(These survey results appeared in the June 2011 issue with the title, "Outsourced?")

Just six years ago, following the 2001 recession, the U.S. economy was starting to show positive signs, with businesses growing and unemployment lowering. Today, however, considering the condition of many local and state governments, managers are not using the private sector significantly more than they were in our 2005 privatization survey.

The same questions were asked in each survey so we could make some comparisons between basic concepts, such as satisfaction with the contractor's performance, incentives offered and reasons for choosing or not choosing to outsource.

View the list of answers to the question, "The secret to successful contracting is...," as well as a copy of the complete survey results.

What services do you/don't you contract?

Solid waste, road/bridge construction and pension fund services were the top outsourced functions in both surveys. Today, however, managers are more open to contracting more services than they were in 2005. Still, those numbers are low, with maintenance of grounds and buildings leading the pack. Interestingly, though, the same respondents were even more emphatic about not contracting in areas they do not currently outsource in the five years between the two surveys.

  • A. Which of the following do you currently contract?
  • B. Please mark each area that you plan to continue to contract next year.
  • C. In addition to those services you currently contract, which new areas are you considering contracting in the next year?
  • D. Please mark this column if you DO NOT and WILL NOT CONTRACT the service.

A. Currently contract B. Will continue to contract C. Will begin contracting D. Do not/will not contract
Building maintenance 26.3% 18.1% 3.5% 68.0%
Fleet management 14.5% 7.9% 2.5% 81.7%
GIS services 19.9% 13.9% 4.4% 70.8%
Grounds maintenance services 28.6% 19.1% 3.9% 63.8%
IT/computer services 33.9% 20.7% 2.7% 57.4%
Payroll services 12.0% 6.5% 1.8% 84.1%
Pension fund services 44.2% 28.8% 0.8% 45.5%
Road/bridge construction services 47.9% 35.0% 1.1% 36.9%
Solid waste collection/disposal 49.6% 33.2% 1.8% 38.2%
Street cleaning and maintenance 14.8% 8.5% 1.9% 81.1%
Traffic engineering 34.7% 22.6% 1.7% 55.4%
Wastewater/sludge treatment 23.0% 13.6% 1.7% 70.7%
Water/Wastewater/Operations/Maintenance 15.6% 7.3% 2.0% 80.2%
Other 49.5% 30.8% 4.4% 40.7%

Why do you contract for services?

Leading reasons why managers contract services remain firmly centered on "saving money" and "professional management and expertise" in both surveys. The end results (saves time and improves operations) were the third and fourth justifications for outsourcing in both surveys. About half of those surveyed list those among the top three reasons why they choose to contract. The responses to this question in the two surveys were the same in almost every category with the exception of "improves infrastructure," which increased its response rate by about 50 percent.

From the list below, please choose the three most important reasons that you have or will contract services.

Saves money 65.2%
Provides professional expertise and management 58.9%
Saves management time 33.1%
Improves operations 31.6%
Improves service quality 22.5%
More accountable 14.5%
Provides better equipment 12.6%
Improves infrastructure 11.4%
Public approval 9.7%
Improves labor relations 3.1%

Why don't you contract services?

In both surveys, respondents steadfastly maintained that contracting services would not improve the quality of the service nor would it improve operations. "Too expensive" was the third choice in both years, but appeared to be less of a reason when measured in terms of the difference in the response rates. Union reaction, although not a large area of response, was even lower in the 2011 survey that it was in the 2005 version.

What are the top three reasons why you will not contract services?

Service quality will not improve 66.2%
Operations will not improve 63.5%
Too expensive 57.7%
Displaces government employees 30.9%
Inefficient 23.9%
Union reaction 11.8%
Public opposition 9.7%
Sets a bad precedent 6.3%

What do you think of contractors?

The general level of satisfaction with contracted services also was close between the two surveys, although the satisfaction level increased by about 8 percent. More than 90 percent of managers are satisfied or very satisfied with their contractor's performance.

How satisfied have you been with contracted services in general?

Very satisfied 18.6%
Satisfied 72.1%
Dissatisfied 7.9%
Very dissatisfied 1.4%

How can contractors win your business?

Guaranteed performance was the clear incentive of choice offered by contractors in both surveys, but the response rate increased significantly from 42 percent in 2005 to more than 63 percent today. The same is true for the second place incentive — performance standards/metrics. The percentage who checked that response increased from 32 percent in 2005 to nearly 53 percent today.

What incentives have contractors offered you to win your business?

Guaranteed performance 63.4%
Performance standards/metrics 52.9%
Revenue or cost sharing 24.6%
Guaranteed employment of existing staff 13.4%
Signing bonus 2.5%
Construct new community buildings 2.2%

Full results

View the list of answers to the question, "The secret to successful contracting is...," as well as a copy of the complete survey results.

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