Remember how Mayor Steve Bach insisted that farming out fleet maintenance would save the city $4 million over a five-year period?
Well, the contract is off to a weak start for savings. The city paid more in 2014 than it did the year before when city workers maintained the city's fleet.
According to an audit released Friday, placing fleet maintenance into the hands of private contractor United Kingdom-based Serco saved the city only $43,100 in 2014, and it cost Colorado Springs Utilities $155,299 more than planned, for a total cost increase of $112,199.
Which is only a tiny fraction of the more than $9.5 million the city and Utilities paid Serco in 2014 to care for vehicles ranging from dump trucks to police cruisers. (Fire trucks aren't included in the Serco contract.)
But the idea was to save money, right?
The extra cost to Utilities stemmed from the addition of Pinkerton Service Center, 7710 Durant Drive, as a maintenance point. That cost Utilities $191,441 in 2013 to prepare the site for maintenance activities, the audit says. But the investment didn't seem to pay off. The City Auditor's Office predicts the Pinkerton site will add $154,490 to this year's costs and $157,036 in 2016, more than the $124,300 auditors expect in savings on fuel and employee time going to the Pinkerton site rather than a more distant service center.
Bach heralded the contract as a money-saver, predicting $2 million in savings in the first three years alone. The contract's original cost justification memo showed a deficit the first year of $62,751 due to one-time, start-up expenses. The second year's savings were projected at $819,202, and the third year at $1,309,883.
But there's one way the contract will save the city money eventually: by off-loading the city's long-term Public Employees Retirement Association obligation for some 59 workers who were laid off because of the contract.
Ryan Trujillo, contract compliance manager, says via email he's still confident the city will attain $4.2 million savings within five years.
The Auditor's Office will audit the fleet contract again after its third year. Asked if he thinks the second and third year savings will tally $2 million, City Auditor Denny Nester says via email, "I'm skeptical." Not because the savings fell short the first year, but rather because Pinkerton was added after the analysis was completed supporting the decision to outsource, meaning "the $2M savings did not reflect the additional cost of the Pinkerton Service location," Nester says.