PROJECT SUMMARY
In October 1997, the City of Long Beach, a 10-square-mile community of 18,000 people along Mississippi's Gulf Coast, sought an audit of the internal operating structure of its public works department by a professional utility management firm. Specifically, the mayor and board of aldermen sought a proposal to improve management efficiency, create staff accountability, improve customer service and reduce overall cost to the City.

In response, Operations Technologies, Inc. (OpTech), a subsidiary of Southwest Water Company, reviewed and reported on four of the City's public works departments: Streets and Drainage; Vehicle Maintenance; Water and Sewer; and Parks, Recreation and Cemeteries. The report concluded that the first three departments presented the greatest opportunity for improvement and annual cost savings.

OpTech proposed a professional management and labor services contract to operate the first three departments, with Parks, Recreation and Cemeteries remaining under City management. Materials, equipment and supplies for all departments would continue to be funded by the City, ensuring that OpTech would have no vested interest in non-performance of work. The proposal guaranteed average annual savings of more than $175,000 to the City for the direct labor and related costs.

On January 1, 1998, OpTech began providing these services under a four-year contract. In October 2000, based on OpTech's performance, the City expanded the services to include Customer Service and Billing Operations. The entire contract was renewed for a second four-year term at the end of 2001.

As promised, OpTech has saved the City on average more than $175,000 annually in direct labor costs compared to what the City had budgeted, with cumulative savings of nearly $1,100,000 from 1998 through 2002 (see Exhibit A). Moreover, the City's satisfaction with OpTech's performance has led to similar public-private partnerships for the nearby coastal cities of Gulfport (1999) and Pascagoula (2003).

Upon assuming responsibility for Long Beach's public works operations, OpTech implemented several measures to achieve its partner's top four goals. To improve management efficiency, the company restructured all three departments under its domain. Key employees were reassigned and promoted. To create staff accountability, computerized inventory management and work order systems were introduced. To keep the lines of communication open between OpTech and key City officials, OpTech began sending the board a monthly report of completed work orders, and OpTech project manager Derrel Wilson continues to participate in weekly staff meetings with the mayor and his department heads, as well as meetings with the mayor and board of aldermen. To improve customer service, OpTech implemented a $50-$200 "Lightning Bolt" reward program to immediately recognize exceptional customer service, and a performance-based compensation system that rewards staff for hard work and commitment, not just tenure. Finally, to reduce overall cost to the city, OpTech reduced staff through attrition, began performing all non-major maintenance on the City's vehicles and equipment in-house, and introduced streamlined procedures and cost-control measures to maximize the life and efficiency of every available resource.

Beyond the formal contract between Long Beach and OpTech, in practice the partnership is something more. "Whatever their needs are, we address them," says Wilson. That can mean anything from preparing for a Mardi Gras parade to raising a new flagpole to boarding up City Hall before a big storm. Beyond that, OpTech is proud to be an active and involved neighbor in the community. The company donated $15,000 for materials to improve the parks in each City ward, and regularly provides financial support to boys and girls' athletic teams, the Boy Scouts and other youth programs.

"OpTech's team extends prompt and professional service on behalf of the City of Long Beach," says Mayor Robert Bass. "The extra efforts are shown through their service and commitment."

Originality
In using the public-private partnership model instead of operating its public works department itself, a smaller city like Long Beach is able to provide public works services to its citizens and tourists without having to recruit and support staff. The OpTech partnership gives the City guaranteed performance and access to industry experts with no impact on its payroll. The City is sheltered from regulatory issues, thanks to OpTech's compliance guarantees, and its overall public works operating expenses will remain essentially unchanged unless both parties renegotiate. Potentially volatile costs such as salaries and wages, benefits, insurance, fuel and new regulatory requirements are borne by OpTech.

Quality
The key to running a smooth public works department is assembling and retaining a competent, trustworthy crew. One of OpTech's first moves when the contract began was to offer employment to all City employees who successfully passed a pre-employment drug screen and physical exam, at a wage equal to or higher than their rate of pay with the City, and to award an average raise of 4 percent within 90 days. Key employees were reassigned and promoted based on their skills and leadership abilities. OpTech also implemented a $50-$200 "Lightning Bolt" reward program to immediately recognize exceptional customer service, and a performance-based compensation system that rewards staff for hard work and commitment, not just tenure. Within the first three years, compensation increased on average by almost 23 percent, resulting in higher morale and a lower turnover rate.

Implementation
To address the City's request for improved management efficiency, OpTech restructured all three departments almost immediately, based on the original audit and proposal findings. New computerized inventory management and work order systems were also introduced. To address staff accountability, OpTech began sending the board of aldermen a monthly report of completed work orders, which on average include 13 work orders for Streets and Drainage and 55 for Water and Sewer. OpTech project manager Derrel Wilson participates in weekly staff meetings with the mayor and his department heads, as well as all meetings with the mayor and board of alderman. This keeps key City officials informed about all work progress and encourages an open dialog about any public works challenges the City may be facing. The work by department is summarized below.

Water and Sewer
In a coastal city subject to intense storms and an average annual rainfall of 60-62 inches, water and wastewater management can present a challenge. Beach water quality, so vital to tourism, is monitored every three days, and a sanitary sewer overflow would result in a beach closure. Under OpTech's watch, the City has only experienced one in five years. To address Long Beach's aging water infrastructure, on average OpTech repairs more than 250 water leaks, builds more than 800 feet of sewer pipeline and clears more than 200 backups on City mainlines a year. In April 2000 OpTech implemented a backflow prevention and cross-connection program on behalf of the City, in compliance with the Mississippi State Board of Health. By the state's June 2001 deadline, all businesses and residents had installed backflow devices, and OpTech maintains a database to record annual inspections and surveys in compliance with state requirements.

• Streets and Drainage: Each year on average OpTech constructs, cleans or widens 275 miles of ditches; installs and cleans 325 feet of culverts and catch basins; cuts 2,500 miles of grass; installs 275 tons of asphalt; collects 10,000 cubic yards of trash; and spreads 700 tons of limestone.
• Vehicle Maintenance: With a tight capital budget, Long Beach must squeeze all of the service it can out of the 75 vehicles and pieces of heavy equipment in its fleet. OpTech's mechanics are critical in that effort, performing almost all mechanical work including brake repairs, tune-ups and more on everything from patrol cars to excavators.
• Customer Service and Billing Operations: Upon assuming responsibility for this department, OpTech funded an audit by the public accounting firm of Moore and Powell. Based on their findings, OpTech implemented several measures to improve collections and create higher accountability. They include a complete audit of metered accounts; development of standard operating procedures for handling deposits, harbor leases, insufficient funds, collections and bankrupt accounts; automatic bank draft acceptance; and new billing and collection reports.

Economics
OpTech's original proposal to provide professional management and labor services guaranteed average annual savings of more than $175,000 to the City for direct labor and related costs. Over the life of the original four-year contract (1998-2001) and first year of a four-year contract renewal (2002), OpTech has saved the City on average almost $220,000 a year, with cumulative savings of nearly $1,100,000 (see Exhibit A). These savings were achieved through the efficiencies detailed above.

Longevity
The public-private partnership between the City of Long Beach and OpTech began in January 1998. The original four-year contract was renewed for a second four-year term at the end of 2001 and runs until December 2005, when it may be extended. The City's satisfaction with OpTech's performance has lead to similar public-private partnerships for the nearby coastal cities of Gulfport (1999) and Pascagoula (2003).