The future existence of the first city department to go through the competitive bidding process known as "managed competition" was called into question Monday during a review by the San Diego City Council's Audit Committee.
An audit of Publishing Services found that workload projections for the department were artificially inflated, which caused the bidders to propose higher costs than should have been necessary. A group of municipal employees won the competition with a $2 million annual bid for five years.
While the audit found the total cost has been adhered to, Publishing Services has raised prices to other departments in their in-house fund by 15 percent to offset a 58 percent shortfall in the projected workload, the report by the city auditor found.
The department handles website design, graphic design, electronic publishing and administration of the city's photocopiers.
Mike Fratteli, who manages Publishing Services, told the committee members that use of his department's type of services is declining industry- wide.
"There may have just been some reluctance on the part of everybody involved to, quite frankly, face up to the fact that putting ink on paper is a dying industry," Fratteli said about the erroneous workload projections.
Tony Heinrichs, the public works director who is above Fratteli in the city's pecking order, said some city workers simply find going to a nearby copy center is faster and more convenient.
Members of the audit team that authored the report responded that they've found "widespread" use of outside vendors, and Andrea Tevlin, the city's Independent Budget Analyst, said municipal departments are not required to use the city's print shop.
"The whole thing is kind of convoluted," Sherman said. "To me, the problem would be easier solved if we got rid of the entire department in the first place."
The problems faced by Publishing Services are "systemic to a government- run bureaucracy," and private firms produce better results, he said.
Managed competition was approved by voters in 2006 and implemented four years later, with an eye toward controlling the city's budget by making departments more efficient. All five of the completed competitions so far have been won by city employees.
The audit also found that the workload projections were not sufficiently vetted and staff concerns about them were not addressed.
According to the audit, the workers were expected to process 3.8 million forms in Fiscal Year 2012, but instead handled about 43,000, an error rate of 99 percent. A projection of creating 240,000 labels that year ended up being off by 90 percent.
City management has agreed to the auditor's recommendations, which are to reassess projected workloads, staffing needs and resources; ensure that workload projections are adequately vetted; report the new assessments to the mayor and City Council so they can make adjustments; and present business management reports regularly to the City Council or its Budget Committee, and make them available to the public.
Publishing Services, fleet maintenance, landfill operations, street and sidewalk maintenance, and street sweeping went through managed competition until former Mayor Bob Filner put a temporary halt to the process. Several other departments were preparing for managed competition when Filner took over, and it's unclear when the process will resume.
Supporters applaud annual overall budgetary savings of somewhere between $10 and $12 million for the managed competition program depending on who is making the estimate, but issues have cropped up, including some reports that fleet maintenance employees don't have enough resources to meet their workload.
The Audit Committee voted unanimously to forward the report to the full City Council -- which includes a couple of managed competition critics -- for review in the near future.
-City News Service