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Montgomery County Organizati()IJ~lmReform Commission Discussion ofContracting Out Countv Services For purposes of this review, the "contracting out" of County services would mean that the County would maintain its responsibility to deliver a particular service, but that the service itself or a piece of the service - would be provided by a third party, rather than by "in house" staff. Ultimately, the County would still be responsible for the service being delivered and for contract oversight. There are a variety of reasons why the County may choose to contract out a service. The County may be starting up a new program and may not want to create a permanent infrastructure until a program is more mature. The service may require unique personnel skill-sets that are easier to provide and/or maintain under contract. Or, a program may be likely to change in the future and a contract approach may be more nimble than an established infrastructure. From a financial standpoint, the bottom-line question that the ORC sought to explore was whether the same level of service or better can be provided at a lower cost via contract or "in house" by County personnel. There are factors that may affect this question in either direction. For instance, the County does not have to build a profit into its program costs, as does a private-sector entity. However, the County may have higher operating costs - such as fully loaded labor costs than a private-sector entity. Because of the varying circumstances involved, the ORC felt strongly that neither option - in-house or contracting out - was inherently better than the other. Each situation has to be reviewed on its own merits and must take into account not only the financial implications, but also a wide variety of other factors that may present themselves. Relevant Laws: For information purposes, we provide details on two local laws that have a direct effect on the County's use of contractors to deliver its services or programs. We make no judgments on the merits of these laws. These include: 1. Bill 5-02 -- Living Wage Law, which requires contractors doing business with the County to pay their workers an annual wage based on certain indices. While it is uncertain what impact this law has on contract costs, presumably, in cases where a particular field of labor is paid more because of the living wage requirement than it might otherwise receive in the private sector, some amount of the wage differential is likely to be passed on to the County through higher contract costs. Therefore, if the County chooses to contract out a particular service, contract cost estimates should assume compliance with the living wage law. 2. Bill 32-05 - Contracts and Procurement Services, enacted in August 2006, requires that a savings threshold must be met (25%) and that other approaches, such as a departmental reorganization, have been considered before the County can contract out work currently being performed by a County employee. - 50PDF Image | Montgomery County Organizational Reform
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