The Trigger Points of
Privatization
Initiatives
T
oday, there are fewer sacred
cows than ever when it comes These trigger points are often prompted by the need to cut costs,
to outsourcing fleet func- poor customer service, staff vacancies, or hiring freezes. To respond
tions. The City of St. Louis
fleet considers virtually everything for successfully, you must know the actual costs of your internal
possible outsourcing. If we can get the
operations before these triggers occur.
same level of service at a lower cost or
improved service at the same cost, it is
outsourced. We can assign work and By Chris Amos
monitor contractor performance just as
easily as we can our own employees. If should calculate the cost of performing award the contract/work, monitor per-
vendors don’t perform as promised or the function themselves. formance, assign the expense to the
attempt to gouge us on price, we find How services are grouped can be im- unit/activity, and pay the invoice(s).
another vendor or bring the function portant. The concepts of bundling and
back in-house. unbundling services so important to Partnering Can Be Good Business
corporate fleet managers are also rele- Partnering with outside vendors is not
Trigger Points to Outsourcing vant for government fleet managers. Re- only good business, it can make the dif-
There are logical trigger points in de- lated services provided by a single ven- ference in analyzing the benefits of com-
ciding to outsource a function or return dor can be less expensive than farming pletely outsourced fleet operations.
it to our own operations. Staff vacancies, out pieces to multiple vendors. The con- If someone can come into my organi-
particularly in a specialized skill set, are verse may also be true. zation and underbid me when I don’t
opportunities to test the capabilities and have to pay taxes or make a profit,
costs of using outside vendors. Hiring The Key to Success shame on me. If I were an outside con-
freezes in many governments during The key to being successful is making tractor looking for new business oppor-
these tough economic times can be the an informed decision based on knowing tunities, I’d be on the lookout for those
impetus in considering changes in long- the actual costs of your internal opera- fleets that are managed with the philos-
standing practices to refocus remaining tions before these trigger points occur. In- ophy that everything should be accom-
internal assets on core fleet functions. ternal rates built without considering the plished in-house — they would most
Similarly, major shifts in government cost of contributions from other internal likely be easy pickings. GF
regulation or vehicle technology requir- suppliers (e.g., information systems, fi-
ing investment in infrastructure, equip- nance, facilities and grounds, supply, per-
FOR MORE INFORMATION:
ment, tools, or skill retraining should sonnel, and legal) are misleading. To com-
prompt an in-depth in-house versus out- pare accurately, you have to ask: “What The author of the preceding
article is Chris Amos, CAFM,
sourcing review. would go away if we no longer did this?” commissioner of Equipment
The trigger point for work currently It is also important to identify all in- Services for the City of St.
Louis, MO, and senior associ-
outsourced is typically contract renewal ternal costs for outsourced functions. ate, Mercury Associates, Inc.
or expiration. While potential bidders For instance, someone must develop He can be reached at:
camos@mercury-assoc.com.
prepare responses, fleet organizations contract specifications or gather bids,
20 Government Fleet September / October 2003