Program designed to save city money comes under scrutiny
By: Elizabeth Malloy

A city of San Diego program designed to save water ratepayers money has come under fire recently, when an audit revealed that it hadn’t save as much money as had been previously reported.

City Councilmember Carl DeMaio has used these findings to illustrate his belief that the city needs to enact managed competition, while some city officials have pointed out that the program still saved a significant amount of money, even if it’s not as much as originally thought.

The Bid to Goal program was developed in the water and wastewater departments, now married under the title of the Public Utilities Department, which encourages employees to find cheaper ways of delivering services, according to Jim Barrett, the director of Public Utilities.

An internal review at the city researches how much it would cost for a private company to perform a certain service over a period of time (usually about five years) and employees then find ways to do the job for that rate or cheaper.

If savings are achieved, employees receive part of it as a kind of bonus. Employees within the department can earn up to $4,000 a year in a bonus. According to Barrett, ratepayers win too, because departmental savings negate the need for rates hikes. The water rate hikes that San Diego residents have experienced in recent years, he said, were to cover mandated infrastructure repairs and wholesale price increases on water, not because of departmental needs.

“Baloney,” DeMaio said when told that the city didn’t think Bid to Goal was contributing to rate increases. “Labor costs are a big part of why our water rates are going up. It's not just the cost of water.”

DeMaio said that the audit report, which revealed that the city had overstated savings from the Bid to Goal program by about $10 million, was evidence that the program needed an overhaul, if not a complete cancellation.

“I’ve been looking into this bonus program for years as a government watchdog, and have always had concerns that the bonus program was being gamed,” DeMaio said at a press conference Wednesday.

The city’s audit contained 14 suggestions for overhauling the Bid to Goal program, including: Using an outside contractor to determine how much the private sector would charge for certain services, rather than city employee estimates; developing stronger guidelines for Bid to Goal annual reports to avoid discrepancies; requiring an external audit of records; and developing a standard of savings calculations.

Barrett acknowledged that the city was troubled about the poor calculating, and said some of that could be attributed to the fact that the water and wastewater departments were only recently merged.

“We expect to be much more aggressive with how we manage that in the future,” Barrett said. “We concur with the findings that we need to do a better job administrating and managing.”

DeMaio, however, said that the audit’s finding is indicative of deeper flaws in the system. He said city employees shouldn’t estimate what the private sector would charge, and shouldn’t be taking home part of what the city saved.

He will ask the City Council’s audit committee to endorse the reforms recommended by the auditor on Feb. 22, and propose a 90-day milestone review with department management to review the implementation of reforms.

“A lot of audit reports sit on the shelf,” he said. “We cannot allow this audit report just to sit on the shelf, we have to be holding department managers accountable for implementation of the auditor’s recommendations.”