Article

Can the Public Sector Learn from Private Enterprise?

September 2007, Government Fleet - Feature

by Tom Johnson

Today, government agencies face enormous challenges, including growing demand for services and shrinking resources. Public/private partnerships can help prevent harmful reductions in services while avoiding significant tax increases. The application of sound business practices can provide substantial increases in productivity and efficiency that benefit both sectors.

A survey by the International City/County Management Association reviewing practices of 1,400 cities and counties found that 90 percent of contracted services had been done in-house just five years earlier. Today, the average American city contracts 23 of 65 basic municipal services, and states contract approximately 14 percent of their activities. The National League of Cities surveyed 288 municipal CEOs and found 61 percent were less able to meet their financial obligations in 2005 than in 2004.

In 2002, 38 states cut budgets by nearly $13.7 billion. In 2004, 40 states cut another $11.8 billion, the biggest budget decrease ever recorded. Seattle alone reduced its 2005 revenues by $60 million dollars.

Private Business Provides Models
A confluence of rising infrastructure needs and social demands combined with tight budgets and resistance to tax increases has made it essential to turn to the innovative qualities of private business models.

Public interests are met through a rigorous oversight process and private enterprise is rewarded by the need to provide quality customer satisfaction for longterm contracts and future business opportunities. These partnerships are an innovative, practical, and new way of providing public services through private companies.

John Hunt, the 2005 Government FleetPublic Sector Fleet Manager of the Year, said he “went to school on the private enterprise examples employed by the City of Fresno, Calif., and started running the fleet department like a business.” Hunt, now fleet manager for the City of Portland, Ore., added, “Sound business principles can be applied across the board to increase productivity and efficiency. We can learn from the private sector. We need to learn from the private sector.”

The City of Atlanta fleet department’s experience illustrates the value of public agencies teaming with private enterprise.

The governor of Georgia felt agencies had insulated themselves from the pressures that produce quality services at reasonable costs. He began the New Georgia program. All commercial activities would be reviewed for improved efficiency or rely on private-sector resources to demonstrate their business models. Half of all government services exist in the commercial marketplace with 20- to 50-percent cost savings when commercial entities are forced to compete with each other.

Atlanta Collaborates with UPS
In Atlanta, city officials approached executives at local successful companies to help improve operations.According to Jan West-McIntyre, director of Atlanta’s motor transport services (MTS), United Parcel Service (UPS) was asked to help improve fleet processes. “It was a collaborative effort to streamline our fleet processes,” said West-McIntyre. “UPS is considered expert because of its fleet size.” The delivery company’s fleet numbers nearly 70,000 trucks, vans, and SUVs.

The first step was to set objectives for the partnership. The group developed six goals and four measurements to be completed in 60 days. They put into place clearly spelled-out performance guarantees that assured a level of quality and appropriate measures to evaluate performance.

Three major components of Atlanta’s fleet operation were restructured: acquisition, maintenance, and disposal.

“UPS helped us develop a five-year vehicle-replacement plan to get the department back on track while acknowledging the financial realities of the city’s budget,” said West-McIntyre.

The collaboration led to changes in the maintenance operations to improve turnaround time and upgrade and refine the computer fleet management system. The system now generates reports to track vehicle maintenance and repair services.

The parts department was also streamlined, said West-McIntyre. Parts usage is computer-tracked to determine which parts can be stocked versus a one-time order. Inventory is tracked for automatic reorder. Parts have been standardized. “We regularly meet with vendors and now order online,” said West-McIntyre.

City Improves Customer Service
In addition, the partnership team also addressed customer service issues. “UPS helped us implement a service agreement with customers,”West-McIntyre explained.MTS staff now asks customers to “Tell us what you need.” Fleet management meets regularly with customer departments. A customer-fleet contract was developed, outlining specific turnaround times, preventive maintenance schedules, vehicle service tracking, and replacement schedules.

“Customer service has improved tremendously,” said West-McIntyre. “We are no longer adversaries. We work together. Fleet and its customers have the same goal — serving the community.”

MTS implemented 90 percent of the changes UPS recommended, said West-McIntyre. “And some changes continue to be ongoing.” Her staff accomplished 20 major improvements in 24 months, and the department was named one of the 100 Best Fleets in North America. And, according to West-McIntyre, “UPS is still open to serve as consultants to MTS.”

According to David E. Scott, commissioner, department of public works, “Innovative governments have found they can provide high-quality services more efficiently and at less cost by developing partnerships with private firms.”

Partnerships Bring Benefits
The benefits of “not reinventing the wheel” and collaborating with private enterprise include:

  • Cost savings.
  • Flexibility and reduced red tape.
  • Increased quality.
  • Innovations.
  • Support of political leadership.
  • Private market expertise.
  • Best-in-class applications.
  • Increased efficiency of new technologies and operational techniques that cash-strapped governments cannot afford.
  • Capital improvements for innovative financial procurement practices.

    Taxpayers benefit from efficiencies developed through experience and under the fire of the marketplace economy and economies of scale in purchasing goods and services.

    West-McIntyre felt the process was “an incorporation of the public values of sharing, caring, and community with our obligations to save money and increase accountability.”

    Atlanta is one example of an innovative government setting goals and objectives for quality public service, then working with the private sector to develop creative ways to achieve those goals. These partnerships are practical, viable, and alternative ways of providing public service through private company cooperation..

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