1. Objectives, Issues and Options City Council Workshop October 13, 2007

2. Contracting for Public Services: Objectives, Issues and Options

3. Option A2 (Criteria) Restrict use of contracting to certain circumstances or criteria (below). Staff would return with an evaluation of which currently outsourced services do not meet the criteria, and what the service and financial impacts would be of transitioning those services in-house. a. Pooling of contracted employees would provide significant benefits that City staffing could not provide. b. Service requires technical or special expertise that City staff could not or do not provide, and is outside of core service mission of the department. c. Service by contractor staff does not have significant interaction, communication or engagement with the community, and service is not expected to significantly affect customer service provided. d. Service is needed on an interim or emergency basis, or for a pilot period of time. e. The service requires substantial space to house the staff and/or equipment to provide the service, which is not available within City facilities or cannot be leased. f. The service requires significant equipment or other capital investment and maintenance, which a private contractor could better amortize the costs or maximize use of the equipment compared to the City. g. Service is new or uncertain, and the City would rather transfer that uncertainty to another entity until more information or experience is gained. Or the service is assessed to entail a certain level of risk that the City would rather transfer to an outside party. Specific risk issues would always be evaluated by staff and incorporated as part of budget development for workers compensation and liability exposures. h. Service would supplement City jobs by having contractors perform more labor-intensive, rudimentary tasks, freeing up City employees to perform more skilled functions. An accompanying reduction in work-related injury, public liability claims and employee lost time would be expected.

4. Introduction Clarity Staff workplan and performance Employee certainty Budget preparation (Priority?) Purpose today Understand current practice Review Policy Paper Goals, issues and options Develop policy (return for formal approval) Council Workshop October 13, 2007 1

5. Policy Development Council Workshop October 13, 2007 Policy Agreement? Others to consider? Examples History Data Pros or Cons Others to consider? Impacts 2

6. Current Practice “Contractual” vs. “Professional” Small percentage (4%-5%) No involuntary employee job loss Current Major Contracts Over $1 M annually: Lifeguards Landscaping Tree Trimming Parking Citation Processing Parking Operations Current Major Contracts Over $1 M annually: Lifeguards Landscaping Tree Trimming Parking Citation Processing Parking Operations Council Workshop October 13, 2007 3

7. What other cities do Council Workshop October 13, 2007 Custodial* (10) Landscape*/Tree Trimming *(7) Print Shop/Water Billing (4) Vehicle Maint/Street Maint/Parking Lot Ops* (3) Facility Maint (2) (* Services provided partially by contract in Santa Monica) 4

8. Policy Objectives Responsive Service/Performance Employee Fairness Socially Responsible Financially Feasible Council Workshop October 13, 2007 5

9. Issues – Responsive Service Challenges Benefits Poor service Quality control Uncontrollable cost Over reliance Not invested -> poor customer service Administrative problems Pooling Specialized Allocation of routine Emergency/interim Space and capital Transfer of risk or uncertainty Council Workshop October 13, 2007 Key: Adequate supervision, monitoring, measuring and reporting 6

10. Example – Pier Custodial Service January 2007 Concern - level of service, flexibility of workforce, Pier Maintenance succession planning March 2007 –“core concern key and policy issue of the PRC was the delivery of the highest possible level of service.” 30-day cancellation, accountability and oversight Ongoing financial and operational analysis

11. October 2007 – high quality of service “For the first time in recent memory, the condition of the restrooms was not a source of complaints during peak summer months. In fact, several comments were relayed that people actually didn’t mind using the restrooms on the Pier, truly a first.” Checklist, grading, oversight

12. Issues – Responsive Service Staff angst of bringing services in-house Time and complexity of Civil Service Lengthen processing time Example - Progressive discipline steps Space! Council Workshop October 13, 2007 7

13. Issues – Employee Fairness History – last 20 years No involuntary terminations due to contracting Placements Employee Group Concerns Probation waiver Seniority Other Council Workshop October 13, 2007 8

14. Issues – Social Responsibility Mixed benefit levels Living Wage Health Care Living Wage Rates (FY 07/08) CityHourly w/health care Hourly Rate w/o health care Santa Monica $12.48 Los Angeles$9.71$10.96 West Hollywood $8.84$10.12 Council Workshop October 13, 2007 9

15. Issues – Financial Feasibility Five Year Forecast – little capacity for ongoing costs Long term cost effectiveness – mixed “In source” example Why less expensive? Benefit levels – 40% Structural - pooling, cost spreading Council Workshop October 13, 2007 10

16. Options – Responsive Service Council Workshop October 13, 2007 11

17. Options – Employee Fairness Council Workshop October 13, 2007 12

18. Options – Social Responsibility Council Workshop October 13, 2007 13

19. Options – Financial Feasibility Council Workshop October 13, 2007 ( 1) Continue with existing contracts within planned resources. No significant tradeoffs; manage with budget process ( 2) Change practice and evaluate tradeoffs in services or identify new revenues 14

20. Summary Existing Practice  Policy + Improve Monitoring, Measuring and Reporting “No involuntary terminations” + probation waiver * Advocate for and/or monitor health care legislation Stay within planned resources – no significant tradeoffs (*) Recommendation CMO presented to MEA Council Workshop October 13, 2007 15

21. Summary Develop a formal policy Right Goals? Issue Clarification Discussion of Options Council Workshop October 13, 2007 Direction for draft policy 16

22. Contracting for Public Services: Objectives, Issues and Options 17