1. Managed Competition: Part of a Successful City’s Strategy Teresa Curlin City of Charlotte May 2007

2. City of Charlotte Population: 664,232 Council/Manager Government 14 Key Business Units 6,300 employees $1billion plus budget Second largest financial center in U.S.

3. Context for Strategy Priorities and Focus Areas Council communicates themes to Leadership Corporate Scorecard Response becomes strategic objectives Organization Organization implements Vision City’s vision statement Annual Council Strategy Retreat Council Committees/ Focus Area Cabinets 16 Corporate Objectives Key Business Unit (KBU) Scorecards

4. City Council Focus Areas Community Safety Housing & Neighborhood Development Transportation Economic Development Environment

5. City Strategy City Council Focus Areas Community of Choice for Living, Working, and Leisure Comprehensive Citizen Service Corporate Scorecard Develop Collaborative Solutions Enhance Customer Service Invest in Infrastructure Expand Tax Base & Revenues Deliver Competitive Services Develop Employees Run the Business Manage Resources Serve the Customer Recruit & Retain Skilled, Diverse Workforce Achieve Positive Employee Climate Promote Learning & Growth Vision Strategic Themes Strategic Principle Optimize Business Processes Maintain AAA Bond Rating Promote Economic Opportunity Increase Perception of Safety Strengthen Neighborhoods Provide Transportation Choices Reduce Crime Safeguard the Environment

6. Council Strategy Focus Area: Restructuring Government Development Plan Increase skill or knowledge; get certification KBU Balanced Scorecard Maximize Fleet Availability Division Balanced Scorecard Establish Fleet Availability Rate Corporate Balanced Scorecard Enhance Customer Service Employee Performance Plan Maintain 90% Fleet Availability Linking Employees to City Strategy

7. City / County Consolidation Building standards Planning Purchasing Utilities Animal Control Emergency Mgt Crime Lab Action Line Charlotte- Mecklenburg Police First Responder E-911 Landfills Veterans Services Elections Office Tax Listings Tax Collections Parks & Recreation

8. Mayor’s Task Force Mayor Richard Vinroot felt that more needed to be done to streamline City costs for services. In 1993 the City established three (3) citizen task forces. Organization Task Force Privatization Task Force Compensation Task Force

9. Current Key Business Units (KBU) Result Of The Organizational Task Force Service KBU Aviation Engineering & Property Management Fire Neighborhood Development Planning Police Solid Waste Transit Transportation Utilities Support KBU Budget & Evaluation Business Support Services Finance Human Resources

10. Privatization and Competition Advisory Committee Result Of The Privatization Task Force 11 member PCAC committee 8 members appointed by City Council, 3 members appointed by the Mayor Committee Chairman selected by the Mayor from the body of the committee Each member can serve two possible terms of two years each Each year a five-year competition plan is presented to the committee

11. $ Saving Options Competition: private sector and City staff submit bids to provide service to citizens, so that City may select the most cost effective solution Optimization: City’s efforts to extend lessons learned in competition to similar operating units Privatization: service contracted to private sector; employees do not compete Source: Douglas Bean, City of Charlotte Utilities Key Business Executive

12. How Do We Choose What To Compete or Privatize Outcomes must be measurable Annual expenditures should be in excess of $500,000 Private firms must be interested in performing the services The “risk of privatization” must be acceptable –Risk of Default –Loss of Human capital –Loss of Control

13. The Proper Support Internal Audit: –reviews City proposals –reviews private company financials –audits City contracts for possible gain sharing Legal: –consultation and review of solicitations and contracts Procurement: –supports KBUs in solicitation development and contracts negotiation

14. How We Measure Success Continuing competition Savings from competitive solicitations Savings from on-going contracts resulting in productivity gains and gainsharing Change in the corporate culture

15. Program Accomplishments Competition: –49 won / 10 lost –Annual savings of $6m Optimization: –26 services optimized/reengineered –Annual savings of $4.5m Privatization: –72 services outsourced –Annual savings of $3.1m Source: Douglas Bean, City of Charlotte Utilities Key Business Executive

16. The Link: Employees and Competition Skilled employees can identify opportunities for operational improvement Employee commitment makes competition execution successful Employees are the ones that “operationalize” improvements Employees commit to a program that recognizes their efforts – gainsharing

17. Employee Gainsharing Employee incentive for exceeding performance and budget targets Savings shared between bidding unit and individual employees –Half to unit / half to employees Source: Douglas Bean, City of Charlotte Utilities Key Business Executive

18. What About HR? Cost of HR KBU factored into bids –Bidding unit’s portion of cost of centralized HR function included in bid Do you want to be the reason an operating department loses a bid?

19. Included Employee Costs Pay Raises Health insurance Incentive pay Workers’ comp Longevity Social Security tax Medicare Overtime 401(k) Retirement Temporary pay

20. Lessons Learned Take the time to develop expectations and communicate clearly with the vendors Construct a meaningful contract with consequences if the vendor does not perform to specific and measurable outcomes Not every service is suitable for competition Communicate with employees Follow through with contract monitoring and open communication with the vendor Staffing infrastructure is critical to success

21. More Info Meeting the Changing Demands of Your Community with Competitive Services…Human Resource’s Vital Role presentation –http://www.charmeck.org/Departments/Human+Resources+City/Human +Resources.htmhttp://www.charmeck.org/Departments/Human+Resources+City/Human +Resources.htm City of Charlotte’s Managed Competition Program –http://www.charmeck.org/Departments/Business+Support+Services/Pro curement/PCAC/PCAC+Main+Page.htmhttp://www.charmeck.org/Departments/Business+Support+Services/Pro curement/PCAC/PCAC+Main+Page.htm