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CH2M HILL OMI has helped several new cities start up using a public-private partnership model. For this reason, we hear from a lot of communities looking to incorporate as well as many established communities. Here are answers to some of the most frequently asked questions.
What is the best form or model of government delivering services?
There are several options, including a traditional form of service, a hybrid form of some city employees and some outsourcing, or a more entrepreneurial approach using a public-private partnership. What’s best for one government may not be the best for another.
Is a public-private partnership the same as privatization?
No, although the terms public-private partnership and privatization often are used interchangeably, they are not the same. Privatization typically means the transfer of public assets to private industry. The public private partnership is the transfer of operating and service responsibility to private industries.
Why would a newly incorporated city hire a private company to manage the city?
There are several reasons and benefits for hiring a private company:
- Expertise, experience, and resources
- Business systems, tools, and processes
- Lower cost than traditional management
- Risk transfer
- Financial assistance for startup of a new city or township
- Contractual performance obligations
- Avoidance of long-term liabilities associated with employee pensions and capital cost of assets
Can a private company really do it cheaper since it is profit-oriented?
Yes. CH2M HILL OMI typically can save anywhere from 15 to 30 percent versus a traditional public-employee model of government. Generally this is because we have the flexibility to manage its resources very differently than a traditional government.
Do we lose control if we hire a private company?
No. You actually may increase control. A contract with CH2M HILL OMI has clearly defined obligations, scope of work, performance criteria, and penalties to which you can hold your partner.
Why would a newly incorporated municipality want to hire a company to perform work normally done by public-sector employees?
Over the past decade there has been a growing trend towards implementing public-private partnerships as a way to secure services and infrastructure at a lower cost. Municipalities are increasingly under intense pressure to deliver services for the lowest possible cost. As a private company, CH2M HILL can draw upon resources that are not available or not as accessible to the public sector. Also, with no existing employees or established bureaucracy, a newly incorporated municipality has the advantage of starting with a “clean sheet of paper” in determining its preferred service delivery and staffing model.
What services has the private sector typically provided to cities under a public-private partnership?
Municipalities have been employing public-private partnerships for decades to deliver many services to their citizens, including water, wastewater, solid waste collection and disposal, snow removal, street maintenance and many other public works functions. Some communities also outsource office functions such as copying and printing or plan and permit review. Delivering complete “city hall” functions is simply an extension of a highly successful and thoroughly proven service delivery model.
Can existing municipalities change from a public-sector service delivery model to a private-sector service delivery model?
Most municipalities have the ability to deliver a wide range of services through public-private partnerships if they want to. Changing from an existing public-sector delivery model to a private-sector delivery model is a major decision. For this reason, we expect that many established municipalities will closely observe this approach before taking any steps to change – unless they’re faced with some significant challenges and feel that the time is right to move in a new direction. In that case, a community faced with ongoing turnover in its permit and plan review division, for example, might consider partnering with a company like CH2M HILL OMI to deliver that service as a way to “test the waters” of a broader partnership.
Can you describe what experience CH2M HILL OMI has in the startup of a new city?
CH2M HILL OMI has mobilized the resources and systems to start several newly incorporated cities since 2005 and we are the only private company ever to do so on such a large scale. In each case, we had less than 90 days to mobilize and prepare to open the doors of city hall to serve citizens. We’re the only company to provide complete management services for entire cities – excluding police, fire, and 911.
How can a company assure a city that it’s always acting in the city’s best interests?
The cornerstones of the contracts CH2M HILL OMI enters into are transparency and accountability to our clients. We know through experience that our company will be successful as a result of us providing the best possible service and value to our clients.
How can a city feel comfortable that it’s getting the best service and value from its private-sector partner?
These service partnerships are developed in a very competitive business environment, and contracts typically spell out a level of service and performance expectations. CH2M HILL OMI’s performance can be readily compared with other communities of similar size.
If a city decides to enter into a public-private partnership can it revert to a public service delivery mode at a later date?
Yes, although it’s important to note that the overwhelming number of communities that enter into partnerships choose to remain in them because of the high quality of service and value they derive through this approach. Public-private partnerships are set up to allow municipalities to withdraw from a contractual relationship at the end of a contract term or to even terminate a contract prior to its end date for justifiable cause. |
