Moore, Oklahoma
Keywords: Public Works, Failed Contract
Public Works
The city of Moore (population 50,000) lies midway between Oklahoma City and Norman.
In response to fiscal stress, the City of Moore, Oklahoma decided to contract out its public utilities and public works departments in December 1993. Services in the contract included streets, drains, parks, cemeteries, building maintenance, sanitation, fleet maintenance, and animal control. Following a competitive bidding process that included three different companies, the five-year contract was awarded to Professional Services Group (PSG), a large multinational firm.
When PSG took over public works, nine employees chose not to take jobs with the private firm. Four months later PSG terminated eleven additional employees, bringing the total reduction in staff for the department to twenty. Following the layoffs PSG employed about forty-five workers. In spite of the staff reductions, PSG still managed to meet its contract obligations to the city. For the first three years, everything was working well, said Richard Sandefur, Director of Public Works. PSG had demonstrated that it could do more with less manpower than the city.
After about three years with the private contractor the local economy improved considerably, and citizens were demanding a higher level of service that what PSG was required to provide under the terms of the contract. Moore City Council felt that PSG should provide this higher level of service at no extra cost to the city, and that the company should hire back some of the employees they terminated to provide the additional service.
PSG rejected the citys request, arguing that since they were fulfilling the terms of the contract they were under no obligation to hire additional staff without an operating budget increase from the city. For the extra money that PSG was going to charge to expand services, the city decided that it made more sense to cancel the contract and bring the work back in-house.
In addition to cost considerations, the city chose to take over public works functions to improve service quality. The city has a better idea of what the city wants, said Mr. Sandefur, and therefore it made sense to bring the contract back in-house. Making public works a city department again has allowed the city to adjust its level of service on a case by case basis. In contrast, the PSG contract did not have the flexibility required to meet changes in citizen demand for services.
In September 1997 a new service agreement was signed by the city and PSG. Under the new contract, most public works functions would return to the city, effective immediately. PSG would retain the operation of the waste water treatment plant, water and sewer line maintenance, and the reading of water meters for an additional five year term.
After taking over public works, the city increased the number of employees in the department by ten, bringing the total to thirty-nine. PSG currently employs sixteen workers to provide water service. Combined, the two parties employ fifty-five people. This figure is about ten less than what the city employed prior to privatization, but ten more than what PSG used when it ran both programs.
The new service arrangement between PSG and the city has been in effect for about two years, and both sides have been pleased with the results. Management and employees are working together to give the citizens the increased level of service they deserve, Sandefur said.