Competitive contracting isn’t sexy. You will never find it in a self-help book at Barnes & Noble, nor will you see it on late-night TV. It doesn’t generate any particular degree of passion or enthusiasm among the public. It’s a structural concept designed to make government efficient, with no accompanying promises for rock-hard abs, never-ending wealth or caviar in your moisturizer. In short: competitive contracting is dull.
But dull or not, competitive contracting has something all the shiny, “As-Seen-on-TV” products lack: It is actually effective.
By introducing competition into the bidding process of a government entity, as competitive contracting does, cities across the country have been able to improve the quality of their services while saving money at the same time. In other words, taxpayers get more for their money and a better product. For example:
- West Virginia privatized its workers’ compensation system, saving employers $150 million dollars each year.
- Philadelphia privatized 49 of its city services, saving approximately $275 million dollars.
- Florida privatized more than 130 projects under former Gov. Jeb Bush’s leadership, saving over $500 million dollars.
- Sandy Springs, Georgia incorporated as a city in 2005, outsourcing almost all of its governmental functions to the private sector. The city has operated successfully for nearly a decade, with no tax increases, $45 million dollars in reserve, and no long-term debt to speak of.
- Even Chicago — the bastion of big government itself — outsources more than 40 city services, collecting over $3 billion in up-front charges for private leases of city resources.
While competitive contracting is not a late-night solution to make you rich beyond your wildest dreams, it is a way for cities to decrease expenses and improve services. And that is possible here in the Lone Star State, too.
A new study just released by the Texas Public Policy Foundation’s Center for Local Governance demonstrates how this solution is applicable on a wide scale and can be used in cities all over Texas — such as League City — to save money and improve residents’ quality of life.
The new case study suggests that League City can save money by outsourcing its noncore services – everything from budget planning, to the issuance of building permits, to city development – to contractors. All in all, TPPF reports that League City stands to save between $30 million to $56 million annually – a reduction of roughly 15 to 28 percent from recent spending levels – by simply contracting their services out to private providers. That’s an approximate 20 percent savings a year, with no money down, no risk, and no sacrifice in the quality or quantity of the services provided.
Competitive contracting is not just about saving taxpayer money; it’s also about helping communities address their needs. For example, in League City’s case, officials have an opportunity to realize as much as $56 million in annual savings through the use of competitive contracting. That’s money that could easily be redirected toward providing tax relief, building infrastructure, or paying down debt and unfunded pension liabilities. It’s a win-win for taxpayers and local officials alike.
So although competitive contracting may not promise rock-solid abs or caviar in your moisturizer, it does offer something more practical: a solution that actually works.
Hill is a policy analyst with the Center for Local Governance at the Texas Public Policy Foundation.