Outsourcing and Customer Rights Principles

SECTION 2.5

Outsourcing Criteria

Contracting out becomes a viable option when most of the following conditions are met: the tasks are repetitive and predictable, the scope of work can be easily defined, little or no decision-making is required to execute the tasks, there is a fixed duration of work, quality service-providers exist in the private-sector, and the results are quantifiable and easily inspected. Examples include routine types of maintenance, such as grounds, custodial, locksmith, elevator maintenance, fire extinguisher maintenance, printing services, and water treatment programs. In addition, specialty jobs, such as generator repairs, uninterrupted power supply repair and maintenance, high voltage system inspection and repairs, traffic controls, glass replacement, engineering services, disaster response plan preparation, design services, maintenance of specialized equipment, computer maintenance, environmental material analysis/testing, and workers' compensation claims administration, typically require special expertise or expensive equipment that is cost-effectively provided by a contractor.

As we continue to evaluate outsourcing opportunities, we need to make decisions carefully and with the knowledge that contractors are in business and will tend to perform in their own best interests, not necessarily that of the University. In a parallel effort, we need to find ways to enrich the jobs of our career staff to provide them assurance of being valued, with their contributions appreciated and recognized.

The following criteria will be applied in evaluating the appropriateness of outsourcing and its likelihood of success:

A. Competition

  • usually must exist in local marketplace
  • necessary for assurance of quality and price-stability
  • normally evidenced by two or more responsive bids

B. Price

  • total direct and indirect costs, including management oversight of the contract
  • include added expense, if applicable, of occupying space in UCI buildings financed with tax-exempt bonds (could alter tax-exempt status)
  • include retirement, if applicable, of unamortized capital investment (including both debt and lease obligations)

C. Quality

  • scope of contract definable, and work-product quantifiable
  • work-product can be inspected
  • must be measurable by clear performance indicators for production/transaction services, or
  • established and observable standards in the case of professional services

D. Generally not feasible or advisable to outsource:

  • functions which entail decisions that must evaluate the best interests of the University (unless valid performance criteria can be specified)
  • functions that embody management decisions on behalf of the University
  • contracts that unacceptably increase exposure to risk or liability.

E. For self-supporting UCI business functions which can alternatively be procured in the private-sector, campus "customers" will make the decision whether to outsource based on their evaluation of price and quality, within the framework of the "Customer Rights Principles," which follow.

F. When outsourcing is elected, a bona fide effort will be made to re-employ displaced employees with the successful supplier/vendor or with the University according to the campus re-employment guidelines, statutory requirements, and collective bargaining obligations.

"Customer Rights Principles"

"Customer rights principles" help shape constructive relationships between customers of administrative services/products and A&BS service-providers. The objective is to go beyond a general commitment to customer service, and to clarify a specific framework of joint expectations as campus units work together to streamline administrative processes, to simplify the delivery of services and products, to improve productivity, and -- whenever possible -- to improve service outcomes even as costs are trimmed. These principles are heavily based on campuswide customer input.

Key premises underlie these "customer rights principles": customers and service-providers need to communicate openly within a framework of understood expectations and obligations; some services/products will best be provided centrally, some will best be decentralized, and others will best be outsourced; and business services should be produced wherever the institution realizes the greatest overall value in terms of quality and cost -- no solution is uniformly best.

When procuring either an "outsourced" or internally recharged product or service, "customers" have the right to:

1. Expect the provider of services/products to be knowledgeable regarding the customer's requirements.

2. Expect timely, complete, and accurate bids containing sufficient detail to compare with competing bids.

3. Receive and approve an agreement which includes scope-of-work, estimated charges, projected start and completion dates, frequency of status reports, scope of project management services, and description of the complaint resolution process.

4. Receive regular status reports which communicate unanticipated occurrences -- notably, notice of obstacles or problems with the work flow as problems surface, especially before the scope of work is altered. All scope changes must be approved by the customer.

5. Authorize unanticipated expenses, in excess of the agreed-upon bid, before they are incurred; and receive accurate, itemized, and timely charges for work performed.

6. Submit a "report card" to the service-provider evaluating performance and value received.

7. Communicate/coordinate with a single project manager.

8. Purchase or contract for the following services from off-campus providers: window coverings, carpets, interior painting, office supplies, office furniture, printing services, and minor capital project design or construction.

A. For projects involving interior painting, window covering, floor covering, customers can function as project managers with freedom from overhead charges (apart from direct costs incurred by central units in support of bidding and contract award).

B. University units who provide services/products listed above will have to compete with external providers on the basis of price and service. A University-based service that consistently fails to compete in this environment will gradually be "outsourced," while a service that provides cost and quality advantages will maintain campus support. In order to make this process produce the desired results and to offer our employees the opportunity to compete for available work, campus units/managers are expected to seek bids from campus units as well as from external providers.

C. These "customer rights" apply to either external or internal vendors or service-providers.

In turn, customers' responsibilities:

1. Provide a detailed scope-of-work with specific objectives that must be met, including deadlines.

2. Identify a single contact-person in order to minimize confusion and redundancy, and particularly to minimize misunderstandings about priorities, available funding, and project accountability.

3. Be (or become) knowledgeable about the product/service being procured or project management responsibilities being assumed, especially regarding risk management considerations and regulatory requirements.

4. Provide timely responses to questions and decisions required to keep the project on schedule and within budget.

5. Monitor policy-performance with respect to affirmative action/equal opportunity contracting practices.