Since its founding in 2005, Sandy Springs has drawn national notice for outsourcing most city government operations to competitively bidding private contractors. But last month, the city approved three-year, no-bid contract extensions due to fears of government disruption during a planning and development boom.
The City Council approved the no-bid extensions only after voicing caution about not shifting to an “in-house,” public-sector government. But new local cities inspired by Sandy Springs, like Brookhaven and Dunwoody, already have brought more jobs and departments in-house.
And Sandy Springs has significantly changed its own organization chart, switching from one contractor to several in 2011, and bringing more executive jobs in-house.
At a council retreat in January, City Councilmember Tibby DeJulio, known as the council’s unofficial sage of the city’s founding ideals, said he backed the no-bid renewals as a temporary measure. But, he said, the city must avoid making it a habit “and not start bringing those positions in-house.”
Oliver Porter, the retired engineer who drew up the city’s original privatization plan, says he understands the city’s reasoning and doesn’t see any “backsliding” yet.
“That’s one of those judgment calls that only time will tell,” Porter said of the no-bid contract extension. “I would think [that] after this extension, they would probably want to go to a full bid again just as a double-check.”
The birth of a privatized government
Porter said outsourcing remains the most efficient way to run government, and he is skeptical of other new cities that do more in-house. “Each of them put their own wrinkles on it…There has been some backsliding, I think, from some of them,” he said. “The closer they adhere to the [Sandy Springs] model, the better off they are.”
But the Sandy Springs experiment is new, and academic research about it is rare, according to one of the few such studies, a 2014 Iowa State University master’s thesis called “Extreme Privatization: A Performance Analysis of the ‘Sandy Springs Model.’”
That thesis, by Jack Feldman, found that in fiscal years 2008 through 2012, Sandy Springs’ government had a much higher per capita cost, and lower performance scores, than the nearby cities of Alpharetta, Johns Creek and Milton. The lowest-cost government was Milton, which had switched from outsourced to largely public-sector government.
Feldman admits his study was limited in data and covers a time when Sandy Springs was under a single outsourcing contract to CH2M. Today, the city has eight main outsourcing contracts held by six companies at a total cost of about $16.4 million.
Sandy Springs directly employs only 10 administrative executives and has only two completely public departments—the police and fire rescue—largely for insurance liability reasons. State law requires the city clerk and court administrator to be employed by the city. The other positions Sandy Springs has brought in-house include: city manager; two assistant city managers; an executive administrator for the city manager; finance director; and human resources director.
Back in 2005, the city launched with only two employees and one giant contract, partly as an efficiency ideal and partly from necessity, Porter said. As Georgia’s first new city approved for incorporation in decades, Sandy Springs had only months to form a government from scratch. Hiring a company was the only viable option, Porter said, and CH2M won two separate contracts, later merged into one, to do it quickly.
The outsourcing was modeled on Weston, Fla., a gated Miami suburb that became a city in 1996. But the Sandy Springs model got national press attention and has had local influence. Most new Georgia cities formed since then have hired CH2M to create their governments. The city’s privatization has been praised by former presidential candidate John Kasich on the campaign trail and criticized in liberal activist Naomi Klein’s bestseller “The Shock Doctrine.”
The model changes
But the model has changed. In 2011, the city dumped CH2M’s single deal to bid out multiple contracts, saying that saved $7 million. “I was concerned about it,” said Porter, adding that while he prefers single-contract government, he doesn’t criticize the wisdom of officials who made that decision.
That 2011 bidding process is something the city did not want to repeat this year as it plans the massive City Springs development and rewrites its zoning code and land-use plan. At the annual council retreat this year, City Manager John McDonough said that rebidding took up a large amount of his time.
Another concern was losing key staff members in contract changes or the uncertainty of renewal. Hiring and retention is a challenge, McDonough has said, and one change to the extended contracts is more city auditing abilities to make sure that contractual payment boosts intended for salaries are making it to employees.
Another big factor in extending the contracts, McDonough said: “I believe we’re getting good service and fair pricing.” Porter agreed with that practical take, saying he believes the same contractors would have won a rebid anyway.
City spokesperson Sharon Kraun—who is employed by Boston-based contractor The Collaborative—said the city’s intent is to rebid the contracts three years from now. But she acknowledged that, as the current situation shows, “something could change.”
‘In-house’ administration-level jobs and departments in local cities
The following lists show which city jobs are “in-house” or directly hired by the city as public-sector employees. The list shows city departments whose entire staff is city-employed, as well as the number of executive-level administration jobs that are city-employed. Brookhaven and Sandy Springs have over 100 direct employees when, for example, police officers are counted.
Departments: police, fire rescue
10 staff: assistant city managers (2); city clerk; city manager; court administrator; executive administrator for city manager; finance director; fire rescue chief; human resources director; police chief
Departments: communications; finance; information technology; human resources; parks and recreation; police; parts of courts, community development and parks and recreation
12 staff: 9 department heads listed above; city clerk; city manager; city manager’s executive assistant
Departments: courts, police
13 staff: assistant city manager; business retention manager; city clerk; city manager; community development director; court administrator; economic development director; finance director; human resources director; human resources generalist; parks and recreation director; police chief; public works director
Source: Cities of Brookhaven, Dunwoody and Sandy Springs