What Happened?
Minneapolis will be selecting from 18 companies to contract with on an IT outsourcing deal. Minneapolis has previous outsourced its IT activities to one company for $149 million dating back to 2003, but that contract will be up in December 2015.
The Goal
Minneapolis decided to outsource its IT activities in 2003 in an effort to reduce costs, increase efficiency, and free up capital and resources for other public services. At that time, the city opted to privatize with one company taking on all responsibilities. This time around, municipal leaders have expressed interest in breaking up the IT tasks into many components or departments. Each of these entities could be managed by one or many private companies depending on the nature and costs of the bids.
Since opening up the RFP to submissions, the city has collected bids from 18 private companies: some of which are offering to manage all IT activities while others are proposing to take on a portion of the responsibilities. If Minneapolis opts to break up its IT tasks into several components, it may make the city more flexible to a rapidly evolving technology climate. The city could adopt new technologies within the components as they arise in piecemeal, rather than plan out large, expensive and time-consuming revamps of the entire sector.
Minneapolis IT officials are seeking out several companies for outsourcing work that are willing sign contracts that are shorter in length than those previously signed. The previous IT outsourcing strategy created agreements with private companies spanning several years before coming up for renewal. If the contracts are shorter, the city believes it can adjust the conditions and stipulations better ad the industry changes.
IT Privatization Finally Approved
Gov1 has followed the process of outsourcing of IT services in Methuen, Massachusetts. The city saw its first proposal to privatize the IT department get squashed in the fall of 2012, and then resurrect in April 2013.
More than one year later, the Methuen City Council finally voted unanimously to outsource its IT department at the cost of $254,705 for a 13-month contract. After June 2015, the city will have the option to extend the contract for three more years for $226,404 on a per year basis.
The city currently holds four municipal IT positions, three of which are filled. All of these jobs will be eliminated, but the city will try to transfer these employees to other public departments based on their skills and experience.
The Methuen City Council failed twice before to have the IT privatization strategy approved. Some of the councilmembers were wary of the estimated savings generated from the outsourcing, and how the shifting of costs would be completed. The council also wanted to avoid layoffs anyway they could.
Since the last vote was called in 2013, the City Council was able to find a different private company interested in the contract, that presented a more concise strategy for measuring and cutting costs. Furthermore, the city has looked into arrangements to move its current IT employees to other departments and agencies to prevent layoffs.
The Privatization Trend
Gov1 has not only kept a close eye on the Methuen privatization process but also the outsourcing of other local government activities such as trash collection and airport management.