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.