Unions Competing With Private Sector Saves Chicago $1 Million

In an ongoing experiment to determine the best way of delivering recycling services, the City of Chicago has been divided into six zones, four of which are being serviced by private sector companies and two that are serviced by city employees.

During the first quarter of competitive bidding, Chicago has saved $1 million (a 31% reduction) on the cost of their recycling program. The City’s crews lowered the price-per-cart from $4.77 at the beginning of the competition to $3.75 per cart for the month of December (a 21% reduction) by using flexible scheduling, more efficient routes, and fewer crews. The private sector competitors are delivering their services at an average of $2.70 per cart.

The city uses two employees per truck (a driver and laborer), whereas the private companies can do the job for less because they use only one person per truck and the vehicles are outfitted with “tippers” that pick up the curbside containers and dump the contents into the truck. Utilizing one employee allows the private companies to increase the number of stops drivers make every day.

This spring, at the six-month interval, Chicago will evaluate the recycling cost data and move forward with the best plan to provide recycling services for the city.

What do you think about public employees competing with the private sector to make the delivery of government services smarter, faster and cheaper?

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Profile Photo Kacie Galbraith

I love the idea of managed competition– allowing public employees to participate in the bidding process for service provision. One of the best outcomes is that it forces public employees to innovate and to streamline their services, so they can be competitive with the private sector. I’ve read about many instances in which public employees work hard to change operations so they can provide a service at a lower cost to the city than they did before– when they otherwise may have had little incentive to do so. But of course, sometimes the private sector wins, and that’s not a bad thing!

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Profile Photo Nicola Stratford

It doesn’t seem to me to be an equal competition because of the different equipment. I’ll be the public sector could do as well if they had the right trucks! The idea of competition is good for the taxpayer but you’re comparing apples and oranges here if the test conditions are not identical.

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Profile Photo Janina Rey Echols Harrison

I agree with Nicola. The equipment used by public sector is not always the best and they have no control over that. An example. I worked as a full charge bookkeeper in private sector. I am currently a budget analyst in public sector. The two aren’t even close. In private sector, I had input on testing and buying the systems we used to complete our tasks. The systems were usually all encompassing and effecient. Public sector, I do double and sometimes triple input because we have a number of systems and many aspects do not ‘talk’ to one another. We do not have input into what we buy or use. If I had to put in a competitive bid to keep my job, it would be a losing option. As far as I can tell, the people making the decisions on what software to buy for my position, know nothing about my workload or processes. They don’t buy a complete, comprehensive program, but leave parts out to reduce the cost. In the end, it only increases costs because it creates an inefficient system that requires far greater input time and output functionality is usually lacking as well. I get a little angry at being held accountable for spending tax payers money when I have no say about how we get there. Pretty sure someone’s family member made big bucks on a contract. It is apples and oranges.

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