Costa Mesa spent nearly 18 months in its bid to shift some of its cost-driven services off of its municipal employees and to private employers. That effort, driven by Mayor Jim Righeimer, resulted in an expensive legal battle with the Orange County Employees Association. But what lessons can be drawn – either from the City itself or from observers of the case in general?

The ultimate line of defense for cities seeking to outsource is moderation.

In Costa Mesa, the City’s leadership barreled toward outsourcing with such speed it caught the state’s attention. The need, as previously explained to PublicCEO, was cost. The City was hemorrhaging money, and each month’s delay would result in tens – if not hundreds – of thousands of dollars in additional expense.

Further complicating the situation was the structure of the City’s labor contracts. An employee was required to be given six months notice before they could be laid off. To ensure compliance, the council approved layoff notices to employees, even if their particular service was not a direct target of the outsourcing policy. The ensuing hysteria further enraged employees associations.

That was March 2011; the first lawsuit was filed in May.

In a presentation given in March 2012, Newport Beach City Manager Dave Kiff offered his advice to those thinking about outsourcing. Among the facts he encouraged his colleagues to keep in mind that outsourcing takes far longer than anticipated. Additionally, he highlights the importance of meeting with employees and compiling information – before outsourcing is pursued. Lastly, he mentions the importance of consulting state law and city charters.

Cities who wish to fully explore outsourcing must be able to operate autonomously through a local charter.

One of Costa Mesa’s great shortfalls was attempting an ambitious outsourcing strategy as a general law city. However, the city of Newport Beach did not have the same challenges when it sought to outsource a variety of its services because it was a charter city.

Ultimately, the Costa Mesa case hinged on state-law limits on local government outsourcing. That restriction can be eased with a charter.

Public Relations must factor into any plan for outsourcing. Employees and their associations have well-practiced public relations experts who will help craft message and put convincing individuals in front of the media. What will the City’s reaction be?

Paramount to an effective response is an informed dialogue. Pointing to specific improvements (either in finances, efficiency, or services) helps. However, as Kiff notes, outsourcing is not all about finances. Resident’s lives will be impacted – either in a real or a perceived manner, and employees will certainly be impacted. Be prepared not only for hard facts but human-interest responses.

Once, and if, an outsourcing plan is approved, be prepared to monitor results. Know who will be the contract administrator, who will be in charge of verifying standards and savings. Be ready and willing to critique your own performance. The process will not be perfect and a willingness to admit room for improvements is an important part of building public trust.

You can view handouts from Mr. Kiff’s presentation at the League of California Cities.