Magazine article Government Finance Review

Reducing Service Delivery Costs through Public/private Partnerships

Magazine article Government Finance Review

Reducing Service Delivery Costs through Public/private Partnerships

Article excerpt

Editor's note: Each year the Government Finance Officers Association awards its prestigious Awards for Excellence to recognize outstanding contributions in the field of government finance. The awards stress documented work that promotes improved public finance. This article describes the 1991 winning entry in the budgeting category.

In 1978, Los Angeles County was faced with shrinking resources as a result of the passage of Proposition 13, the California "property tax revolt" initiative. Like many state and local governments today, Los Angeles County was searching for ways to significantly reduce costs while maintaining essential services. The county's Cost-Effective Privatization Contracting Program has proven to be one of the most successful long-term approaches developed to "get more bang for the taxpayer's buck." The county has saved more than $250 million.

Some of the services privatized to date include dietary services, airport management, vehicle fleet maintenance, medical and dental services, workers' compensation administration, training, welfare case management, security, building and landscape maintenance, and data conversion. Many of these contracted services are substantial in scope, the county's contract for management of five public-use airports involves 2,400 based aircraft and 800,000 takeoffs and landings annually.

Enabling Legislation

Like most other government jurisdictions, Los Angeles County has been contracting for goods and services for decades. However, prior to 1978, the county charter generally prohibited contracts for services traditionally provided by civil service employees. A ballot measure was required to amend the charter.

The ballot measure was overwhelmingly approved by the voters. The County Board of Supervisors was authorized to enter into contracts for the performance of work which could be more economically or feasibly performed by independent contractors. But this was not left to whim or fancy. The measure also called for the board to adopt an enabling ordinance specifying bidding procedures and criteria for entering into such contracts. The subsequent ordinance included safeguards to assure that:

* the services would be performed more

economically or more feasibly by an

independent contractor;

* the county's ability to respond to

emergencies would not be impaired;

* confidential information would be


* alternate resources would be available in

the event of a contractor's default;

* there would be no infringement upon

the county's role and relationship to its

citizens; and

* the county would be in full compliance with all applicable federal and state regulations.

Getting Started

From the beginning, contracting was approached with an eye to avoiding the administrative burden--excessive regulations, policies, procedures and directives--that permeates so much of public purchasing programs and the civil service public personnel system. The county sought to encourage creative thinking through management incentives and a decentralized approach.

In 1979, the Board of Supervisors instituted a contracts development program which sought to challenge county managers to give up monopoly arrangements and to introduce competition into the public arena. This was to be a public/private venture, and nothing was left to chance. A blue-ribbon citizens committee of business, labor and public service representatives was established to provide oversight and guidance. This Contract Services Advisory Committee reviewed each county department's contracting potential, resulting in aggressive board-approved contracting plans.

While under the overall policy direction of the Board of Supervisors, county department heads were held responsible for implementing their programs. …

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