A long-overdue reform is coming to the City of San Diego in the form of managed competition. In November 2006, voters overwhelmingly approved a measure that allows the city to solicit bids from private sector contractors and government employees to inject competition into the process of providing various services. Similar managed competition and outsourcing efforts elsewhere have resulted in cost savings and improved service levels.
Mayor Jerry Sanders recently announced that he is advancing 11 city functions forward in the managed competition process. Among the larger budget items in this list is trash collection. The mayor’s proposal calls for a phased approach to competitive procurement that would solicit bids for collection routes each equal to roughly 20 percent of the total, although the city intends to always retain at least one-fifth of current collection routes.
In pursuing competition for its trash collection services, San Diego is catching up with the times. Most U.S. cities, from small towns to large metropolitan areas, already contract some or all of their solid waste collection services. The growth in competition for solid waste services has been a long-term trend.
A 1995 study of 120 local governments in 34 states found that, between 1987 and 1995, the percentage of cities contracting out for solid waste collection increased by 20 percent and that 100 percent of participants saw cost savings from this approach.
According to the National Solid Waste Management Association, in 2001, the private sector provided 76 percent of the nation’s solid waste services, and its market share was growing at a rate of two to three percent per year. Indeed, the vast majority of residents in nearby municipalities and in the unincorporated areas of San Diego County are already served by private waste haulers, and most San Diego apartments and commercial buildings are served by a private hauler, not the city’s Environmental Services Department.
Other cities such as Phoenix, Arizona, and Charlotte, North Carolina, have enjoyed great success with their managed competitions for garbage collection services. Over the first 15 years of Phoenix’s competition program, the inflation-adjusted costs of solid waste collection declined by 38 percent citywide. Charlotte realized savings of $14 million over the first five years of its program, and a 2007 study of 15 North Carolina cities found that Charlotte’s collection costs per ton of garbage were 35 percent less than the statewide average. A large body of research has revealed that such savings figures are typical, with savings ranging from 20 to 60 percent.
A 2007 Ontario Waste Management Association study estimated that the city of Toronto could save at least $10 million a year by contracting out residential waste and recycling collection. The report also notes that private sector waste companies in the area provide the same service for about 20 percent less than the public sector, and that the average private sector waste collection worker is more than twice as productive as the average city of Toronto worker.
Given the widespread use and proven success of trash collection competition programs, San Diego is wise to finally utilize this tool to provide better services at less cost to taxpayers. To get the most out of its competition program, the city should advance the mayor’s proposal without delay, and ensure that the lessons of competition are applied-and the benefits realized-to all other applicable city services.