In a trial run last year, taxpayers paid 489 percent more for a snowplow contractor than it would have for city crews — a difference of roughly $208,000. That contractor performed worse than the city about half the time, according to a consultant's report, consistently missing streets for which it was responsible.
Yet despite "no quantifiable savings," as city spokeswoman Kim Melchor puts it, the city plans to seek bids for the 2014-15 season that will cover more territory and span more years.
The city, which is handling all snowplowing on its own this winter, refused to allow the Independent to interview anyone for this story, answering questions by email instead. Such as this explanation from Public Works director Dave Lethbridge, sent via Melchor: "We don't have enough data to analyze it and that's why we want to pursue future contracts for snow plowing services." Contracts "that encompassed more than one grid for a longer contract period would be more appealing to potential contractors."
A chief reason the city wants to outsource is "the high cost of a defined benefit system for employees," Melchor said in an email — in other words, those pension costs that Mayor Steve Bach has decried in the past.
In January 2012, the city turned snowplowing in "Grid 5," the city's far north sector, over to Landscape Assist of Colorado Springs, one of two bidders. It was a dry winter, so the contractor was seldom called upon, earning only $41,240. The city's consultant, Merrick & Co., was paid $32,197 to monitor the job.
Last winter provided a better test. For 13 storms, at least two of which dumped more than 6 inches of snow, Terracare of Littleton, the sole bidder, was paid $261,756 for plowing Grid 1, northwest of Garden of the Gods Road and Interstate 25. The city spent $160,492 over the same period to plow three grids — 2, 6 and 7, which lie south, northeast and east, respectively, of the contractor's grid. City crews handled each grid at an average cost of $53,500, or about one-fifth of Terracare's total.
According to Lethbridge, both the contractor's and city's cost figures are "all in," and include fuel, labor, trucks, parts, and de-icer material.
Merrick reports that Terracare missed more than 120 streets that pass by schools or feed into main arteries such as Academy Boulevard. Workers also destroyed one mailbox, and triggered 13 complaints from early December 2012 to early March 2013.
Merrick, paid $73,624 to perform a storm-by-storm analysis, found the contractor did worse than the city in six storms — earning a "poor" rating for a Jan. 14 storm — and performed similarly in five others. Terracare bested the city on Feb. 20, which led to its highest charge, about $30,000. Merrick noted minor differences in performance in one other storm but didn't declare a winner.
Terracare's shortcomings included using less de-icer than the city and starting later, Merrick noted. In one case, the city began plowing at 5:30 p.m., while Terracare didn't mobilize until 8:15 p.m.
Justin Stewart, Terracare's vice president of public infrastructure, declined to address the missed streets but said snowplowing for cities is nothing new for him. "We've done this many years," he says. "We're running between 45 and 50 plows at a time." He says the firm has plowed for Lone Tree for 11 or 12 years and Centennial — a "sprawling city" covering up to 100 square miles — for five years running, among others.
Terracare made money on the Colorado Springs contract, he says, but adds it could be modified to the city's benefit.
"We had to get our own yard, equipment, and material for this project," he says. "If you have one yard for one grid, you have that cost. If you have one yard for three grids, it's less for each [grid]."
Stewart suggests the city allow a contractor to use a city facility to store de-icer material and contract for years at a time so that it makes sense for a contractor to invest up to $225,000 each for trucks. Not many bidders will make a big investment for a one-year deal, he says.
The city already has faced those facts, with Melchor stating, "We learned that in order to have efficiencies of scale we would need to broaden the number of grids and extend the contract beyond one season."
And Lethbridge says in his statement the city will apply lessons learned from last year's contract to a request for proposals for services next winter, which he hopes will draw more bids and "improved cost savings." Although there were no cost savings.
As Merrick advised in its report: "The burden of proof that a contractor can perform snow removal services better, cheaper, and faster rests on the contracting community if they ever hope to gain a foothold in the public market sector."
The 'P' word
Last summer, Bach appointed an 11-member Optimization Committee composed of developers, contractors, city staffers, City Councilors Jill Gaebler and Helen Collins, and members of the City Committee, a group of businesspeople who analyze city finances and make recommendations.
One member, Chuck Fowler, who also belongs to the City Committee, describes the mission as establishing "a framework" to measure whether the city is delivering "service at its optimum, and that doesn't necessarily mean at the lowest cost."
Gaebler says via email the process should result in improving customer service and saving money. Collins, like Bach, hopes to cut pensions.
"I'm not saying city workers don't do a good job," Collins says in an interview, "but the problem with city workers is PERA," the Public Employees Retirement Association.
Those costs will be reduced in the city's biggest outsourcing to date — the hiring of United Kingdom-based Serco to maintain the city's fleet of vehicles and equipment. The $35 million deal is expected to save about $1 million over five years and eliminate at least 60 city workers.
This year, the city's PERA cost is $8.7 million, compared to $9 million in 2012. But PERA isn't the only culprit. Police and fire pensions have jumped under Bach, from $14.2 million in 2012 to $17 million this year, and the city's payroll now includes 1,677 workers — 35 more than two years ago.