December 6, 2005
School of International and Public Affairs, Columbia University
The City of Indianapolis has been widely touted as a success story for managed competition. Faced with a fiscal crisis, its mayor, Stephen Goldsmith, introduced competitive bidding to redefine the roles of local government and the private sector in providing public services. The results generated greater efficiency, windfalls in savings for the city, as well as in-house units that were able to effectively compete with their private counterparts. This case focuses on the critical years between 1992 and 1999, when Goldsmith held public office. It traces the challenges he faced in reforming the city's services, and examines the factors that enabled him to do so. Research was conducted through interviews with key participants and analysts, review of government publications and data, as well as other reports and publications. In addition, a study of the Indianapolis Fleet Service as a competitive bidding process model was undertaken. The findings help to illustrate the components necessary for the organization and implementation of competitive bidding in general, which include ensuring a level playing field, supporting the in-house bid, thoroughly developing a bid request, managing the contract and monitoring performance, and using leadership to involve stakeholders such as unions. The potential risks and costs of each factor are also evaluated. However, when Goldsmith left office, questions arose over the continued advantages of managed competition. The sustainability of the competitive bidding process as an effective tool to improve cost-efficiency and service quality is explored. Moreover, its applicability to other cities is presented through a review of lessons learned from the Indianapolis experience. In Goldsmith's words, "it can be done, but it takes the right amount of incentives and leadership."
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