Friday, November 17, 2006
Hauling Trash in the ‘Burgs
Beginning January 1, 2007 the City of Pittsburgh will begin to haul refuse for the Borough of Wilkinsburg, its neighbor in the eastern suburbs. Wilkinsburg is switching from a private hauler (the contract has expired) and will move to the City after having conversations with City officials going back 4 or 5 months. The deal is expected to save money for Wilkinsburg, while the City plans to hire 8 additional workers to handle pickup.
It is not unheard of that when public services are opened to managed competition between private and public providers that the public provider can innovate, lower its costs, and win the bid. It happened in Indianapolis, a city which was on the forefront of managed competition, when its refuse division won several of the bids the City requested. As a result, as documented in former mayor Stephen Goldsmith’s book The 21st Century City, “the cost per household for trash pickup dropped…[public] crew productivity [escalated]…absenteeism and workers’ compensation claims also decreased”. We have detailed the savings from contracting achieved in Denver’s public transit system.
So it can work. But leave it to Pittsburgh’s refuse union to make claims that go too far. “If the private sector can compete against public employees, why shouldn't we be able to compete with them?” were the words of the head of the union. If only that was the case. The City has long resisted opening up trash collection (and most other City functions) to competition. And, when the Act 47 plan mandated it, the competition was very limited in scope.
The Recovery Plan outlined a two-step “Managed Competition of Municipal Solid Waste Services”. In step one, the City was to issue an RFP for 10 percent of the City’s households and, in order “to provide an opportunity to evaluate contracted services, the City workforce shall not compete for this initial pilot service area”. In step two, the “City workforce shall be included among the bidders in competition with private contractors”.
Good in theory, but that is not how it worked out. Instead, there was no private pilot program and bidders were instructed to submit bids for both phases, reducing the interest of outside vendors. With little surprise, the City refuse union ended up winning the entire bid. Why the original Act 47 plan was altered is anyone’s guess, but it is quite probable that the union and its allies on City Council shuttled the two-step process. As such, there was no way to evaluate whether an honest, open process was ever really attempted.
So what’s the story? The City is adding to its labor costs and potential workers’ compensation liability. Not the way to go for a City in recovery and under oversight.
It is not unheard of that when public services are opened to managed competition between private and public providers that the public provider can innovate, lower its costs, and win the bid. It happened in Indianapolis, a city which was on the forefront of managed competition, when its refuse division won several of the bids the City requested. As a result, as documented in former mayor Stephen Goldsmith’s book The 21st Century City, “the cost per household for trash pickup dropped…[public] crew productivity [escalated]…absenteeism and workers’ compensation claims also decreased”. We have detailed the savings from contracting achieved in Denver’s public transit system.
So it can work. But leave it to Pittsburgh’s refuse union to make claims that go too far. “If the private sector can compete against public employees, why shouldn't we be able to compete with them?” were the words of the head of the union. If only that was the case. The City has long resisted opening up trash collection (and most other City functions) to competition. And, when the Act 47 plan mandated it, the competition was very limited in scope.
The Recovery Plan outlined a two-step “Managed Competition of Municipal Solid Waste Services”. In step one, the City was to issue an RFP for 10 percent of the City’s households and, in order “to provide an opportunity to evaluate contracted services, the City workforce shall not compete for this initial pilot service area”. In step two, the “City workforce shall be included among the bidders in competition with private contractors”.
Good in theory, but that is not how it worked out. Instead, there was no private pilot program and bidders were instructed to submit bids for both phases, reducing the interest of outside vendors. With little surprise, the City refuse union ended up winning the entire bid. Why the original Act 47 plan was altered is anyone’s guess, but it is quite probable that the union and its allies on City Council shuttled the two-step process. As such, there was no way to evaluate whether an honest, open process was ever really attempted.
So what’s the story? The City is adding to its labor costs and potential workers’ compensation liability. Not the way to go for a City in recovery and under oversight.
