City Hall touts $13 mil. in consultant’s savings
BY FRAN SPIELMAN City Hall Reporter email@example.com July 2, 2012 12:06AM
9-18-02...O'Hare Airport...An airplane taxis into the terminal behind cars parked in one of the long term parking lots at O'Hare airport. Cars are being"booted" in these lots while their owners are out of town. (Keith Hale/Sun-Times)
Updated: August 3, 2012 6:10AM
A consulting company hired by Mayor Rahm Emanuel last summer to consolidate and overhaul city contracts has already saved the city $13.3 million, City Hall contends.
Emanuel promised that Accenture would wring at least $25 million in savings out of $500 million in purchases. The company is more than halfway home in delivering on that promise, officials said.
The savings was expected to come from renegotiating some contracts, rebidding others and combining purchases by individual city departments to get a bulk price — and that is precisely what happened.
Of the $6.3 million in savings cited by City Hall as examples of Accenture’s efforts, $5 million comes from contracts awarded by the city to manage public parking and ground transportation at O’Hare Airport.
For years, the parking contract has been held by Standard Parking.
It’s now been re-bid under terms more favorable to Chicago taxpayers. Changes made include lower profit margins, reduced internal management and fewer employees at all levels of the parking operation — from security and maintenance to payment booths. A winning bidder has been chosen, but City Hall refused to identify the company until the contract is executed.
“The things we’ve cut are not particularly value-added,” said a Department of Procurement Services official, who asked to remain anonymous.
“They use horses for mounted security. Why not use pickup trucks that don’t cost as much? Is wthere a difference in service? No. It’s just a less expensive way to do something that needs to be done.”
Another $900,000 in savings identified by Accenture came out of the city’s considerable costs for office supplies.
Instead of buying brand-name pens, for example, the city is now purchasing generic brands and private labels. And instead of allowing employees to order office supplies from an unlimited catalogue, Procurement Services is restricting those items.
Empowered by an ordinance approved by the City Council last week, the city has also negotiated caps on future price increases for such volatile commodities as office paper.
Telecommunications costs have been reduced by more than $400,000. In some cases, Accenture ordered the shut-off of phones the city was using seasonally, but paying for all year.
The more the city saves, the more money Accenture makes. The contract calls for Accenture to review $500 million in contracts and get 10 percent of the first $70 million in savings, with a smaller percentage after that.
“Some of it will be better coordination. Some of it will be in better negotiations with who we’re buying from,” Emanuel told reporters last summer.
“Some will be in bulk purchasing that we’re seeing already between the city and county. They buy salt. We buy salt. They buy natural gas. We buy natural gas. If you’re buying in bigger quantities, you can find savings. . . . So, it’s not gonna be in one way. It’s gonna be in multiple ways, but by being very aggressive in the contracting.”
City Hall purchases nearly $2 billion in goods and services each year.
After choosing Accenture, Emanuel bragged that the company had saved $140 million for the state of Pennsylvania, $30 million for the state of Ohio and $86 million for New York City’s Department of Education.
Some of the savings in Pennsylvania came after the company found that a hospital in Allentown was paying $23.20 for a case of ketchup, while a prison in another part of the state was paying just $12.66. They were able to get the lower price for the entire state by centralizing the contract, officials said.
“It was high time that Chicago used a Chicago-based company to find those savings for its taxpayers,” the mayor said then.
After being chosen to overhaul city contracts, Accenture Financial Services announced that it would add 500 jobs to Chicago.
Emanuel has promised that, if Accenture delivers on its savings promise to the city, it would get another chunk of city contracts to review.