I recently sat through a local Board of Commissioners meeting listening to them struggle with the idea of “regionalization” of Geographic Information System (GIS) services. Other surrounding counties are now looking to “exit the business” and seek to turn these services over on a contract basis to our local County government. On its face, it sounds like a good idea. After all, there are a lot of cost redundancies paid individually by all of these Counties, such as building space, utility costs, administrative overhead such as manager’s time, payroll, administration, human resource expenses, insurance, and the plethora of other support staff (from IT all the way down to the janitor), capital expenses (computers, printers, plotters, office furnishings, supplies and software), direct labor costs (the salary) and the indirect labor costs, which includes employer paid retirement expenses, paid vacations, paid sick time, paid holidays, medical coverage, dental coverage, employee training, workman’s comp, etc.).  But in this instance, when it came time to make a decision, it was clear that staff did not have a full grasp of all these costs based on the contract prices negotiated with the other Counties.

Often the real costs of providing government services are not fully accounted for. When considering various outsourcing solutions, such as an outsourcing contract (RFP, RFQ), contract employees, or even complete privatization, these costs must all be accounted for in order to determine the viability of outsourcing. There is a lot of merit to the regionalization of government services, particularly for services that only government can perform. But for services that are already offered by the private sector, local officials should take a careful look at all of the costs in order to make a true apples to apples comparison.  And since no two communities are exactly alike in terms of its cost structure (similarly, no two private service providers are alike either), some quality time with your local fiscal officer or comptroller could help you derive some estimates to help you make that cost of service comparison easier.