Managed Competition Reconsidered Managed Competition Reconsidered A formative evaluation of San Diego’s Managed Competition ProgramA formative evaluation of San Diego’s Managed Competition Program

Justin C. Scholey, University of California, San Diego, Urban Studies & Planning ProgramJustin C. Scholey, University of California, San Diego, Urban Studies & Planning Program

15 March 201215 March 2012Sketch: Andrew Smith:Sketch: Andrew Smith:

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Research Question: How can the city of San Diego deliver a managed competition program that achieves the highest degree cost efficiency, accountability, and equity?

Abstract: In 2006, San Diego voters approved Proposition D, allowing selective city services to be subjected to a bidding process alongside private competitors.. This formative evaluation found that outsourcing is most successful when municipalities conduct objective financial analysis, produce sound contracts, encourage citizen participation, and invests in the necessary regulatory framework to manage and enforce its contracts. Since public employees have thus far prevailed in the bidding process the city has the opportunity to consider the results of this evaluation to ensure the programs future viability.

Background & Significance•The city of San Diego is currently dealing with a severely underfunded pension system.•Lack of fiscal foresight and a tax averse electorate has allowed measures such as managed competition to emerge.

Purpose of the Study•Evaluate the city’s managed competition program to assess it strengths and weaknesses to ensure that cost savings are achieved without compromising institutional accountability and equitable service provisions.

Findings

•Managed Competition is most successful when municipalities conduct objective financial analysis, produce sound contracts, encourage citizen participation, and invests in the necessary regulatory framework to manage and enforce it contracts.

Cost Efficiency•The city of San Diego thus far has derived the vast majority of its cost savings estimates from one single partisan think tank (i.e. The Reason Foundation) that cites savings data that is nearly 25 years old.

• The 2012 fiscal year budget proposal eliminates staffing for administering contracts by 50 percent based on the 2008 fiscal year budget showing that the city is decreasing its capacity to manage current and future contracts.

Equity•The city has worked with local advocacy groups to amend the program guide to force private providers to retain city workers for a minimum of 90 days.

•The program guide contains a firewall to keep decision makers appropriately out of touch with the parties devising proposals to submit for bid.

Analytical Approach

•The social efficiency model was used as an organization framework and measures outsourcing based on its ability to render cost savings, institutional accountability, and equitable service provisions.

Methods

•A cadre of case studies, city financial and policy data, as well as stakeholder interviews provided this evaluation with the necessary information.

Accountability•The city has worked with local advocacy groups to adopt measures to requiring performance measures and specific service outcomes to be described in detail and publicly disclosed before a given contract is sent out for bid.

Conclusion

•Consider a wider body of resources when formulating cost savings to set achievable goals.

•The city must equip itself with the proper regulatory oversight capacity in order to monitor and enforce its contracts.

•If the city does not have a strong regulatory capacity it can easily compromise institutional accountability and equity, thus paving way for the emergence of

Special Acknowledgements to Keith Pezzolli,& Hans Hassell.