City's costing consultant will develop a"costing model", which is a set of clearly understandable spreadsheets that capture the current cost providing these services. This costing model will serve as the basis for helping city employees participating in the bidding process to understand what theu service costs so that they can evaluate ways to save costs and improve their competitiveness as they prepare proposals for the RFPs. Linda Camp and her staff in the Contract and Analysis Division will provide trauung in the contracting process and bidding procedures to city employees who choose to compete for the marina or grass cutting services. The trauung will include ongoing advice and assistance as employees gather information and prepare proposals in response to the RFPs issued. • ff there is an employee bid, the City will provide group process training. • Training will be provided only when the bid teams request it. � To suttunarize the RFP and bid process for you: 1) The Mayor will ask department heads to prepare an RFP when a project has been selected. 2) Once the RFP is issued, I will send a letter to department heads requesting a letter of intent-to-bid from any empioyee group who is direcdy involved in performing the subject work. The Department head will be responsible for dishibuting this letter to employees. The letter will advise that the ideal city bid team, i.e., any joint labor-management group, will consist of employees, managers and supervisors who directly perform the work, along with top management and union representation However, intent-to-bid requests from any group of employees will be reviewed for acceptability. 3) The intent-to bid letter will be sent to me in the Mayor's Office. I will immediately ask the Compete Saint Paul Execurive Board to review the request and recommend to the Mayor if we should proceed. 4) If we decide to proceed with an employee group and they have asked for training, we will unmediately schedule the training in costing, bidding and group process for as soon as possible. Our objecrive is to have potential bidders submit a letter-of-intent to respond within one week after the RFP is issued. We then intend to review the request and set up the h�aining during the following week. 5) Once the deadline for submitting proposals has expired, a Special Bid Review Committee, composed of staff from the Contract & Analysis Division, the department perfornung the service being bid, members of the Compete Saint Paul Execurive Board, Mayor's Office staff, and possibly non-city personnel with special knowledge or expertise in the services being bid, will review the proposals or bids and recommend to the Mayor which to accept. 6) The Mayor then will bring his recommendarion on the winning bid to the City Council for approval. Council File # 9 9� S�� Green Sheet # � +�So RESOLUTION CITY OF SAINT PAUL, MINNESOTA Presented By Referred To 2 RESOLVED, that in order to facilitate the formation and effective work of a labar- 3 management committee on the principles and operation of the Compete St. Paul program, the 4 Council hereby states its intent, and formally requests, that the Mayor put on hold any fixrther 5 actions to implement Compete St. Paul for tree-trimmiug and grass-mowing until such time as 6 the labor-management coxnmittee, or administration and St. Paul Works Alliance sepazately, 7 shall report to the Council on the progress made; and, be it 9 FURTHER RESOLVED, that the labor-management committee, or if no such committee 10 can report, the admirustration and the St. Paul Works Alliance, report back to the Council at its 11 regular meeting on August 4, 1999. 12 13 14 Aequested by Department of: By: Form Approved b iy Attorney �: �.� �tt� G - y -�9 Approved by Mayor for Submission to Council BY� Y: Approved by Mayor: Date By: " �'�"' �' "' \ ' 6 Adopted by Council: Date � \ ` \� \ Adoption Certified by Counci Secretary �q-.��y DEPARTMQJLOFFICNCAUNCIL DATE WmAtED c�t coun��� June 9, 1999 GREEN SHEET No 64050 COMACT PERSON & PFiOtJE InXl�l� uNtlaWme All Councilmembers �,�,�,��� p ,,,� MUST BE ON COUNCIL AGENDA BY (DA7t� AsSlcx June 9, 1999 �� arrwnon�r anurnK rtamxc �� ww�un�aEnncFSOa� wnwcu�mnnaccrc ❑rnrort(oaASLSTAMr) ❑ TOTAL # OF S{GNATURE PAGES (Cl.lP ALL LOCATIONS FOR SIGNATURE) CTION RE�UESTED Requesting that the Mayor put on hold any further actions to implement Compete St. Paul for tree trimming and grass mowing until such time as the labor management committee, or administration and St. Paul Works Alliance separately, report to the Council on August 4, 1999, on the progress made. RECOMMENDATIO Approve(A)orReject(R PEIISONALSERVICECONiAACi5MU5TAN5WER7XEFOLLOWIN6QUE5TION5: 1. Has this persoNfirm e�xr vrorked undx a contracf far this tlepe�fineM7 PLANNING COMMISSION YES NO CIB CAMMITTEE 2. Fiasthis pereaVCrtn ever been a city empbyee? CIVIL SERVICE COMMISSION rES No 3. Dces this persoNfirtn possess a sldll not nwmallypossessed by arry curteM ciF/ emPloyee� YES NO 4. Is tliis persoNfim� a tarpeted vendoY) YES NO E�lain all yes a�v�ers on sepa2te sheet aM attach to green sheet INRIATING PROBLEM ISSUE, OPPORTUNI'fY (Who, What, When, Wliere, Why) ADVANTAGESIFAPPROVED DISADVANTAGESIFAPPROVED � DISADVANTAGES IF NOT APPROVED TOTALAMOUNTOFTRANSACTIONf COST/REVENUEBUDCETED�CIRCLEON� YES NO FUNDING SOURCE ACTIVITY NUMBER FlNANCW.INFORMATION (EXPWN) . �. CITY OF SAINT PAUL 390 Ciry Hai[ Tekphone: (651J 26685l0 Norm Colemart, Mayor IS West Xei[ogg Boulevard Facsimi(e: (651) 266-85l3 Saint Paul, Mi'utesora 55102 June 16, 1999 Deaz Councilmembers: I have received CF 99-549 requesting me to suspend implementation of portions of the Compete Saint Paul process until August 4th. I am extremely disappointed that the City Council felt it necessary to adopt such a resolution and I will not sign it. Compete Saint Paul is a top priority of my administration and will continue to be as long as I am Mayor. When I fust announced this uuriative, I stressed that a focus on competition was necessary to ensure that the important services we provide our public are of the highest quality and the best value to our cirizens. Compete Saint Paul is a means the City must explore to help us become more competirive. We are taking important steps that I believe will make Compete Saint Paul a<, success. Following the CounciPs recommendation, my office has already contacted a number of union leaders to determine what we will need to do to establish a labor-management task force. The response has been positive and I am co�dent we can work together, labor and management, as we embark on this exciting and important project. Change is difficult. I recognize the apprehension among some because Compete Saint Paul will significantly change the way we view our role as a service provider. We are challenging the status quo and the idea that public employees should not have to compete for services they currenfly provide. However, I am dismayed by the words and actions of some who cannot see the enonnous potential for both city employees and Saint Paul taxpayers. � In addition, the Council's request to put a hold on moving forwazd with the tree- himining and grass-mowing projects unril the admuustration and union groups can discuss and report on union issues will slow our efforts to understand how this process can work at the project level. The unions have asked that city employees be thoroughly trained in developing bids and that qualified managers or consultants be available to assist in this process. They also have called for establishing an Activity Based Costing system to provide accurate cost comparisons between city and private bids. r_ -� �19 5 `�� Letter to City Councilmembers June 16, 1999 Page 2 From the outset of this process I have articulated these ideas and have looked forward to implementing them in the context of tl�e inirial services selected for competition. Questions or di�culries that may arise during the costing and trauvng phase could be addressed and resoived at the project level. We wili learn from these initial experiences. We will improve and refine our apprflach with future projects. Furthermore, concems about trauung and costing could be brought to the labor-management committee. My priority now is to proceed with hiring a qualified consulting fum to tr�ain the Compete Saint Paul Executive Board in the Activity Based Costing methodology and develop a training outline and timeline for the initial competirion projects. I will suspend training for city employees on the grass mowing or iree h�imming projects unril we have discussed the "principles of participarion" with labor representarives. However, I will not support any future efforts to delay the process or alter the composition of the Compete Saint Paul Executive Board. I am committed to moving Compete Saint Paul forward and I believe we aze on the right track. I welcome yow continued interest in this process and I ask for yout � openness and cooperation as we work to make it a success for city employees and Saint Paul cirizens alike. Sincerely, �UD Norm Coleman Mayor cc: Compete Saint Paul Executive Board City Council aides y9 �s �4 City of Saint Paul City Council Research 310 City Hall Saint Paul. MN 55102 (612)266-8560 INTER-DEPARTMENTAL MEMORANDUM DATE: May 21, 1999 TO: Susan Kimberly O�ce of the Mayor FROM: Nancy Anderson Assistant Secretary to the City Council SUBJECT: City Council Action. At the City Council Meeting on May 19, 1999, the Council took formal action to refer to the Administration the attached "Principles of Participation" by the Saint Paul Works! Alliance and report back your impressions, etc. to the Council at their June 9, 1999, meeting. This report by the Administration will be listed under "Discussion" on the June 9th Agenda. NA Attachment: Principies of Participation 99 s�9 Princ�ples of I'art�ci�atio� �y the Saint Paui Works! Alliance i. Union (i.e. labor) representatives wiIl be involved in the development and implementation of a competition program that incorporaYes the report of the Compete Saint Paul Task Force who have been selected by their exciusive representational organizations. 2_ As Compete Saint Paul is a collaborative effort between management and labor, employees and union representatives will be allowed to participate in all aspecYs of the competirive bid process during the normal work day and without any loss of pay. 3. City employees currently providing a service will have an opportunity to undertake a competiUve assessment of the service prior to designating that service for public- private competition. Such assessment shali inciude the identification of readily achievable efficiency and effectiveness improvements. 4. Transition costs, administrative costs of contract management, as well as the relinquishing of managerial and operational discrelion will be recognized when transferring public service delivery to private industries. Therefore, the City wili continue to deliver a service in-house where potenrial savings from outside service delivery are less than 10% of the cost of providing the service. 5. Prior to any City service being subjected to a public-private competition, the Mayor will certify to the City Council that the potential economic advantage of contracting out outweighs the public's interest in having a particular service performed directly by City government. After written receipt of such certification from the Mayor, the City Council wiil have 30 calendar days to hoid hearings on the certification and decide whether or not to approve each recoznmendation for public-private competition. 6. City employees, supervisors and managers will be thoroughly trained to effectively prepaze them to develop bids and proposals for publio-private competitions during the workday without loss of pay. 7. Qualified and experienced managers wiil be available to assist in the competitive assessment and the development of bids or proposals. In cases where qualified an� 99 s�9 e�perienced managers aze not available, the City at no additional ezcpense to the groposal will provide a eonsultant. 8. Other necessary resources for the purpose o£ encoura�ng and assisting present city employees to o �aanize, prepare and submit a bid or proposal for services presented for competition will be provided. 9. All contracts entered into as a result of competitive bidding wiil require that the wa�es paid to the occupationai �oup utilized in such work will not be less than the wages and fringes paid to comparabie positions in the classified Civil Service System. In addition, federal, state and local David-Bacon legisla4ion will apply to all covered occuparions. 10. The City wiil establish an Activity Based Costing System that will provide for an accurate comparison of costs between a City bid or proposal and that of a private Contractor. Only costs that wouid be avoided if a service were privatized will be included in those comparisans. 11. When comparing in-house costs and contractor costs, the contraetor's cost of providing a service and any continuing city costs that would be direetly associated with the contracted function, will be included. Continuing costs shall inciude, but not be limited to, inspecrion, supervision and monitoring. 12. No employee wiil be laid off, terminated or reduced in salary as a result of the Compete Saint Paul initiative. 13. Successful contractors wiil be required to offer available posirions to empioyees of the City of Saint Paul doing similar work. 14. Successful contractors will agree to recogiize the Unions representing affected employees, ahide by existing collective bargaining agreements and negatiate successor Agreements. 15. No privatization or comperition for City services will be initiated unYil the conditions of participation have been established and agreed upon. If other major areas of disagreement arise that aze not otherwise covered within these outlined principles, such issues will be resolved through the Labor/Management process as outli�ed above. Rev. Si 17/99 Opeiutc#12LN y9--r�9 ����ciples of Participation By the Saint Paul Works! Alliance 1. Union (i.e. labor) representatives will be involved in the developmeat and implementation of a competition prograzn that incorporates the report of the Compete Saint Pau1 Task Force who have been selected by their exclusive representaxional organizations. 2. As Compete Saint Paul is a collaborative effort between management and labor, employees and union representatives will be allowed to participate in all aspecis of the comperitive bid process during the normal work day and without any loss of pay. 3. City employees currendy providing a service will have an opportunity to undertake a competitive assessment of the service prior to designating that service for public- private competition. Such assessment sha11 include the idemification of readily achievable efficiency and effectiveness improvements. 4. Transition costs, administrative costs of contract management, as well as the relinquishing of managerial and operational discretion will be recognized when transferring pubiic service delivery to private industries. Therefore, the City wiil conrinue to deliver a service in-house where potential savin�s from outside service delivery aze less than 10% of the cost of providing the service. 5. Prior to any City service being sub}ected to a pubtic-private competirion, the Mayor will certify to the City Council that the potential economic advantage of contracring out outweighs the pubiic's interest in having a particular service performed directly by City govemment. After written receipt of such certification from the Mayor, the City Council will have 30 calendar days to hold hearings on the certification and decide whether or not to approve each recommendation for publio-private competition. 6. City employees, supervisors and managers will be thoroughly trained to effectively prepare them to develop bids and proposals for public-private competitions durin� the workday without loss of pay. 7. Qualified and experienced managers will be available to assist in the competirive assessment and the development of bids or progosals. In cases where qualified and 9� 3 s�y experieaced managers aze not available, the City at no additional expense to the proposal will provide a consultant. 8. Other necessary resources for the piupose of encouraging and assisting present city employees to o a�anize, prepare and submit a bid or proposai for services presented for competition will be provided. 9. All contracts entered into as a result of competitive bidding will require that the wa�es paid to the occupational group utilized in such work will not be less than the wages and fringes paid to compazabie positions in the ciassified Civil Service System. In addition, federal, state and locai David-Bacon legisiation will apply to all covered occupations. 10. The City will establish an Activity Based Costing System that will provide for an accurate comparison of costs between a City bid or proposal and that of a private Contractor. Only costs that would be auoided if a service were privatized will be included in those comparisons. 11. When comparing in-house costs and contractor costs, the contractor's cost of providina a service and any continuing city costs that would be directly associated with the contracted function, will be included. Continuing costs shall include, but not be limited to, inspection, supervision and monitoring. 12. No employee will be laid off, terminated or reduced in salary as a result of the Compete Saint Paul initiative. 13. Successful contractors will be required to offer availabie positions to employees of the City of Saint Paul doing similaz work. 14. Successful contractors wiil agree to recognize the Unions representing affected employees, abide by existing collective bargaining agreements and ne�otiate successor Agreements. 15. No privatization or competition for City services will be initiated until the conditions of participation have been established and agreed upon. If other major areas of disagreement arise that aze not otherwise covered within these outlined principles, such issues will be resolved through the Labor/Managemeat process as outlined above. Rev. 5i 17/99 Opeiutc# 12LN 99 � �� Compete Saint Paul Policy Session Agenda L Overview of Privatizarion and Comperirion A. Dr. Beth Honadte, Department of Applied Economics, University of Minnesota II. The Compete Saint Paul Program - Compete St. Paul Execufive Board A. Background B. Goals C. Process D. Future IIL Competirion From a Private Sector Perspective A. Tim Matx, Saint Paul Chamber of Commerce IV. Compefirion From a Labor Perspective A. Dr. Chuck Davis, Director of Private Sector Programming for Labor Education Services, Industrial Relations Center, Carlson School of Management, University of Mimiesota B. Shar Knutson, Saant Paul Trades and Labor Assembly, AFL-CIO V. Public Comment VI. Council Questions 9y-� �y C'rly of St. Pauf Office of the City Council 320 City Hall Saint Paul, MN 55102 (651) 266-8588 INTER-DEPARTMENTAL MEMORANDUM DATE: May 13, 1999 TO: City Councilmembers FROM: Jennifer Rundl�Policy Analyst SUBJECT: Overview of Contracting in Saint Paul Government Tlus memo provides a very brief overview of the practice of contracting wiUun Saint Paul City government. With the recent creation of the Compete Saint Paul Executive Board, the issue of competition has come to the forefront of many discussions, though contracting has been a common practice over time for a number of City services. The Compete Saint Paul Execuuve Board is institutionalizing the practice within the City and allownig City employees to formally bid on contracts, a practice that has historically been missing from the bidding process. The following list is not a complete tabulation of all the services that have been contracted out, but rather it shows the variety of services that have been contracted. These services either have been or currently are being provided by the private sector, though in many cases the entire function has not been completely contracted out, but rather City employees perform the same service in conjunction with the contractors: ❑ Garbage collection - completely privatized ❑ Diseased tree removal - City and private sector contractors ❑ Snow plowing on select routes - City and private sector contractors ❑ Asphalt, sand, salt hauling - City and private sector contractors ❑ Security systems for libraries and recreation centers ❑ Building cleaning far City Hall Annex and RCGC West - private contractor ❑ Towing - private contractors ❑ Office supplies - private contractor ❑ Engineering and design services for construction - City and private contractors ❑ Legal Services - City and private sector contractors ❑ Street paving, lighting, construction - City and private contractors Utilizing a private contractor is not the only way to sa�e taYpayers money and make government more efficient. Contracting among governmental entities through Joint Powers Agreements is a common practice. In some cases, a government will provide a service to another far a fee, such as fire dispatch services provided to Roseville by the Saint Paul Fire Deparhnent. In other cases, the governmental entities may combine their functions, such as the Saint PauURamsey County 99- � ��' Public Health Aepartment. Current efforts aze also underway to examine the feasibility of consolidating the Saint Paul Workforce Development Program and the Rawsey County Job Traiuing Program. TWO SHORT CASE STUDIES Garbage Collection Prior to 1971, the City of Saint Paul collected food waste only, "gazbage," and private haulers collected rubbish, such as paper products. Private incinerafion was banned in 1971, increasing the burden of refuse and gazbage haulers, and the Ciry was told by the Minnesota Pollution Control Agency to examine the adequacy of the hauling system and determine the capability to handled the increased amount of refuse. As a result, a combined collec6on system of private and public haulers was instituted, and the two sectors competed for customers. The City system operated with only small losses throughout the 1970's until 1979, when the losses nearly tripled. Two factors have been attributed to the loss: a sharp rise in fuei costs and rising landfill disposal costs. Private contractors also faced rising costs, but were able to react negotiate some service delivery changes with customers and in some cases even trade customers with other private haulers, creating more efficient routes, to mitigate the rising costs. The City's process for raising charges prevented it from immediately raising rates. The City also paid higher wages and benefits, was unable to mold services to customer needs, and did not advertise because of a concern about using public funds for advertising. The City chose to terminate its collection service beginning May 9, 1980. The affected employees were reassigned elsewhere within Public Works or other City departments. The system of all private haulers competing against each other for business still exists today in Saint Paul. It is interesting to note that the City of Minneapolis has both public and private haulers. The question then arises: why did the combined system work there and fail here? A few factors come into play. First, city crews and private haulers in Minneapolis have designated areas to serve and have concentrated collection areas, which Saint Paul did not. Saint Paul crews and private haulers would collect refuse from all parts of the City, lengthening the distance between stops and increasing fuel costs, particulazly given that at the time, garbage trucks got only three to four miles per gallon. In addition, Minneapolis residents pay for gazbage service as part of their water bill, thus ensuring that everyone has garbage collection service. Differences between revenues and expenditures for gazbage collection are covered by the General Fund. In Saint Paul, residents contracted individually for service, so some residents do not have service. Instead they illegaliy dump their trash in someone else's gazbage cans or in public waste receptacles, or they may even dump it in an empty lot. In some cases, they may have worked out an arrangement with a relative to place their trash in with the relatives', particularly if they do not generate much refuse and do not wish to pay for regular service. - �/Gi-.� �y PubLic Works The Department of Public Works contracts with private fircns for a variety of services. The City will compare a contractor's cost with the City's cost and determine whether the work should be contracted. In some cases, the City simply doesn't have enough staff or equipment to work on all the projects, and it is more economical to hire a contractar fhan to hire temporary empioyees to do the work and rent the necessary equipment. Some snow plowing routes, namely dead ends and cul-de-sacs, aze handled by private contractars. Cost comparisons are also done for these routes. By contracting out some routes, the City does not have to hire as many full time plow drivers, or hire temporary employees. The contractors are hired on a yearly basis. Contracting has proven to be very effective in ensuring that projects aze completed in a timely manner and the costs are kept at a reasonable level. It also ensures a high levei of service for citizens. CONCLUSION Contracting is not the answer to creating efficiency or cost savings in every situation. The City has in the past considered contracting out for animal control services, but found that the City could actually exceed the services a contractor could offer. In other cases, the City has found ways to reduce costs as a result of hiring a contractor or opening a service for bidding. In other instances throughout the City, contracts have been awazded but the contractar has failed to foilow through, thus causing the City to have to resume the function and pursue corrective actions, thus tying up additional staff hours in litigation or other actions against the contractor. Contracting is a common practice in government, and it takes an many forms. The various options should be weighed against each other before any final decisions are made. In many cases government can be a competitor, and in instances where it simply cannot be, other opfions ought to be considered. 9� � 5�y City of St. Paul Office of the City Council 320 City Hafl Saint Paul, MN 55102 (651) 266-8588 INTER-DEPARTMENTAL MEMORA{VDl7M DATE: May 13, 1999 TO: City Councilmembers FROM: Jennifer Rundl�Rolicy Analyst SUBJECT: Suggested Process for Opening City Services to Competitive Bidding This memo outlines some basic information that should be present in any decision-making process to open City services to competitive bidding. The ideas aze gleaned from information provided by the National League of Cities and by the State of Colorado's Commission on Privatization. Step L Identify services that will not be opened to competition. These are most often core services which are imperafive to maintaining life and safety, such as police and fire services. After iden6fying services that will not be opened to competition, ask the following questions to deternune whether or not to privatize the remaiuing services: 1. Should the City be responsible for a given function? 2. Is there a policy reason why the City should perform this function? 3. Is the City currently successful at performing the function? 4. Can the City become more effective and/ar efficient at performing the function? Step 2: Evaluate and priorifize the remanung options available for competition. 1. Identify the functional components of a service - tailor procurement to fit the market 2. Perform a"Yellow Pages TesY' to detemune the potential number of competitars. A Yellow Pages Test is a determination of the availability of similar services in the azea. For exasnple, if a CiTy elects to contract out its landscaping services, it can search for landscapers in the azea. Since there are probably many private sector providers, the private market will probably be very competitive. If there are no private sector providers in the azea, contracting out the service may not be the best oprion for nnproving the service. Step 3: Calculate the cost of providing the service and contracting the service. 1. Utilize Acfivity-Based Costing (ABC): Allocate costs based on activity (such as total cost to fill potholes) rather than by accounting category (such as salaries, equipment, supplies, etc.) 2. Compare the cost of providing the service with the contract cost. �� ��9 contractor cost - Total contract cost = �'e cost } of the contract to the City iinistrahon cost - of procurement, ract negofiation, awazd, processing ndments, change ;rs, dispute �„ :essing invoices, ongoing iitoring and uation of the _ new revenue Calculate the cost savings. Cost savings = avoidable cost - total contract cost (Avoidable costs aze in-house costs that will not be incurred if a target services is contracted out.) Step 4: Determine the options available to provide work for current city workers who face potential outsourcing. Step 5: Developing a Request for Proposals If it is determined that a service will be opened for competition and Requests for Proposals (RFPs) will be solicited, the Request for Proposals specification should be developed by deparhnent heads, supervisors, relevant staff currently providing the service, elected officials, and constituents. It is also important that at least two proposals aze received. If City employees are planning to submit a proposal, they should be provided with expertise to assist them in formulating tha# proposal. It would also be advisable to allow CiTy empioyees the opportunity to change their business practices to be competitive with outside contractors even before soliciting bids or proposals. It if is then proven that the City simply cannot compete with the private sectar, then the process could be opened up to outside contractors. Elements of the RFP: � Scope of services or project requirements - This should inciude technical and functional requirements, time lines, legal requirements, and minimum qualifications. ► Description of the end result or deliverable good. � Benchmazks for standards of performance - minimum qualiTy standards. � Selection process and criteria (see suggested contractor qualificarions below for more information). � Currently, two methods aze used for the purchasing process, bid specifications and Requests for Proposals (RFPs). Tradirional bid specifications aze used to solicit bids when only the contract cost is used to evaluate the bids. Legally, the contract must be awazded to the lowest responsSble bidder meeting the requirements under a bid specification. When an RFP is used, the contract may be awarded based on a number of criteria. RFPs aze typically used for purchasing professional services, commodiries that have complex requirements, or when many possible alternatives exist in the mazketplace. �19- �5�y � Proposal submission requirements - deadlines, number of copies to submit, other details � Provision for hiring City staff who are displaced by contract � Guidelines for outlining the contract cost. Suggested Contractor Qualifications and Requirements � Must not have been a City employee within the last six months. � Must provide campaign contribution disclosure for the last five yeazs. � Must provide three relevant business references. � Must submit financial records to indicate financial viability. � Must provide a description of how the services will be delivered and how the quality standards will be met. � Other Administrative details that should be included: - Number of staff involved in providing services and their wages and benefits. - The location of the administrative offices if they are not provided by the City. - Insurance and liability information. - Equipment requirements and how it is provided (company-owned, city-provided, or rented, etc). 99-sy� CITY of Saint Paul City Council Research 310 City Hall Saint Paul, MN 55102 (612)266-8560 INTER-DEPARTMENTAL MEMORANDUM DATE: August 16, 1999 TO: Shari Moore, Deputy City Clerk FROM: Nancy Anderson '� � SUBJECT: Council Information Presented on August 4, 1999. Attached is a copy of a report that was presented at the City Council Meeting held on August 4, 1999, regarding the implementation progress of Compete Saint Paul. This item is being submitted to you for your records. �n ��C�IVED �UG 17 �ggs CI7Y ���R� Council File # �_ 1=� � � Green Sheet # RESOLUTION CTTY OF SAINT PAUL, NIINNESOTA �( / Presented By Refened To 2 RESOLVED, that in order to facilitate the formation and effective work of a labor- 3 management committee on the principles and operation of the Compete St. Paul program, the 4 Council hereby states its intent, and formally requests, that the Mayor put on hold any further 5 actions to implement Compete St. Paul for tree-trimming and grass-mowing until such time as 6 the labor-management committee, or administration and St. Paul Works Alliance sepazately, 7 shall report to the Council on the progress made; and, be it 9 FUR.THER RESOLVED, that the labor-management committee or if no such committee 10 ¢, +hP arlminictratiott ar e St. Paul Works Allianc , report back to the Council at its 11 regulaz meeting on August 4, 1999. 12 13 14 Requested by Department of: By: Fozm A proved b i Attorney 8,.: �. G-g•9'f Approved by Mayor for Submission to Council By: Approved by Mayor: Date By: Adopted by Council: Date � ` `�� \ Adoption Certified by Counci Secretary q�-5�� Report by Mayor's Office on implementation progress of Compete Saint Paul August 4, 1999 Bruce Engelbrekt Office of the Mayor On 7uly 13�' the Mayor informed city labor representatives and the City Council of a change in direction of the Compete Saint Paul process. The Mayor decided to move the process forward and he set into motion several steps: • First, the City is proceeding with the preparation of Requests for Proposals (RFPs) for select city services; • Second, the City is providing general training in Activity-Based Costing for department and office directors, department accountants and key managers who will be involved in preparing the RFPs; Third, the City is following through on the Mayor's commitment from last February to provide training for city employees in understanding the cost of theu services as a way of helping them prepare competitive proposals. Likewise, the City is ready to provide iraining in contracting procedures and the bidding process to assist city employees in developing responses to the RFPs. • Since July 13"', we have taken several specific actions: We have taken a new look at city services that might be good candidates for bidding out. While we prepared a short list of services to be considered for bidding over the next several weeks, we are looking at all city services, with the exceprion of police and fire. The Mayor has asked his department and office directors to take a closer look at the services they provide to assist him in identifying which would be good candidates for competirive bidding. We have prepazed and issued RFPs for two city services: on July 30`� notices of RFPs for the Watergate Marina (in Pazks & Rec) and Grass Cutting service (in PW-Street Maintenance) were posted in the Saint Paul Legal Ledgez and sent out to a list of potential respondents. DirecCOrs of both Parks & Recrearion and Public Works were given copies of the RFPs that same day. We haue extended the deadline for submitting proposals for the first two RFPs to beyond 60 days to allow adequate time for city employees to be trained and to prepare and submit proposals if they choose. This time frame is double the nonnal response period for RFPs regularly issued by the Conuact and Analysis Division of the Department of Technology & Management Services. � `7 J 1 Finally, we held one general training session on ABC costing for department heads, department accountants and key managers. Approlcimately 40 people attended that session. We will hold another session tomonow (8/5) with the similar attendance expected. We will offer at least one addirionai session - in late August or eazly September for any other city employees who wish to attend. We would certauily welcome City Council members and staff at this session. • Now, in the coming days and weeks we pian to do the following: We wili wark closely with department directors and key managers to prepare additionat RFPs for bidding out. Later this month we expect to issue RFPs for Civil Service testing in the Office of Human Resowces and tree trimm;ng in parks & Recrearion. Begumiug with the Watergate Marina and grass cutting services the City's costing consultant will develop a"costing model", which is a set of clearly understandable spreadsheets that capture the current cost providing these services. This costing model will serve as the basis for helping city employees participating in the bidding process to understand what theu service costs so that they can evaluate ways to save costs and improve their competitiveness as they prepare proposals for the RFPs. Linda Camp and her staff in the Contract and Analysis Division will provide trauung in the contracting process and bidding procedures to city employees who choose to compete for the marina or grass cutting services. The trauung will include ongoing advice and assistance as employees gather information and prepare proposals in response to the RFPs issued. • ff there is an employee bid, the City will provide group process training. • Training will be provided only when the bid teams request it. � To suttunarize the RFP and bid process for you: 1) The Mayor will ask department heads to prepare an RFP when a project has been selected. 2) Once the RFP is issued, I will send a letter to department heads requesting a letter of intent-to-bid from any empioyee group who is direcdy involved in performing the subject work. The Department head will be responsible for dishibuting this letter to employees. The letter will advise that the ideal city bid team, i.e., any joint labor-management group, will consist of employees, managers and supervisors who directly perform the work, along with top management and union representation However, intent-to-bid requests from any group of employees will be reviewed for acceptability. 3) The intent-to bid letter will be sent to me in the Mayor's Office. I will immediately ask the Compete Saint Paul Execurive Board to review the request and recommend to the Mayor if we should proceed. 4) If we decide to proceed with an employee group and they have asked for training, we will unmediately schedule the training in costing, bidding and group process for as soon as possible. Our objecrive is to have potential bidders submit a letter-of-intent to respond within one week after the RFP is issued. We then intend to review the request and set up the h�aining during the following week. 5) Once the deadline for submitting proposals has expired, a Special Bid Review Committee, composed of staff from the Contract & Analysis Division, the department perfornung the service being bid, members of the Compete Saint Paul Execurive Board, Mayor's Office staff, and possibly non-city personnel with special knowledge or expertise in the services being bid, will review the proposals or bids and recommend to the Mayor which to accept. 6) The Mayor then will bring his recommendarion on the winning bid to the City Council for approval. Council File # 9 9� S�� Green Sheet # � +�So RESOLUTION CITY OF SAINT PAUL, MINNESOTA Presented By Referred To 2 RESOLVED, that in order to facilitate the formation and effective work of a labar- 3 management committee on the principles and operation of the Compete St. Paul program, the 4 Council hereby states its intent, and formally requests, that the Mayor put on hold any fixrther 5 actions to implement Compete St. Paul for tree-trimmiug and grass-mowing until such time as 6 the labor-management coxnmittee, or administration and St. Paul Works Alliance sepazately, 7 shall report to the Council on the progress made; and, be it 9 FURTHER RESOLVED, that the labor-management committee, or if no such committee 10 can report, the admirustration and the St. Paul Works Alliance, report back to the Council at its 11 regular meeting on August 4, 1999. 12 13 14 Aequested by Department of: By: Form Approved b iy Attorney �: �.� �tt� G - y -�9 Approved by Mayor for Submission to Council BY� Y: Approved by Mayor: Date By: " �'�"' �' "' \ ' 6 Adopted by Council: Date � \ ` \� \ Adoption Certified by Counci Secretary �q-.��y DEPARTMQJLOFFICNCAUNCIL DATE WmAtED c�t coun��� June 9, 1999 GREEN SHEET No 64050 COMACT PERSON & PFiOtJE InXl�l� uNtlaWme All Councilmembers �,�,�,��� p ,,,� MUST BE ON COUNCIL AGENDA BY (DA7t� AsSlcx June 9, 1999 �� arrwnon�r anurnK rtamxc �� ww�un�aEnncFSOa� wnwcu�mnnaccrc ❑rnrort(oaASLSTAMr) ❑ TOTAL # OF S{GNATURE PAGES (Cl.lP ALL LOCATIONS FOR SIGNATURE) CTION RE�UESTED Requesting that the Mayor put on hold any further actions to implement Compete St. Paul for tree trimming and grass mowing until such time as the labor management committee, or administration and St. Paul Works Alliance separately, report to the Council on August 4, 1999, on the progress made. RECOMMENDATIO Approve(A)orReject(R PEIISONALSERVICECONiAACi5MU5TAN5WER7XEFOLLOWIN6QUE5TION5: 1. Has this persoNfirm e�xr vrorked undx a contracf far this tlepe�fineM7 PLANNING COMMISSION YES NO CIB CAMMITTEE 2. Fiasthis pereaVCrtn ever been a city empbyee? CIVIL SERVICE COMMISSION rES No 3. Dces this persoNfirtn possess a sldll not nwmallypossessed by arry curteM ciF/ emPloyee� YES NO 4. Is tliis persoNfim� a tarpeted vendoY) YES NO E�lain all yes a�v�ers on sepa2te sheet aM attach to green sheet INRIATING PROBLEM ISSUE, OPPORTUNI'fY (Who, What, When, Wliere, Why) ADVANTAGESIFAPPROVED DISADVANTAGESIFAPPROVED � DISADVANTAGES IF NOT APPROVED TOTALAMOUNTOFTRANSACTIONf COST/REVENUEBUDCETED�CIRCLEON� YES NO FUNDING SOURCE ACTIVITY NUMBER FlNANCW.INFORMATION (EXPWN) . �. CITY OF SAINT PAUL 390 Ciry Hai[ Tekphone: (651J 26685l0 Norm Colemart, Mayor IS West Xei[ogg Boulevard Facsimi(e: (651) 266-85l3 Saint Paul, Mi'utesora 55102 June 16, 1999 Deaz Councilmembers: I have received CF 99-549 requesting me to suspend implementation of portions of the Compete Saint Paul process until August 4th. I am extremely disappointed that the City Council felt it necessary to adopt such a resolution and I will not sign it. Compete Saint Paul is a top priority of my administration and will continue to be as long as I am Mayor. When I fust announced this uuriative, I stressed that a focus on competition was necessary to ensure that the important services we provide our public are of the highest quality and the best value to our cirizens. Compete Saint Paul is a means the City must explore to help us become more competirive. We are taking important steps that I believe will make Compete Saint Paul a<, success. Following the CounciPs recommendation, my office has already contacted a number of union leaders to determine what we will need to do to establish a labor-management task force. The response has been positive and I am co�dent we can work together, labor and management, as we embark on this exciting and important project. Change is difficult. I recognize the apprehension among some because Compete Saint Paul will significantly change the way we view our role as a service provider. We are challenging the status quo and the idea that public employees should not have to compete for services they currenfly provide. However, I am dismayed by the words and actions of some who cannot see the enonnous potential for both city employees and Saint Paul taxpayers. � In addition, the Council's request to put a hold on moving forwazd with the tree- himining and grass-mowing projects unril the admuustration and union groups can discuss and report on union issues will slow our efforts to understand how this process can work at the project level. The unions have asked that city employees be thoroughly trained in developing bids and that qualified managers or consultants be available to assist in this process. They also have called for establishing an Activity Based Costing system to provide accurate cost comparisons between city and private bids. r_ -� �19 5 `�� Letter to City Councilmembers June 16, 1999 Page 2 From the outset of this process I have articulated these ideas and have looked forward to implementing them in the context of tl�e inirial services selected for competition. Questions or di�culries that may arise during the costing and trauvng phase could be addressed and resoived at the project level. We wili learn from these initial experiences. We will improve and refine our apprflach with future projects. Furthermore, concems about trauung and costing could be brought to the labor-management committee. My priority now is to proceed with hiring a qualified consulting fum to tr�ain the Compete Saint Paul Executive Board in the Activity Based Costing methodology and develop a training outline and timeline for the initial competirion projects. I will suspend training for city employees on the grass mowing or iree h�imming projects unril we have discussed the "principles of participarion" with labor representarives. However, I will not support any future efforts to delay the process or alter the composition of the Compete Saint Paul Executive Board. I am committed to moving Compete Saint Paul forward and I believe we aze on the right track. I welcome yow continued interest in this process and I ask for yout � openness and cooperation as we work to make it a success for city employees and Saint Paul cirizens alike. Sincerely, �UD Norm Coleman Mayor cc: Compete Saint Paul Executive Board City Council aides y9 �s �4 City of Saint Paul City Council Research 310 City Hall Saint Paul. MN 55102 (612)266-8560 INTER-DEPARTMENTAL MEMORANDUM DATE: May 21, 1999 TO: Susan Kimberly O�ce of the Mayor FROM: Nancy Anderson Assistant Secretary to the City Council SUBJECT: City Council Action. At the City Council Meeting on May 19, 1999, the Council took formal action to refer to the Administration the attached "Principles of Participation" by the Saint Paul Works! Alliance and report back your impressions, etc. to the Council at their June 9, 1999, meeting. This report by the Administration will be listed under "Discussion" on the June 9th Agenda. NA Attachment: Principies of Participation 99 s�9 Princ�ples of I'art�ci�atio� �y the Saint Paui Works! Alliance i. Union (i.e. labor) representatives wiIl be involved in the development and implementation of a competition program that incorporaYes the report of the Compete Saint Paul Task Force who have been selected by their exciusive representational organizations. 2_ As Compete Saint Paul is a collaborative effort between management and labor, employees and union representatives will be allowed to participate in all aspecYs of the competirive bid process during the normal work day and without any loss of pay. 3. City employees currently providing a service will have an opportunity to undertake a competiUve assessment of the service prior to designating that service for public- private competition. Such assessment shali inciude the identification of readily achievable efficiency and effectiveness improvements. 4. Transition costs, administrative costs of contract management, as well as the relinquishing of managerial and operational discrelion will be recognized when transferring public service delivery to private industries. Therefore, the City wili continue to deliver a service in-house where potenrial savings from outside service delivery are less than 10% of the cost of providing the service. 5. Prior to any City service being subjected to a public-private competition, the Mayor will certify to the City Council that the potential economic advantage of contracting out outweighs the public's interest in having a particular service performed directly by City government. After written receipt of such certification from the Mayor, the City Council wiil have 30 calendar days to hoid hearings on the certification and decide whether or not to approve each recoznmendation for public-private competition. 6. City employees, supervisors and managers will be thoroughly trained to effectively prepaze them to develop bids and proposals for publio-private competitions during the workday without loss of pay. 7. Qualified and experienced managers wiil be available to assist in the competitive assessment and the development of bids or proposals. In cases where qualified an� 99 s�9 e�perienced managers aze not available, the City at no additional ezcpense to the groposal will provide a eonsultant. 8. Other necessary resources for the purpose o£ encoura�ng and assisting present city employees to o �aanize, prepare and submit a bid or proposal for services presented for competition will be provided. 9. All contracts entered into as a result of competitive bidding wiil require that the wa�es paid to the occupationai �oup utilized in such work will not be less than the wages and fringes paid to comparabie positions in the classified Civil Service System. In addition, federal, state and local David-Bacon legisla4ion will apply to all covered occuparions. 10. The City wiil establish an Activity Based Costing System that will provide for an accurate comparison of costs between a City bid or proposal and that of a private Contractor. Only costs that wouid be avoided if a service were privatized will be included in those comparisans. 11. When comparing in-house costs and contractor costs, the contraetor's cost of providing a service and any continuing city costs that would be direetly associated with the contracted function, will be included. Continuing costs shall inciude, but not be limited to, inspecrion, supervision and monitoring. 12. No employee wiil be laid off, terminated or reduced in salary as a result of the Compete Saint Paul initiative. 13. Successful contractors wiil be required to offer available posirions to empioyees of the City of Saint Paul doing similar work. 14. Successful contractors will agree to recogiize the Unions representing affected employees, ahide by existing collective bargaining agreements and negatiate successor Agreements. 15. No privatization or comperition for City services will be initiated unYil the conditions of participation have been established and agreed upon. If other major areas of disagreement arise that aze not otherwise covered within these outlined principles, such issues will be resolved through the Labor/Management process as outli�ed above. Rev. Si 17/99 Opeiutc#12LN y9--r�9 ����ciples of Participation By the Saint Paul Works! Alliance 1. Union (i.e. labor) representatives will be involved in the developmeat and implementation of a competition prograzn that incorporates the report of the Compete Saint Pau1 Task Force who have been selected by their exclusive representaxional organizations. 2. As Compete Saint Paul is a collaborative effort between management and labor, employees and union representatives will be allowed to participate in all aspecis of the comperitive bid process during the normal work day and without any loss of pay. 3. City employees currendy providing a service will have an opportunity to undertake a competitive assessment of the service prior to designating that service for public- private competition. Such assessment sha11 include the idemification of readily achievable efficiency and effectiveness improvements. 4. Transition costs, administrative costs of contract management, as well as the relinquishing of managerial and operational discretion will be recognized when transferring pubiic service delivery to private industries. Therefore, the City wiil conrinue to deliver a service in-house where potential savin�s from outside service delivery aze less than 10% of the cost of providing the service. 5. Prior to any City service being sub}ected to a pubtic-private competirion, the Mayor will certify to the City Council that the potential economic advantage of contracring out outweighs the pubiic's interest in having a particular service performed directly by City govemment. After written receipt of such certification from the Mayor, the City Council will have 30 calendar days to hold hearings on the certification and decide whether or not to approve each recommendation for publio-private competition. 6. City employees, supervisors and managers will be thoroughly trained to effectively prepare them to develop bids and proposals for public-private competitions durin� the workday without loss of pay. 7. Qualified and experienced managers will be available to assist in the competirive assessment and the development of bids or progosals. In cases where qualified and 9� 3 s�y experieaced managers aze not available, the City at no additional expense to the proposal will provide a consultant. 8. Other necessary resources for the piupose of encouraging and assisting present city employees to o a�anize, prepare and submit a bid or proposai for services presented for competition will be provided. 9. All contracts entered into as a result of competitive bidding will require that the wa�es paid to the occupational group utilized in such work will not be less than the wages and fringes paid to compazabie positions in the ciassified Civil Service System. In addition, federal, state and locai David-Bacon legisiation will apply to all covered occupations. 10. The City will establish an Activity Based Costing System that will provide for an accurate comparison of costs between a City bid or proposal and that of a private Contractor. Only costs that would be auoided if a service were privatized will be included in those comparisons. 11. When comparing in-house costs and contractor costs, the contractor's cost of providina a service and any continuing city costs that would be directly associated with the contracted function, will be included. Continuing costs shall include, but not be limited to, inspection, supervision and monitoring. 12. No employee will be laid off, terminated or reduced in salary as a result of the Compete Saint Paul initiative. 13. Successful contractors will be required to offer availabie positions to employees of the City of Saint Paul doing similaz work. 14. Successful contractors wiil agree to recognize the Unions representing affected employees, abide by existing collective bargaining agreements and ne�otiate successor Agreements. 15. No privatization or competition for City services will be initiated until the conditions of participation have been established and agreed upon. If other major areas of disagreement arise that aze not otherwise covered within these outlined principles, such issues will be resolved through the Labor/Managemeat process as outlined above. Rev. 5i 17/99 Opeiutc# 12LN 99 � �� Compete Saint Paul Policy Session Agenda L Overview of Privatizarion and Comperirion A. Dr. Beth Honadte, Department of Applied Economics, University of Minnesota II. The Compete Saint Paul Program - Compete St. Paul Execufive Board A. Background B. Goals C. Process D. Future IIL Competirion From a Private Sector Perspective A. Tim Matx, Saint Paul Chamber of Commerce IV. Compefirion From a Labor Perspective A. Dr. Chuck Davis, Director of Private Sector Programming for Labor Education Services, Industrial Relations Center, Carlson School of Management, University of Mimiesota B. Shar Knutson, Saant Paul Trades and Labor Assembly, AFL-CIO V. Public Comment VI. Council Questions 9y-� �y C'rly of St. Pauf Office of the City Council 320 City Hall Saint Paul, MN 55102 (651) 266-8588 INTER-DEPARTMENTAL MEMORANDUM DATE: May 13, 1999 TO: City Councilmembers FROM: Jennifer Rundl�Policy Analyst SUBJECT: Overview of Contracting in Saint Paul Government Tlus memo provides a very brief overview of the practice of contracting wiUun Saint Paul City government. With the recent creation of the Compete Saint Paul Executive Board, the issue of competition has come to the forefront of many discussions, though contracting has been a common practice over time for a number of City services. The Compete Saint Paul Execuuve Board is institutionalizing the practice within the City and allownig City employees to formally bid on contracts, a practice that has historically been missing from the bidding process. The following list is not a complete tabulation of all the services that have been contracted out, but rather it shows the variety of services that have been contracted. These services either have been or currently are being provided by the private sector, though in many cases the entire function has not been completely contracted out, but rather City employees perform the same service in conjunction with the contractors: ❑ Garbage collection - completely privatized ❑ Diseased tree removal - City and private sector contractors ❑ Snow plowing on select routes - City and private sector contractors ❑ Asphalt, sand, salt hauling - City and private sector contractors ❑ Security systems for libraries and recreation centers ❑ Building cleaning far City Hall Annex and RCGC West - private contractor ❑ Towing - private contractors ❑ Office supplies - private contractor ❑ Engineering and design services for construction - City and private contractors ❑ Legal Services - City and private sector contractors ❑ Street paving, lighting, construction - City and private contractors Utilizing a private contractor is not the only way to sa�e taYpayers money and make government more efficient. Contracting among governmental entities through Joint Powers Agreements is a common practice. In some cases, a government will provide a service to another far a fee, such as fire dispatch services provided to Roseville by the Saint Paul Fire Deparhnent. In other cases, the governmental entities may combine their functions, such as the Saint PauURamsey County 99- � ��' Public Health Aepartment. Current efforts aze also underway to examine the feasibility of consolidating the Saint Paul Workforce Development Program and the Rawsey County Job Traiuing Program. TWO SHORT CASE STUDIES Garbage Collection Prior to 1971, the City of Saint Paul collected food waste only, "gazbage," and private haulers collected rubbish, such as paper products. Private incinerafion was banned in 1971, increasing the burden of refuse and gazbage haulers, and the Ciry was told by the Minnesota Pollution Control Agency to examine the adequacy of the hauling system and determine the capability to handled the increased amount of refuse. As a result, a combined collec6on system of private and public haulers was instituted, and the two sectors competed for customers. The City system operated with only small losses throughout the 1970's until 1979, when the losses nearly tripled. Two factors have been attributed to the loss: a sharp rise in fuei costs and rising landfill disposal costs. Private contractors also faced rising costs, but were able to react negotiate some service delivery changes with customers and in some cases even trade customers with other private haulers, creating more efficient routes, to mitigate the rising costs. The City's process for raising charges prevented it from immediately raising rates. The City also paid higher wages and benefits, was unable to mold services to customer needs, and did not advertise because of a concern about using public funds for advertising. The City chose to terminate its collection service beginning May 9, 1980. The affected employees were reassigned elsewhere within Public Works or other City departments. The system of all private haulers competing against each other for business still exists today in Saint Paul. It is interesting to note that the City of Minneapolis has both public and private haulers. The question then arises: why did the combined system work there and fail here? A few factors come into play. First, city crews and private haulers in Minneapolis have designated areas to serve and have concentrated collection areas, which Saint Paul did not. Saint Paul crews and private haulers would collect refuse from all parts of the City, lengthening the distance between stops and increasing fuel costs, particulazly given that at the time, garbage trucks got only three to four miles per gallon. In addition, Minneapolis residents pay for gazbage service as part of their water bill, thus ensuring that everyone has garbage collection service. Differences between revenues and expenditures for gazbage collection are covered by the General Fund. In Saint Paul, residents contracted individually for service, so some residents do not have service. Instead they illegaliy dump their trash in someone else's gazbage cans or in public waste receptacles, or they may even dump it in an empty lot. In some cases, they may have worked out an arrangement with a relative to place their trash in with the relatives', particularly if they do not generate much refuse and do not wish to pay for regular service. - �/Gi-.� �y PubLic Works The Department of Public Works contracts with private fircns for a variety of services. The City will compare a contractor's cost with the City's cost and determine whether the work should be contracted. In some cases, the City simply doesn't have enough staff or equipment to work on all the projects, and it is more economical to hire a contractar fhan to hire temporary empioyees to do the work and rent the necessary equipment. Some snow plowing routes, namely dead ends and cul-de-sacs, aze handled by private contractars. Cost comparisons are also done for these routes. By contracting out some routes, the City does not have to hire as many full time plow drivers, or hire temporary employees. The contractors are hired on a yearly basis. Contracting has proven to be very effective in ensuring that projects aze completed in a timely manner and the costs are kept at a reasonable level. It also ensures a high levei of service for citizens. CONCLUSION Contracting is not the answer to creating efficiency or cost savings in every situation. The City has in the past considered contracting out for animal control services, but found that the City could actually exceed the services a contractor could offer. In other cases, the City has found ways to reduce costs as a result of hiring a contractor or opening a service for bidding. In other instances throughout the City, contracts have been awazded but the contractar has failed to foilow through, thus causing the City to have to resume the function and pursue corrective actions, thus tying up additional staff hours in litigation or other actions against the contractor. Contracting is a common practice in government, and it takes an many forms. The various options should be weighed against each other before any final decisions are made. In many cases government can be a competitor, and in instances where it simply cannot be, other opfions ought to be considered. 9� � 5�y City of St. Paul Office of the City Council 320 City Hafl Saint Paul, MN 55102 (651) 266-8588 INTER-DEPARTMENTAL MEMORA{VDl7M DATE: May 13, 1999 TO: City Councilmembers FROM: Jennifer Rundl�Rolicy Analyst SUBJECT: Suggested Process for Opening City Services to Competitive Bidding This memo outlines some basic information that should be present in any decision-making process to open City services to competitive bidding. The ideas aze gleaned from information provided by the National League of Cities and by the State of Colorado's Commission on Privatization. Step L Identify services that will not be opened to competition. These are most often core services which are imperafive to maintaining life and safety, such as police and fire services. After iden6fying services that will not be opened to competition, ask the following questions to deternune whether or not to privatize the remaiuing services: 1. Should the City be responsible for a given function? 2. Is there a policy reason why the City should perform this function? 3. Is the City currently successful at performing the function? 4. Can the City become more effective and/ar efficient at performing the function? Step 2: Evaluate and priorifize the remanung options available for competition. 1. Identify the functional components of a service - tailor procurement to fit the market 2. Perform a"Yellow Pages TesY' to detemune the potential number of competitars. A Yellow Pages Test is a determination of the availability of similar services in the azea. For exasnple, if a CiTy elects to contract out its landscaping services, it can search for landscapers in the azea. Since there are probably many private sector providers, the private market will probably be very competitive. If there are no private sector providers in the azea, contracting out the service may not be the best oprion for nnproving the service. Step 3: Calculate the cost of providing the service and contracting the service. 1. Utilize Acfivity-Based Costing (ABC): Allocate costs based on activity (such as total cost to fill potholes) rather than by accounting category (such as salaries, equipment, supplies, etc.) 2. Compare the cost of providing the service with the contract cost. �� ��9 contractor cost - Total contract cost = �'e cost } of the contract to the City iinistrahon cost - of procurement, ract negofiation, awazd, processing ndments, change ;rs, dispute �„ :essing invoices, ongoing iitoring and uation of the _ new revenue Calculate the cost savings. Cost savings = avoidable cost - total contract cost (Avoidable costs aze in-house costs that will not be incurred if a target services is contracted out.) Step 4: Determine the options available to provide work for current city workers who face potential outsourcing. Step 5: Developing a Request for Proposals If it is determined that a service will be opened for competition and Requests for Proposals (RFPs) will be solicited, the Request for Proposals specification should be developed by deparhnent heads, supervisors, relevant staff currently providing the service, elected officials, and constituents. It is also important that at least two proposals aze received. If City employees are planning to submit a proposal, they should be provided with expertise to assist them in formulating tha# proposal. It would also be advisable to allow CiTy empioyees the opportunity to change their business practices to be competitive with outside contractors even before soliciting bids or proposals. It if is then proven that the City simply cannot compete with the private sectar, then the process could be opened up to outside contractors. Elements of the RFP: � Scope of services or project requirements - This should inciude technical and functional requirements, time lines, legal requirements, and minimum qualifications. ► Description of the end result or deliverable good. � Benchmazks for standards of performance - minimum qualiTy standards. � Selection process and criteria (see suggested contractor qualificarions below for more information). � Currently, two methods aze used for the purchasing process, bid specifications and Requests for Proposals (RFPs). Tradirional bid specifications aze used to solicit bids when only the contract cost is used to evaluate the bids. Legally, the contract must be awazded to the lowest responsSble bidder meeting the requirements under a bid specification. When an RFP is used, the contract may be awarded based on a number of criteria. RFPs aze typically used for purchasing professional services, commodiries that have complex requirements, or when many possible alternatives exist in the mazketplace. �19- �5�y � Proposal submission requirements - deadlines, number of copies to submit, other details � Provision for hiring City staff who are displaced by contract � Guidelines for outlining the contract cost. Suggested Contractor Qualifications and Requirements � Must not have been a City employee within the last six months. � Must provide campaign contribution disclosure for the last five yeazs. � Must provide three relevant business references. � Must submit financial records to indicate financial viability. � Must provide a description of how the services will be delivered and how the quality standards will be met. � Other Administrative details that should be included: - Number of staff involved in providing services and their wages and benefits. - The location of the administrative offices if they are not provided by the City. - Insurance and liability information. - Equipment requirements and how it is provided (company-owned, city-provided, or rented, etc). 99-sy� CITY of Saint Paul City Council Research 310 City Hall Saint Paul, MN 55102 (612)266-8560 INTER-DEPARTMENTAL MEMORANDUM DATE: August 16, 1999 TO: Shari Moore, Deputy City Clerk FROM: Nancy Anderson '� � SUBJECT: Council Information Presented on August 4, 1999. Attached is a copy of a report that was presented at the City Council Meeting held on August 4, 1999, regarding the implementation progress of Compete Saint Paul. This item is being submitted to you for your records. �n ��C�IVED �UG 17 �ggs CI7Y ���R� Council File # �_ 1=� � � Green Sheet # RESOLUTION CTTY OF SAINT PAUL, NIINNESOTA �( / Presented By Refened To 2 RESOLVED, that in order to facilitate the formation and effective work of a labor- 3 management committee on the principles and operation of the Compete St. Paul program, the 4 Council hereby states its intent, and formally requests, that the Mayor put on hold any further 5 actions to implement Compete St. Paul for tree-trimming and grass-mowing until such time as 6 the labor-management committee, or administration and St. Paul Works Alliance sepazately, 7 shall report to the Council on the progress made; and, be it 9 FUR.THER RESOLVED, that the labor-management committee or if no such committee 10 ¢, +hP arlminictratiott ar e St. Paul Works Allianc , report back to the Council at its 11 regulaz meeting on August 4, 1999. 12 13 14 Requested by Department of: By: Fozm A proved b i Attorney 8,.: �. G-g•9'f Approved by Mayor for Submission to Council By: Approved by Mayor: Date By: Adopted by Council: Date � ` `�� \ Adoption Certified by Counci Secretary q�-5�� Report by Mayor's Office on implementation progress of Compete Saint Paul August 4, 1999 Bruce Engelbrekt Office of the Mayor On 7uly 13�' the Mayor informed city labor representatives and the City Council of a change in direction of the Compete Saint Paul process. The Mayor decided to move the process forward and he set into motion several steps: • First, the City is proceeding with the preparation of Requests for Proposals (RFPs) for select city services; • Second, the City is providing general training in Activity-Based Costing for department and office directors, department accountants and key managers who will be involved in preparing the RFPs; Third, the City is following through on the Mayor's commitment from last February to provide training for city employees in understanding the cost of theu services as a way of helping them prepare competitive proposals. Likewise, the City is ready to provide iraining in contracting procedures and the bidding process to assist city employees in developing responses to the RFPs. • Since July 13"', we have taken several specific actions: We have taken a new look at city services that might be good candidates for bidding out. While we prepared a short list of services to be considered for bidding over the next several weeks, we are looking at all city services, with the exceprion of police and fire. The Mayor has asked his department and office directors to take a closer look at the services they provide to assist him in identifying which would be good candidates for competirive bidding. We have prepazed and issued RFPs for two city services: on July 30`� notices of RFPs for the Watergate Marina (in Pazks & Rec) and Grass Cutting service (in PW-Street Maintenance) were posted in the Saint Paul Legal Ledgez and sent out to a list of potential respondents. DirecCOrs of both Parks & Recrearion and Public Works were given copies of the RFPs that same day. We haue extended the deadline for submitting proposals for the first two RFPs to beyond 60 days to allow adequate time for city employees to be trained and to prepare and submit proposals if they choose. This time frame is double the nonnal response period for RFPs regularly issued by the Conuact and Analysis Division of the Department of Technology & Management Services. � `7 J 1 Finally, we held one general training session on ABC costing for department heads, department accountants and key managers. Approlcimately 40 people attended that session. We will hold another session tomonow (8/5) with the similar attendance expected. We will offer at least one addirionai session - in late August or eazly September for any other city employees who wish to attend. We would certauily welcome City Council members and staff at this session. • Now, in the coming days and weeks we pian to do the following: We wili wark closely with department directors and key managers to prepare additionat RFPs for bidding out. Later this month we expect to issue RFPs for Civil Service testing in the Office of Human Resowces and tree trimm;ng in parks & Recrearion. Begumiug with the Watergate Marina and grass cutting services the City's costing consultant will develop a"costing model", which is a set of clearly understandable spreadsheets that capture the current cost providing these services. This costing model will serve as the basis for helping city employees participating in the bidding process to understand what theu service costs so that they can evaluate ways to save costs and improve their competitiveness as they prepare proposals for the RFPs. Linda Camp and her staff in the Contract and Analysis Division will provide trauung in the contracting process and bidding procedures to city employees who choose to compete for the marina or grass cutting services. The trauung will include ongoing advice and assistance as employees gather information and prepare proposals in response to the RFPs issued. • ff there is an employee bid, the City will provide group process training. • Training will be provided only when the bid teams request it. � To suttunarize the RFP and bid process for you: 1) The Mayor will ask department heads to prepare an RFP when a project has been selected. 2) Once the RFP is issued, I will send a letter to department heads requesting a letter of intent-to-bid from any empioyee group who is direcdy involved in performing the subject work. The Department head will be responsible for dishibuting this letter to employees. The letter will advise that the ideal city bid team, i.e., any joint labor-management group, will consist of employees, managers and supervisors who directly perform the work, along with top management and union representation However, intent-to-bid requests from any group of employees will be reviewed for acceptability. 3) The intent-to bid letter will be sent to me in the Mayor's Office. I will immediately ask the Compete Saint Paul Execurive Board to review the request and recommend to the Mayor if we should proceed. 4) If we decide to proceed with an employee group and they have asked for training, we will unmediately schedule the training in costing, bidding and group process for as soon as possible. Our objecrive is to have potential bidders submit a letter-of-intent to respond within one week after the RFP is issued. We then intend to review the request and set up the h�aining during the following week. 5) Once the deadline for submitting proposals has expired, a Special Bid Review Committee, composed of staff from the Contract & Analysis Division, the department perfornung the service being bid, members of the Compete Saint Paul Execurive Board, Mayor's Office staff, and possibly non-city personnel with special knowledge or expertise in the services being bid, will review the proposals or bids and recommend to the Mayor which to accept. 6) The Mayor then will bring his recommendarion on the winning bid to the City Council for approval.