Wednesday, January 20, 2010

Milton splits with private company

Courtesy by Jonathan Copsey / Appen Newspapers

January 18, 2010 MILTON – The grand experiment is at an end for Milton – as of the first of the year, there was no longer any public-private partnership between the city and private company CH2M Hill.

"For all intents and purposes, we're done," said City Manager Chris Lagerbloom.

When Milton was first formed in 2006, CH2M Hill was brought in to manage much of the day-to-day affairs of city government, just as they currently are with the cities of Johns Creek and Sandy Springs.

The company bought equipment, computers, phones, an office building to serve as city hall, all to get the city up and running on its very first day of business.

"They provide a very vital service for a new government," said Lagerbloom.

However, with the economic downturn, cracks began to show in the relationship with city leaders.

Hill fees a problem

There was the trouble of having private employees scattered wherever the company thought it best. For instance, the city Web site was managed by a webmaster in Denver, where CH2M Hill has its headquarters.

For Lagerbloom, it was a constant problem having to rely on passing information to the public when that person was not only unable to attend informational meetings, but living two time zones away.

The biggest – and by far the most worrying – was that the city was contractually obligated to pay the company a lump sum every year for its services.

This created a problem when Milton had to pare back its budget to meet the economic climate and the company would not budge on the fee.

"How do we break apart this lump sum? How do we position ourselves such that we don't have this $7 million contract on us that will always be $7 million?" asked Lagerbloom.

To add to that, there was a clause in the contract that increased the fee based on a complicated formula. Had the city stayed with CH2M Hill, that $7 million would have risen to $8.2 million with no increase in performance or costs.

That's a lot of money for a city whose budget last year was a little over $17 million.

What now?

Now that the deal is done, the city is already seeing savings. By eliminating the company from contracts, Milton is able to directly negotiate with contractors used for public works and keep the fee that CH2M Hill would tag on.

Lagerbloom claims he has already seen overall savings of $1.26 million for taxpayers so far this year. He expects that number to go up, with even more saved next year.

"This wasn't a bad experience for the city," said Lagerbloom. "We wouldn't have been positioned such that we could make this transition if we hadn't had somebody like CH2MHill to start us up. [But] there is no middle man at this point."


Anonymous said...

No doute you will save money by not having a middle man to attach a fee based contract. Fill all the postitions that are open and get as much completed then brag. When you ask for more service you have to pay more to get it. I know change orders will come.. Just how many did you see from CH? These are questions that we the public never get to see.

Anonymous said...

The Bloom, what a piece of work.