Privatization of Fleet Management: The Allegheny County, Pennsylvania, Experience.

• Author: McMeekin, Barry G.

This article describes how fleet management was successfully outsourced in the face of strong opposition in a politically charged environment.

Allegheny County

734 sq. miles

128 minucipalities

Population 1.3 million

In 1996, major political changes took place in Allegheny County, Pennsylvania. The dominant party in power for more than 30 years was narrowly defeated. A new administration immediately implemented a 20 percent across the board property tax reduction. The tax cut produced a structural imbalance in the budget of more than $30 million. The county did have a sizeable fund balance but it was expected to erode quickly if immediate steps to reduce costs were not put into place. A major theme emphasized by the new administration was the use of privatization and managed competition in service delivery.

The new Board of Commissioners assigned the task of developing a systematic managed competition strategy to a set of private-sector task forces. Implementation of the strategy was to be managed by the Department of Budget and Finance. The fact that almost all of the county collective bargaining agreements were up for negotiation provided an opportunity to use competition strategies. Services recommended for full-scale privatization included nursing homes, golf courses, county airports, computer services, and property tax assessment. Services that were recommended for managed compeitition--where managers and unions were encouraged to bid for their production--included road maintenance, fleet management, and a number of other areas. Political conflict at the board level--some of it related to competition efforts--led to a split in the dominant majority and put a new majority in place that was cross-partisan. Most of the privatization and managed competition efforts were halted. This article describes the outso urcing of fleet management--one of the few competition initiatives that was carried out.

Fleet Management Competition

A committee was created in early 1996 to analyze the various concerns of the county fleet management program. The committee consisted of representatives of the Commissioner's Offices, the Department of Budget and Finance, the Department of Law, and the Department of Property and Supplies, which at the time had direct responsibility for most of the fleet management program. The committee also consisted of members representing various civic groups. The steps the task force undertook at the beginning of the process were to:

* review and identify all current specific fleet-related functions;

* identify and qualify vendors for the specific functions; and,

* develop proposals for the functions for committee review.

Although many of the fleet functions were housed in the Department of Property and Supplies, it was discovered that related services existed in several other departments. The Department of Maintenance and Special Services operated its own garage to maintain its assigned fleet. The Department of Parks and Recreation maintained its own garage for tractor and small tool repair. The Department of Law had responsibility for much of the risk management concerning the county fleet. All of these branch functions and their costs needed to be identified to present a true picture of the scope to prospective vendors.

After careful analysis, the task force recommended the competitive contracting of the following fleet components: vehicle maintenance, fuel management, vehicle leasing, and parking services. The recommendations were based on a number of weaknesses that were identified in the existing county fleet management program such as:

* the lack of a comprehensive preventive maintenance program;

* the lack of policies and procedures;

* mechanics without industry standard certifications;

* absence of cost controls; and,

* ineffective inventory management.

The committee also found that the current program was exposed to serious environmental liabilities regarding fuel management, and that the county operated redundant fueling sites and failed to appropriately control fuel dispersal...