Cost reduction

The City of Phoenix is in a very precarious place with our budget, and will be for at least the next 22 years. That’s because we are, as required by law, slowly paying down our past due pension obligations. And those costs go up – a lot – every single year. When we come out of this period, we’re going to have a TON more cash to spend on projects and Council priorities. But until we get to the end of the road, times are and will be tight. Current Mayor and Council have, recklessly, increased the risks ahead of us by spending far more money on an ongoing basis than we currently project to have. If we hit another economic downturn anytime during this period, Phoenix will be right back where we were in 2008-2009, looking at across the board salary cuts and eliminating positions. The well is dry. The only way for this Council, or future Councils, to keep increasing spending on social programs is to cut costs on all the stuff we already do.

If common sense ran government, doing so would be a snap. It doesn’t. I’ve spent the better part of the last five years focused like a laser on these issues, and even made some very significant progress in a number of departments. There’s a lot more to do. This will be a major, ongoing talking point of my campaign, and focus of my time in office if you choose to elect me. Below are some concrete examples of what can be done:

1. Swap Request For Proposal (RFP) contracts with Construction Manager At Risk (CMAR) contracts

 

Contractors have learned they can game the system and win more bids by deliberately underbidding. They then come back to the city mid-way through the contract for an “Additional Payment Authority.” This is a recurring theme on Council agendas, some companies have basically made a system of it, and the city has gone along without a peep.

No more. We need to end this practice. It is driving up costs, is rife with the possibility of fraud, and involves zero oversight of the additional cost, which is invariably (since there is no competition at that point) charged at non-competitive rates. CMAR contracts hold bidders accountable, and provide cost surety for taxpayers.

 

2. Hold Contractors Accountable
 

This should be self-explanatory, and standard practice. But it is not. How many times have you driven over a new patch in the road that is already sinking into a pit? The contractor who did that work in the first place should be the ones back out there – immediately – fixing their shoddy work. But that was not often the case before I started hammering city professional staff on this issue, and while the Water Dept in particular has gotten a lot better about this, there are still far too many cases like this throughout the city where contractors are not held to account and taxpayers end up footing the bill for their failures.

 

3. Use Request for Qualifications (RFQs) & fast bids
 

RFPs are considered the “gold standard” in government contract bidding. Probably because they massively increase the size and cost of government, and make everything we do cost more than it should. Anyone who wants to pursue a contract has to put together these enormous RFP bid-books (the things literally run to thousands of pages). So, of course, they add the cost of all that work to their bid. And, knowing they won’t win every bid, they add the cost of a few more RFPs, so they can spread those costs out on the bids they do win. The result is that the City of Phoenix, and pretty much every government entity in the U.S., spends 50% more, at the bare minimum, for every single thing we do and buy than it costs to get that same product, service, or work performed in the private sector.

 

For example, whenever a developer is building a new project that will require work in the right-of-way, changes to the roads, etc., the city is required to perform that work or changes. But since the developer can do the work for 50% less than we can, or more, the city has developed a work-around: the developer pays us for the work, then as part of their development agreement we contract them to do the work, and pay them for it with the money they gave us.

 

By using RFQ lists – lists of companies already certified to provide that good or service – along with fast bids where you simply send all the companies or individuals on that list a scope of work or service requirement and get bids without them having to go through the RFP process, we can cut these costs significantly.

 

4. Change Purchasing Requirements

 

It’s not just roadway work that is made overly expensive by RFPs. Every single pen, pencil and sheet of paper in City Hall costs double or triple what it would if we simply ordered those items from Office Depot, Amazon, etc.

 

We need to get rid of the bid requirement. Have a designated purchasing agent in each city department who is given an annual budget, and authorized to purchase whatever goods or office supplies are needed for their department from a list of standard pre-approved sources. Then audit a few of them each year to make sure those purchasing agents stay on the up and up. This is how virtually every company in America does their purchasing, and they manage to do it without a rash of fraud, or paying stupidly high prices. Government can do the same.

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