City Moves Toward Outsourcing IT; Could Save $21M

The city of San Diego has agreed to tentative contracts with two companies to handle information technology services, which should result in cost savings of $7.4 million over the next five years, Mayor Jerry Sanders said Tuesday.

The deals with Atos IT Solutions and Services and CGI Technologies and Solutions are part of the city's move to end its 30-year relationship with Data Processing Corp., Sanders said.

"In an effort to reduce our costs and bring our IT system out of the 1970s, my administration last year launched a fair and open process that allows private companies an opportunity to bid for the right to provide the city with IT services," Sanders said.

It's the first time the city has put its entire IT portfolio to bid since it began its relationship with DPC, the mayor said.

The five-year proposed deals, which will go before the City Council's Rules Committee on Wednesday, require approval from the full council to take effect.

The two firms would perform software development and maintenance and provide help desk support for city employees and other services, the mayor said. He said if the companies perform well, and two years are added to the contracts, the savings would grow to more than $21 million over the life of the deals.

Another IT contract with an outside firm has also been reached and will be announced in the near future, with similar savings totals, city officials said.

Chief Operating Officer Jay Goldstone said the transition from DPC to the other companies would cost the city more than $12 million next year, including $6 million from the general fund. That money is already in the mayor's budget proposal released last week, he said.

Goldstone said the savings from the contracts will catch up, though, and the city should break even after about three years. The last couple of years will result in the estimated $7.4 million in savings, he said.

According to Goldstone, about 95 percent of DPC's revenue comes from the city of San Diego, and 144 of its employees work on municipal functions. Many of them are expected to be hired by the new vendors, he said.

DPC will continue to provide IT services to the city for a transition period of about one year, Goldstone said.

In a statement, Councilman Carl DeMaio praised the outsourcing as a good financial move for the city.

"The cost-savings will help fund repairs to the City's crumbling roads and increase hours to libraries and recreation centers," DeMaio said. "I encourage City leaders to approve this proposal without delay and to hold the winners of this bid accountable for the savings they claim."

-City News Service