The City of Laguna Niguel began contracting for street maintenance with Charles Abbott Associates on July 1, 1993. The city saved more than $250,000 through competitive contracting in its first year, a 25 percent reduction from its previous costs when it contracted with Orange County for services. Using these savings, Laguna Niguel significantly expanded its street maintenance services, while keeping the budget well below its previous level before competitive contracting. "The real reason we are contracting is that now I have control over maintaining our streets, whereas before, the county was the one that decided what got done and when. So the significant difference just in administering the street maintenance program is not only in cost savings, but the fact that I can direct it and make the decisions," said Public Works Director Ken Montgomery.

Laguna Niguel now has a regular patrol of its rights of way, and the citizens are enjoying cleaner streets. The response time in resolving customer complaints was reduced from 56 days to 6.5 days over a six-month period. In addition, the average number of complaints has dropped 44 percent.

The response time for emergencies also had to be considered when the city privatized. Officials wrote into the agreement with the contractor that "all of the subcontractors that our maintenance contractor hired had to be available to respond to call-outs (emergencies), and this has worked out extremely well," said Montgomery.

Officials in Laguna Niguel found the transition to privatization particularly easy because they didn’t have to be concerned with layoffs or relocating workers. All of the public employees that provided their street maintenance had worked for the county.

Indianapolis has opened up pothole filling, asphalt laying, crack sealing, berm repair and other road maintenance functions to competition.

The first service opened to competition was pothole filling. Forced to compete, city workers streamlined operations, dropping from eight workers on a crew to four, and going from two trucks to just one, but still their costs weren’t competitive with private firms. In reviewing their costs, city employees discovered that the overhead costs of indirect management were enormous. There were 92 truck drivers and 32 management supervisors. "We can’t compete if you are going to attribute their salaries into our costs of doing business," the union told the mayor. The front-line union employees asked Mayor Goldsmith to unload them of the burden of the supervisors.

In response, Mayor Goldsmith laid off most of the supervisors. The city unit won the contract. With the assistance of outside experts, they now do intensive full-cost accounting on all the services they perform, from chuck-hole filling to crack-sealing to line painting. They can tell you exactly how much money it costs for every mile of cracks in the road they seal or every street sign they make.

They also have gone through something called the GE Dot Matrix. This means that city crews have evaluated their strengths and weaknesses compared to other competitors in the marketplace. In the private sector, this sort of benchmarking process is fairly common; it’s unheard of in government. City crews use this information when they bid on contracts. If they have determined a service is not one of their strengths, they won’t bid on it.

In October 1987, all of British Columbia’s highway and bridge maintenance — more than 29,000 miles of public roads and 2,645 bridges — was put out to competitive bidding. The provincial Ministry of Transportation and Highways divided the province into 28 districts.

The majority of workers affected by the privatization, about 3,800 employees, had performed all provincial bridge and road maintenance. These workers originally were allocated among the province’s eight development regions.

From the beginning, the government sought to protect the interests of these current employees, encouraging proposals that involved continued employment of existing workers. The government also encouraged existing employees to form their own private firms to take over the services they were providing. The government gave qualifying employee groups the first opportunity to bid on providing services as prime contractors for their contract area. Moreover, bids from these employee-owned firms were given a 5 percent preference over non-employee bids. Ultimately, of the 28 multi-year contracts, 10 were awarded to new firms composed of the former provincial employees.