The Issue
Indianapolis Fleet Services (IFS) was created to keep the City running – literally. Responsible for managing and maintaining the vehicle and equipment fleet, IFS services fire apparatus, police cars, snow plows, street sweepers, lawn mowers, and just about anything else with a motor. Plagued by union–management disagreements and ongoing disputes with its Departmental customers, IFS had an historic cost structure higher than its private sector counterparts, and it delivered services that even its management acknowledged were not acceptable from a quality standpoint. Over time, the City fleet had fallen into disrepair and customers were increasingly seeking ways to procure fleet management services in other ways.
The Team
Skip Stitt, then the City’s Director of Enterprise Development, helped lead the City’s efforts to lower fleet services costs, raise customer satisfaction, accelerate vehicle turnaround times, and end the strife between management and line employees.
The Strategy
Using a Managed Competition model, the City issued a competitive Request for Proposals (RFP) and solicited proposals from private sector fleet services managers and the City’s incumbent IFS team. From a policy perspective, the City and its fleet services customers were more focused on high quality services and low prices than private-versus-public sector delivery. Spurred by the competitive process, the IFS team reengineered its service delivery model and cost structure, and submitted the winning proposal.
The Impact
The IFS Managed Competition model was a success on virtually all fronts. Total cost savings over the first five years exceeded $8.5 million – a savings of about 18%. This occurred even as the City’s fleet grew by nearly five percent as a result of a public safety take-home car program. Cost savings were achieved in a number of areas including personnel productivity (billable hours per mechanic increased 21%), parts inventory management, security and facilities costs. The quality of the work done at IFS also improved substantially. The number of written customer complaints plummeted from 149 per year to five. The number of meetings with Departmental customers increased from 32 per year to 192 per year. Most critical to the City’s public safety customers, vehicle turnaround time within eight hours rose to nearly 80%. The project was also a success for the City’s incumbent employees, notwithstanding their initial concerns with the Managed Competition model. Benefits included:
- No employee lost their job as a result of the reengineering effort
- The number of days lost to workers compensation injuries fell from over 500 per year to four
- Union employee grievances dropped from 23 per year to four
- After achieving their performance targets and simultaneously generating additional savings beyond their competitive proposal price, employees earned incentive payments of between $800 and $930 per year