U.S. Lags in Outsourcing Municipal Facilities Management
6/10/2013 9:04 AM
Submitted by S. Laraby
In the United States, municipal facilities management has been driven largely by the need to reduce operational costs and to simplify implementation of services provided. From janitorial services to landscaping to preventative maintenance to construction, outsourcing these services can lower costs and improve quality. Compared to many other countries, the U.S. model for doing so is in its infancy.
In some countries, the impetus for outsourcing has been legislative. In the U.K. the Local Government Act of 1988 requires municipal services to be competitively outsourced. This does two things. First, the services are always being provided at the market rate. Companies are required to remain competitive and, thus, are encouraged to drive down their costs --- thereby driving down the cost to the municipality. Secondly, it simplifies operations for the municipality. The municipality is able to focus more resources on improving the quality of services it provides, rather than managing complex personnel issues, seasonal employee transfers, researching and implementing best practices, and the myriad of other challenges that come with employing a large workforce.
Outsourcing is not one-size-fits-all. New Zealand has implemented a public sector reform initiative. This initiative requires municipalities to use public-private competition to improve services delivered to the public. This, in a way keeps the public service providers competitive on pricing and the level of services provided.
In Australia, some states take New Zealand's initiative one step further. In addition offering the services up to public-private competition for the business, states like Victoria require half of local public expenditure be put up for public bidding.
Why does the U.S. lag in outsourced municipal facilities management? Because it can. Conventional attitudes about how to handle municipalities prevail and a change can be seen as unnecessary risk. However, the potential benefits greatly outweigh the risk and each municipality is able to right-size the model to their risk tolerance.
The real risk lies in allowing governance of our municipalities to become outdated, inefficient, and costly to those they serve. Though the United States has made some steps toward a more progressive stance on outsourcing these services, community leaders must remain cognizant of the benefits that other, less conventional municipal facilities management models provide.
Fig 1 http://davidyoung.org/Resources/Docs/ContingencyApproach.pdf