The City of Colorado Springs and Colorado Springs Utilities have signed a five-year outsourcing contract with Serco Inc. to provide fleet maintenance services beginning Jan. 1. The five-year contract is worth $35 million.

Serco will service Colorado Springs Utilities vehicles and equipment based in Colorado Springs and all City vehicles, including police and fire vehicles. The contract doesn't cover the Fire Department's heavy fire trucks. Serco is now evaluating staffing requirements.

City officials estimate that outsourcing fleet maintenance for the 3,500-plus vehicles and equipment for both the city and utility will achieve a combined cost savings of more than $4 million over the life of the contract.

Officials say hiring Serco will reduce labor and vehicle costs for Colorado Springs Utilities; provide onsite fleet services at several locations; and improve response times and customer service. Hiring Serco stemmed from a 2012 citywide reorganization plan.

Serco expects to hire a majority of the City's current fleet workforce and is looking to fill additional positions, said Ed Muse, vice president of fleet services for the company. These positions can be viewed online.

The majority of city fleet employees applied with Serco, and all who were made offers were offered pay at or above their present pay, said Laura Neumann, Colorado Springs' chief of staff, in a statement.

Those who choose not to work with Serco or are not hired are being offered a severance package of one week of pay for every year of service up to eight years. They are also eligible for a re-employment benefit, which guarantees them an interview for any City job posting (internal or external) for which they apply and meet the minimum qualifications, Neumann said.

"If they are not employed by Serco or another company offering health benefits, they are eligible for extended health coverage for six months," Neumann told Government Fleet. "There is no lapse in health coverage for those employed by Serco."

She added that the city expects to spend about $700,000 the first year in severance and other separation costs.

Serco employees will initially utilize the existing fleet maintenance facilities and during the first year, the company will add an additional service location for the Utilities' vehicles, Neumann said.

Serco, a U.K.-based company with a national office in Virginia, already employs 500 and several subcontractors in Colorado Springs.

*Updated 12/2/13 with contract cost information.

By Thi Dao