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


What happens to the crew when a city goes private.

Turning public services over to a private provider cuts costs both directly and indirectly.

The immediate payoff is eliminating all personnel costs, which represent more than half of the average city's expenses. The more subtle benefit is that someone else must account for an employee's performance—or lack thereof.

“Public-sector employees get lulled into a greater sense of security than private-sector employees,” says Gregory Wilson, public works director for Milton, Ga., a client of engineering firm CH2M Hill Operations Management International (OMI), and former assistant water commissioner for Cleveland. “If I'm not performing, it's much easier to remove me than my public-sector counterpart.”

As the scope of outsourcing has expanded, contracts have become increasingly sophisticated. They include detailed provisions for how former public-sector employees will be dealt with, says Rick Norment, executive director of the National Council of Public-Private Partnerships, that address pensions and salaries as well as eligibility for a position with the new employer.

In 1984, Hinesville, Ga. (population 36,000), signed a contract with OMI to maintain and operate a new wastewater treatment plant. In 1992, the city expanded the contract to include, among other responsibilities, street sweeping, solid waste collection and disposal, mosquito spraying, and fleet maintenance. City employees were eligible for an OMI job provided they passed a drug test.

Several moved from public works to another city department, a few retired, and the rest went to work for OMI.

In 1999, Gulfport, Miss. (population 71,000), outsourced two of its six public works divisions—streets/drainage and water/sewer—to Atlanta-based Operations Technology Inc. (OpTech), a division of Southwest Water Co. Services Group. The divisions' 150 employees were guaranteed employment for 60 days; ultimately, more than half went to work for OpTech, according to public works director Kris Riemann, who's a city employee. He monitors OpTech's performance and oversees the rest of the city's public works divisions.

“There's a natural, normal attrition process that ultimately reduces the workforce,” says Norment. “But at the same time, there can be greater opportunities for growth with the private-sector employer.”