Gulfport, Miss., moved more than 100 public works employees off its payroll when it hired a private firm to operate its streets/drainage and water/sewer divisions. “Private companies can incentivize employees in a way that a city can't—spot bonuses, for example,” says Gulfport, Miss., public works director Kris Riemann, who remains a city employee. “And they can terminate employees who aren't meeting standards.” Photo: Pat Sullivan
Angelia Parham worked on a survey crew, for a development company, as a researcher for the Texas Transportation Institute, and was deputy transportation director for the city of Roswell, Ga., before joining CH2M Hill OMI as public works director for Sandy Springs, Ga., the state's seventh-largest city. “In the private sector, there's a lot more opportunity to be innovative and creative, to think outside of the box,” she says, “and that is very much appreciated and rewarded.” Photo: City of Sandy Springs

“A public client has very strong leverage over the private sector to perform and deliver,” says Rick Norment, executive director of the National Council of Public-Private Partnerships in Washington, D.C. “Even when a public agency sells an asset, like Chicago did with the Skyway [a 7.8-mile toll road that's been leased to an Australian firm for 99 years], it can take back that asset if the private partner fails to meet highly detailed performance specifications.”

Traditionally, cities have limited out-sourcing to solid waste collection and disposal and water and wastewater treatment. But over the past decade, says Norment, as budgets get tighter and politicians remain loath to raise rates or taxes, cities have expanded the scope of service the private sector provides. In addition to Georgia and Illinois, cities in Mississippi, Florida, and Colorado have developed partnership models that ensure providers maintain acceptable service levels and treat employees as fairly as possible in the transition from public to private management.

When Monmouth expanded its scope of services with EMC, for example, all public works employees except managers belonged to the American Federation of State, County, and Municipal Employees. EMC negotiated with the union to ensure employees retained what they'd paid into the Illinois Municipal Retirement Fund. While they may no longer contribute to the fund, as EMC employees they can contribute to the company's 401(k) program. (EMC has successfully negotiated with the union three times since then.)

At the same time, the company promoted wastewater treatment plant supervisor Andy Jackson to public works superintendent and retained the city's former public works director, who was near retirement, as a private consultant to help Jackson with the transition. A high school graduate who'd joined the public works department in 1987 as a union employee in the plant, Jackson considers himself lucky to have been given the challenge.

“Sometimes these companies want to bring in the [public works] manager from the outside,” he says. “I've lived here all my life, and that can work against you.”

When EMC's 10-year contract expires in 2008, the city can renew, choose another provider, or bring services back in-house. Since his job depends on the contract's renewal, Jackson could find himself looking for work at the age of 49. But he's not too concerned. He's reviewed annually by EMC based on input from the city and hasn't received any negative feedback. In addition, research by the National Council of Public-Private Partnerships shows that 96% of contracts are renewed (92% with the same company; 4% with a different provider).

“Am I concerned about the future?” Jackson asks rhetorically. “Sure, to a degree. But I'm not going to let it consume me. I mean, that's life. No one's irreplaceable.

“I'm sure there'll be options available if the city doesn't renew. And if the new company is anything like EMC, they'll talk to the people who've been working here first [before hiring new employees or assigning their own employees].”

In the meantime, Jackson is just doing his job. His main project this year is to build a third wastewater plant, which will pre-treat water from a local food-processing plant. “This is no different than if I were working for the city,” he says. “Our job is to provide a service. Period.”