OR
We are in the What Business?
Lee R. Evett
 Vice President – Burton and Associates –
Tampa Office
 City Manager - 34 Years – 7 Cities, 5 States
 B.A. Purdue; M.P.A. Indiana University
Previous Leadership Presentations
Elements of Leadership – 21 Irrefutable Laws
The Other Side of Leadership
Do you have to be Nuts to be a City Manager?
Leadership and Outsourcing
Leadership
Leadership is a proactive catalyst
Leadership recognizes the need for and facilitates
change
Outsourcing
Building a better mouse trap
Future of local governments in the “New Reality”
Leadership and Outsourcing
Strange combination of topics?
No, we are in the leadership business
And Outsourcing is how leaders are re-shaping local
government
Leadership and Outsourcing
First - Who are we ?
Where do you work?
Why does my position exist?
Why does my organization exist?
What does my organization provide?
You are in the Leadership Supply Business
Leadership and Outsourcing
Why is government in the Leadership Supply Business?
Because Governments are created to supply Leadership
Because Governments are a necessary part of society
Why are Government “necessary”?
Leadership and Outsourcing
Governments are formed to fill a natural leadership vacuum arises when unrelated people start living in proximity to
others
Governments are service providers for what we either can
not do by ourselves or can do more efficiently together
Leadership and Outsourcing
Governments necessarily exist to protect people and
their rights. To provide agreed upon services. To
maintain order and promote domestic tranquility.
In exchange, people agree to be governed, abide by the
laws adopted by the governed, and give up some of their
freedoms (mostly to not run around and wreak havoc)
OK – We Are in the Leadership
Business – How are we doing?
 When can we say we have met the service expectations
of society?
 How do we measure our talents of providing services?
 When can we say we have succeeded?
Measuring Leadership Success
In Private Sector – Piece of Cake
Success is measured by:
1) Increased market share;
2) Revenue increases meet goals
3) Sales targets are met; and
4) Profit projections are realized
And all on a quarterly basis
Measuring Leadership Success
In the Public Sector – It’s another story
Success is measured by:
1) Satisfying the electorate; movers and shakers
2) Staying out of the media, “successful” re-elections
3) Comparison with other local governments employees per thousand, expenditures per thousand,
crimes per thousand etc.
4) Staying financially healthy (moving definition)
OK, We Measured – Now, how do
we do better?
Change your Leadership Focus
Private Sector
 Leadership focus is always external –using the base to
increase customer satisfaction - revenue, market share
and profit –
Public Sector
 Leadership focus is often internal – demonstrating
leadership by controlling the base – favorable
number of employees, expenditures, and statistics
Change to External Focus

Empower Employees to help customers:
Ritz Carlton - Empowerment
Disney - Same
 Replace unsatisfactory or marginal employees:
Los Angeles – the very, very, very, very…..
20-year Planners
 Recognize those who do focus on customers:
Coral Springs
OK – We Changed Focus But We
Still Want to do Better
 We changed focus
 We removed marginal employees
 We empowered our employees
But we still want (need) to do better –
How do we do that?
Need to think about re-creating the base – need to
question why and how you do what you do
Remember - Leadership is a synonym for Change
How do we do better?
 Do we increase staff, if so When ? Answer - never
 Do we have more employees than needed? Answer - Yes
 Do supervisors supervise ? Answer - Rarely
 Do your employees think “internally” to the organization
or “externally” to citizens and services?
 Is your organization run for the benefit of the employees
or “stockholders”?
Now – How do we do better?
Concentrate on the Employee/Service “Basics”
 Employees provide services – not follow rules without
exception, complain about temperature, parking spots
 Providing services is the goal, not improving employee
morale
 Encourage employees to solve service problems – not
just report them
 Every employee is part of the organization – you don’t
want to hear, “that’s not part of my job,” or “that’s not
my responsibility – you will have to call someone else”
Now – How do we do better?
Hire employees based on three criteria:
1) Character
2) Competency
3) Chemistry
Every employee should commit to do what they say they
will do
Still Not There?
Do not assume the only way to provide a service is to
employ people
Do not assume the cost of providing the service can not
be less
Do not assume that you have taken the service to the
highest level
Now – How do we do better?
Outsourcing – Remodeling Your Base
 Outsourcing is about realizing a private sector corporation
can provide a public service
 Outsourcing is about setting standards for performance –
perhaps higher than currently enjoyed
 Outsourcing is about providing a public service with a
recognizable value
What does “doing better” mean?
Doing better isn’t just about higher service levels
Doing better also means doing the same with less
 Revenues are down
 Worse, revenues are not improving or slowly improving
 Reserves are used with the hope that things will get better
 Citizens are continuing the mantra - Property Taxes are
too high, government spends too much
What to do?
Leadership is about change – consider outsourcing
 What will outsourcing do for your organization?
 What do you want outsourcing to do for your
organization – control/lower costs, improve levels of
service, remove the HR Department?
 Is outsourcing really better?
Potential Outsourcing Advantages
 Efficient performance
 Known cost - potential cost savings
 Better service levels – quantified service levels
Potential Outsourcing Disadvantages
 Difficult/awkward to change services or service providers
 Hard to change back, infrastructure – who owns it?
 Maintenance of public property
 Service levels will be what you specify, be careful and know
what you presently offer
Outsourcing - Not a New Idea
 1955 - Directive of the Office of Management and
Budget – discouraging Federal Government from
producing any goods or services that can be obtained
from the private sector
 Peter Drucker coined the term Privatization in 1968
 1972 Rand Corporation. In-depth study on
Outsourcing
Common Examples of Outsourcing
 Garbage collection, recycling, accounting, building
code enforcement, debt collection, parks and
grounds maintenance, recreation, 911 Primary
Service Answering Points (PSAP), Police, Fire,
Ambulance
 Abandoning a public service is a forced
“outsourcing”
Key Aspect of OutsourcingAccountability
Accountability is a fundamentally required aspect
of social existence –
In government - it is often a problem
 Some crucial functions must be carried out
collectively, such as elections, who is accountable?
 We act on behalf of the public – but who really knows
what they want - how can we be accountable when
seemingly everyone has a different thought of what we
should be doing?
Outsourcing may not be for You
 Hard to measure the value of production – hard to
demonstrate efficiency, cost reduction
 More disruptive it is to change providers
 Internal experts know more about how to accomplish the
task
 And:
Always Remember - hiring employees is more
politically popular than paying a for-profit
corporation
When Outsourcing May Be The
Answer
 More the service can be
identified/quantified/specified
 More the efficiency/production of the services can be
measured and costs identified
 Multiple vendors for the service – good market place
– competition – other examples in operation
 Performance can be objectively evaluated after the
fact
When Outsourcing May Be The
Answer
 More readily a failing contractor can be replaced
 Less government is seen as caring only about dollars
 Stronger the case for employing profit seekers than
employing individuals – usually the more technical
 More it can be shown that the city “wins”
OK – You want to Outsource a
Service or Function
 What do I do (being the leader I am) and yet still
survive to another day
 How do I do what I want to do (being the leader I
am) and still survive to another day
Step 1 – Pick a Low Hanging Service
 Consider well defined services with know quantities -
garbage collection, 911 PSAP’s, utility operations, and
grounds maintenance are good examples
 Less precise but still doable: engineering, planning
and zoning, parks and recreation
Step Two – Research and Talk
 Know your present actual costs, not budget costs - the
fully allocated real cost
 Know what costs you will avoid (save)
 Have all the facts, actual costs, anticipated savings,
comparable examples from other communities. Know
what worked and what did not
 Do NOT do this in a vacuum, do your research quietly:
discuss your thoughts with each elected official
BEFORE MAKING PUBLIC COMMENTS
Step Three - The RFP
Write clear, tight specifications:
 Number of units/frequency of activity/special programs
currently in place
 Detail exactly what you want – be cautious of imaginative
providers
 Hold a pre-bid meeting to ensure no misunderstandings
on what YOU want
 Customer service expectations/penalties for service
infractions (e.g. tardiness/non specified
practices/behavioral infractions, uniforms, personal
appearance)
Step Three – The RFP
 Spell out when early termination is appropriate, city
should be the final decision maker
 Define payments; detail invoicing, when payable, how
paid, based on what service frequency, when (if) fee is
to be increased, by how much - beware of CPI increases
 Define each required or optional management report by
type, contents, when to be delivered, to whom, penalty
for non delivery or incomplete performance
10:50 AM
Step Three – The RFP
 Define the city’s option to identify future service
changes, special events, special and/or specific reports
and data requests
 Define extraordinary events (injuries, accidents, etc.)
and spell out reporting responsibilities – to whom and
how soon
 Spell out extra duties and specific compensation for
known special events, including hurricanes
Step Three – The RFP
 Spell out minimum staffing by using performance
standards - not numbers of employees
 Spell out the city will specify uniforms or establish
dress code
 Identify behavioral expectations and specific
consequences for infractions
Step Three – The RFP
 Make clear the city determines contract infractions
 Provide for an internal administrative (not arbitration)
appeal process
 Don’t be afraid to individualize the services to your
communities expectations
 If something “can’t be done” know exactly why –
research yourself if necessary
Step Three – The RFP
 Review the RFP with each impacted department –
include front counter personnel and main
receptionists – those who will be the first to hear
citizen issues/questions
 Clearly define the term and possibility of renewal or
extension before re-bid
 Periodically re-bid - establish the precedent - even
when you like the contractor
Step Three – The RFP
 Speak candidly with vendor references including both
management and field personnel
 Meet company’s top management, learn their personal
history, goals for the organization. What is the
company personnel turnover rate/why (indicate you
will be doing this)
 When you have finalists, put together a core group who
will hear two or three presentations
Step Three – The RFP
 Visit existing contractual operations
 Select a service provider with the same care you would
use to hire a department head, key assistant or auditor
 Contractor must assign a senior management person
as your key 24/7 contact – home phone, cell phone etc.
 Key contact should periodically attend departmental
management meetings
Step Four – Approving The
Contract
 Each elected official must understand all aspects of
what is happenings before it is on the Agenda
 Develop FAQ’s for the Council and appointed staff to
insure continuity of answers
 Develop a public presentation on what is being
outsourced and why (benefit to the city)
Step Five
MONITOR AND ADMINISTER
THE CONTRACT
Other Thoughts
 Hey, its NOT an easy task
 Most cities have outsourced a service – but not recently
 Political ramifications – every elected official campaigns
on running government like a business and then votes
for what will get them re-elected
Other Thoughts
Do not outsourcing police or fire services unless:
 A) You are a brand new city or
 B) The union agrees - which means it is in their best
interest and may or may not be in your best interest or
 C) You have a death wish
Real Life Examples
Three Examples of Leadership making a change:
 The Osceola County Library System
 The City of Weston
 The City of Sandy Springs, GA
Osceola Outsources the Library
October 2011 Headline - Osceola Commissioners put
library privatization on hold
County will look at how it can make cuts without
outsourcing
Osceola County officials find themselves with a
dilemma: move ahead with an unpopular proposal to
outsource libraries or continue to run the libraries and
make cuts themselves
Osceola Outsources the Library
What Happens
County listens to the headlines and re-negotiates the
contract
Removes most onerous provisions, insures the County
controls policies of operations/administration
Osceola Outsources their Library
Result
Osceola County did Outsource their Library
 Cost savings was the motive
 73 County employees affected
 Contract signed in December 2011
 Private Operation started January 3, 2012
 All employees offered positions with same salary but
company benefits – “8 or 9” did not accept
Osceola Outsources the Library
December 2011 Headline – Osceola County Approves
Privatization of Library System
 Saving an estimated $6 million over five years
 Maintain current hours of operation at all branches
 All employees offered positions with LSSI at their
current salaries
 Osceola County retains full ownership of all facilities
and resource materials, as well as policy-making and
management decisions
Osceola Outsources the Library
 Five year contract
 First East Coast operation for California Company
 County savings so far $1 million per year
 Some of the saving due to county cut back on book
purchases
 County understands the company’s operation is
profitable
Real Life Examples
Florida’s Outsourcing Poster Child – The City of Weston:
(FY 2012)
$6.4 Billion Assessed Valuation– Pop 65,000
$115 Million All Funds Budget – Zero “G.O.” Debt
$35 Million General Fund - $89 Million in Reserves FY 11
27 Square Miles – AAA Credit Rating – only 2 in State
Their Mission - Value
Nine “real” employees – 278 contract “employees” provide City
services
City of Weston
 Multiple Contractors
 Only Executive Staff are City Employees
 Specific contract areas
Building
Information Technology
Police/Fire - Sheriff
Parks and Recreation
Planning and Zoning
Public Works
Finance
City of Weston
 Three Types of Contracts: Perpetual, Prime and Demand
 Perpetual Contracts – Key Positions; City Manager, City
Attorney, Engineering/Planning & Zoning, IT and
Administrative Services
 Prime - 30 plus contracts for basic on-going services -
landscaping, fire, police, parks and recreation, accounting,
engineering
 Demand – hurricane clean-up, special events, specialized
services not used regularly, infrequent use of large or
unusual equipment
City of Weston
 Weston incorporated in 1996 as an “outsourced” City;
originally Indian Trace CDD
 Weston Model - city employees administer multiple
contracts
 In the beginning – only one employee, the City
Manager – later added employees to insure adequate
monitoring of contracts
Real Life Examples
Sandy Springs, GA
 Population – 97,898
 Annual Operating Budget: $83 Million
 Government Service Model:
Non-public safety service provided through Private/Public
Partnership (PPP) Model – one contract – contractor issues
subcontracts
 Long Term Debt: $0 – Short Term Debt: $ 5 Million
Sandy Springs, GA
 City acquires needed assets
 City retains budget control
 Private Sector - responsible for staffing/service costs
 Private Sector responsible for normal repair/replacement
of equipment
 City controls capital planning and expenditures
 Employees work for private company/Subs
Sandy Springs, GA
Recreation and Parks Services
Revenue
Expenses:
Personnel
Operating
Other
Net Expenditure
PPP
$352,000
$1,702,521
$520,000
$252,500
$2,475,021
$2,268,752
$520,000
$252,500
$3,041,252
Total Cost
$2,123,021
$2,689,252
Estimated Cost Savings:
Traditional Model
$352,000
$566,231
Sandy Springs, GA
Human Resource Services
Expenses
PPP
Traditional Model
Contract for Service
$350,000
$0
Personnel
$0
$364,650
Operating
$0
$69,638
Total Cost
$350,000
$434,288
Estimated Cost Savings: $84,288
Sandy Springs, GA
Public Works Services
Expenses
Contract for Service
Employees (14)
Maintenance
Equipment
Total Cost
PPP
$550,000
$0
$0
$0
$550,000
Estimated Cost Savings:
Traditional Model
$0
$560,560
$96,000
$81,910
$738,470
$188,470
Sandy Springs, GA
Ambulance Services
PPP
Traditional Model
Revenue: Patient Reimbursement
Expenses:
Contract for Service
Personnel
Operating
$0
$1,984,317
$450,000
$0
$0
$0
$3,213,613
$521,647
Total Cost
Net Cost
$450,000
$450,000
$3,735,260
$1,750,943
Estimated Cost Savings:
$1,300,943
Sandy Springs, GA
Essential Elements for a Successful PPP:
 Value
 Cost Savings/Efficiency
 Accountability
 Performance Measures:
 Customer Satisfaction
 Survey component
Final Miscellaneous Thoughts
 Contract with a professional – resist the urge to tinker
 Citizens will not appreciate the inability to bully council
or staff for a “personal” change/service
 Potential manpower reduction in emergency situations,
water/sewer line breaks – hurricanes (but you can
contract for these as well)
Final Miscellaneous Thoughts
 If outsourcing were a drug – read the cautions on the
label
 Do not go into this arrangement simply because of
dollars and cents
 Benefits paid contract employees are lower than paid
public employees
Final Miscellaneous Thoughts
 Contractors are paid their costs and a profit
 Many citizens think government services should be free
or provided by “not-for-profit” agencies
 Test the winds for Red and Blue
 Consider the council’s business / professional
sophistication (Business IQ)
Final Miscellaneous Thoughts
Community Business IQ
 Higher the Business IQ – the higher probability of
success (usually Red)
 Lower the Business IQ – the lower the probability of
success (usually Blue)