The New Norm: Contracting and Outsourcing

2013 Massachusetts Parks and Recreation Annual Conference

Hyannis, MA

Chris Nunes, CPREDirector of Parks and RecreationThe Woodlands Township

Session Objectives• Outline the use and

development of contracts for services, programs and maintenance.

• Identify and recognize how to minimize risks in contract development

• Identify the benefits of contracting

Background Information

Contracting &Outsourcing Defined:• Assigning

responsibility for all or a portion of the activity and tasks involved in developing and/or running and maintaining a system to a contractor outside of the organization

Background Information

• IRS – “A general rule is that you, have the right to control or direct the result of the work done by an independent contractor, but not the means and methods of accomplishing the result.”

Background InformationEmployee Contractor

Pro’s Dedicated LoyaltyMultiple RolesImproved Work Flow

Reduced OverheadNo Health BenefitsWork On DemandHighly Specialized Staff

Con’s BenefitsProfessional developmentOverhead Administrative / Personnel Issues

Lack of ControlNo Fixed Rates Lack of Loyalty“Apples to Apples”

Background Information

• Facility– Lifeguards– Pool Maintenance – Security– Laundry– Equipment Maintenance– Pest Control– Concessions

• Program Management– Instruction– Advertising– Programs– Marketing/Promotion– Event Management

• Trades– Electrical– Plumbing– Janitorial/Custodial – Landscape/Forestry

• If you are already doing it, can you expand on the current scope?

Types of services that can be contracted

Challenges of Contracting

• Communication• Relationships• Specifications vs

Outcome• Control• Poorly written contract • Poor performance and

responsiveness• Monitoring• Liability/

Indemnification• Low Bid Mentality • Workplace Restrictions • Local Marketplace

Benefits of Contracting

• Is it more economical to contract out?– Price Differential-

Self Bid– Staffing Limitations – Service Trade-Offs– Capital Investment – Technical Expertise

Benefits of ContractingSelf Bid- JanitorialStaffing Costs

Days Service Is Needed 365Parks with restrooms 20Minutes per restroom 13Travel time per park 5Open/ Close 2Total Minutes 189895Total Work Hours 3164.9167Staff Cost-$17 with benefits 53803.583

Truck CostMiles Per Day 100Miles Per Gallon 17Per Gallon 2Days Per Year 365Truck Cost Operation 4294.1176Insurance 300Oil Change-$25 per 4000 miles 225Truck Capital Cost 6666.6667

3 Years/ $20000Total Self Bid $65,289Actual Bid $55,000

Benefits of Contracting

• Self-Bid Weekend Trash

Key Point- Staff on weekends are able to handle additional duties required-fix toilet, graffiti, etc

Weekend Trash

# of Parks Cost per day

In House 27 $500

Contract 13 Sat- $1000Sun- $1200

Benefits of Contracting• Staffing limitations

– Inability to hire staff– Time constraints – Work load balance – Length of time of project

0

50

100

150

200

250

Need vs Capacity

Need

Capacity

Benefits of ContractingCapital Investment• How often do you use?

•Floor Scrubber/Polisher•Laundry Equipment•Food Service Equipment

•Paint Sprayer•Aerial Lift•Aerator

0

50

100

150

200

250

Ho

urs

Month

Floor Scrubber Need vs Capacity

Aereation Need

Capacity

Benefits of Contracting• Does your organization have the following

expertise?•Sponsorships•Media Relations•Legal•Specialty Programming•Landscape •Pool Operations•HVAC•Chemicals•Concessions•Planning

Keys to a Quality Bid Process

• Bid Documents–Scope of Work–Specifications–Standards–Expectations

Keys to a Quality Bid Process

• Scope of work:– Custodial/Gate and

Facilities Maintenance • Provide all labor,

materials, equipment, licensing and supervision necessary for custodial maintenance at twenty community parks for 34 months.

• Length of contract will have an impact on capital investment

Keys to a Quality Bid Process

Development of Specifications-All cars get you from Point A to Point B, but various features and other factors affect the overall price.

Cadillac Neon

Keys to a Quality Bid Process

• Scope to Specifications– “Big Picture” ……………..

Keys to a Quality Bid Process

• Scope to Specifications– ………….to Details

Keys to a Quality Bid Process

• Development of Specifications-Two Methods– Outcomes/Performance Based

Keys to a Quality Bid Process

• Development of Specifications-Two Methods– Required Services

Keys to a Quality Bid Process

• Specifications:– Industry

Standards– Best Practices– User Needs– Community

Needs– How would you

do the job?– What else????

Keys to a Quality Bid Process

• How would you do the job?

Painting the Gym

Paint Type

Paint Qualit

y

Surface Prep

Clean Up

Primer

Keys to a Quality Bid Process• Standards and Specifications-Christmas

Tree Lights

Providing information on the maintenance needs of the project

Providing specifications on the type of lights, color, etc.

Keys to a Quality Bid Process• Standards and Specifications-Janitorial:

Keys to a Quality Bid Process• Specifications-Concessions:

Addressing responsibility for trash in the park/facility

Addressing ability to place signage in the park/facility

Keys to a Quality Bid Process

Background Information:– What does a bidder need to know to

provide a quality bid and make a profit???• Historical information• Units consumed • Rate of use• Limitations on work• Rate of growth

Keys to a Quality Bid Process

• Background Information-Pool Chemical

Keys to a Quality Bid Process• Background Information-HVAC

Keys to a Quality Bid Process• Background Information-Christmas Trees

Keys to a Quality Bid Process• Vendor Qualifications:

– Financial– Bonding– Past law suites– Number of contracts– Expiration of current contracts– Bank information

Keys to a Quality Bid Process• Bid Tabulation:

Keys to a Quality Bid Process

• Pre-Bid Meeting• Bid Time Period• Bonds• Timeline• Conditioning

Period

Keys to a Quality Contract• Contractor Responsibility and Liabilities

– State and Federal Laws– Insurance-$1 million/$2 million– Required licenses, certifications – Image Standards– Reporting

• Detailed Monthly Invoicing

– Adherence to Safety of Users – Limitations/Indemnification

Keys to a Quality Contract• Contractor Responsibility and Liabilities

– Image Standards

Keys to a Quality Contract• Contractor Responsibility and Liabilities

– Detailed Monthly Invoicing

Selecting the Right Contractor

• Do your homework: Check references & previous work completed

• Professionalism in the bid• Low bid contractors will create additional

work due to failure to provide “other services.”

• Analyze all aspects of the bid

Managing the Contract • Contract Compliance

– Dedicated employee to manage the contract (Cost!!!!)

– Monitoring tools– Status meetings – Reporting systems – Develop and

maintain the relationship

Final Thoughts • What if bids are too far apart?

– Do you have good specifications– Do you have an apples to apples

comparison?– What type of business is it- small vs large?– Is this their primary line of business?– Use a third party to analyze– Use industry standards to compare.

Thank you!!!!!

• For further questions or comments

Chris Nunes, Ph.D., CPRE,Director of Parks and RecreationThe Woodlands Township281-210-3906cnunes@thewoodlandstownship-tx.gov

Exercise …. 15 minutes

• Get in Groups of 5 people• Chose a service that one of your cities

does by staff. • Create a scenario for outsourcing that

service• Present