CPI Wins Privatization Reforms in San Diego

August 28, 2008 -- Center on Policy Initiatives

By Susan Duerksen, CPI Communications Director

The Center on Policy Initiatives (CPI) celebrated an important victory in July, when the San Diego City Council approved several reforms we proposed to protect against some of the worst risks of privatization. These reforms will help make sure private contractors can't take over city functions by scrimping on worker health coverage in the quality of services.

The San Diego mayor is attempting to outsource many city services through "managed competition," in which city departments will have to bid against private contractors for the jobs. The program is touted as a way to save money, but CPI has succeeded in getting the City Council to take a closer look at some of the hidden costs.

The reforms passed so far will have the following impacts:

Healthcare: Contractors won't be able to underbid the city workforce by denying workers health benefits.Differences in employer spending on health insurance are removed from the bid comparison, so that contractors can't gain an unfair advantage by failing to insure their workers.

Service quality: Open, public review will help preserve service quality. The public and the Council will be able to review descriptions of the work to be performed -- and Council approval will be required -- before the city seeks bids for privatizing any city function.

Worker retention: City workers who know the jobs will have a good chance of staying on the job. Any contractor taking over a city service will have to give first preference in hiring to displaced city workers.

"The City Council took the right steps to make sure that quality city services are protected and to make sure we don't add to the ranks of the uninsured by using low-bid contractors," said Donald Cohen, CPI Executive Director.

To make this happen, CPI organized delegations of community members, city workers, civic leaders and other allies who met with City Councilmembers and their staff. More than a dozen people testified at the council meeting on the need to preserve health benefits and protect against sloppy work by contractors.

At the meeting, CPI distributed a brief report on documented failures by current city contractors that have resulted in poor service and/or extra costs as city workers had to redo the work. In an opinion column published the day before, CPI Research and Policy Director Murtaza Baxamusa explained how privatization puts health coverage at risk.

Our Do It Right webpage contains more information on the reforms, as well as links to press coverage, our op-ed and the contractor failure report.

So far, the mayor's staff has presented Statements of Work, the description of work to be outsourced, for just two small functions.The first was for the one-person job of dead animal removal.As described amusingly by a local newspaper columnist, the complexity of getting that job description right encapsulates the risks in outsourcing city services.

For more information, visit our website at www.onlinecpi.org