$80,000 for what?

It’s a bad sign that I’m getting my local news from the blogotubes, but I couldn’t resist posting a link to a bit of investigative journalism done by the folks at Miss Vicky’s Offhand Remarks.

In a nutshell: the city (at Larry O’Brien’s bidding) paid a consultant $80,000 to help develop the city budget. Part of that budget mentioned outsourcing parking meter management as a cost-saving measure, pointing to the success of Hamilton’s parking meter outsourcing. Miss Vicky and the Webgeek did some Googling, and discovered that:

Hamilton handles its own parking meters, thank you very much
Dundas, which recently amalgamated with Hamilton, did contract out their parking meter management, but now wants to reincorporate the service back into their city. The goal is to increase profit being seen in the old municipality of Dundas.

The comments contain an interesting back-and-forth between Blake Batson and the purveyors of Miss Vicky’s on whether outsourcing of a profitable really service is a good idea. Reasons to outsource: a private company has a stronger profit motive than government, so it should be able to be more efficient (ie, a greater return without charging the public more). Reasons not to oursource: the tender process is expensive, and the city will eventually realize that it can be as profitable as the private company and it will reintegrate the service anyway.

Of course, when you factor in that we’re dealing with a finite amount of profit, the silent costs of outsourcing add up: paying off employees who are let go, legal fees for tender and reacquisition, costs of studies to ensure that the private organization is doing a decent job, cost of interacting with the outsourcing firm, et cetera. The devil is in the details.
This text was originally posted on Saturday, November 17, 2007 by Erigami Scholey-Fuller.