I have received a tremendous amount of feedback from
public sector fleet managers to the Market Trends column
appearing in the August 2002 issue on the need to create a
partnership with fleet service providers. You will be able to
read many of these comments in the letters to the editor
page over the next several issues.
Traditionally, public fleet operations have tended to be
undercapitalized and understaffed. As a consequence, public
fleet managers stress that they are already outsourcing
or subletting, some as much as a third of their fleet work. In
addition, declining tax revenues are prompting additional
pressures to consider outsourcing as many government
fleet managers report that their budgets are being reduced.
They are looking for alternate ways to maintain the same
level or improved levels of service within the confines of a
flat or reduced budget. A number of public fleet and equipment
managers report that they have been challenged by
their upper administration to consider outsourcing as a way
to reduce costs.
In addition to declining tax revenues, other factors are increasing
the level of subletting. For instance, more vehicle
maintenance work is being outsourced as a result of the increased
complexity of today’s vehicles, the shortage of
qualified technicians, and the stringent environmental requirements
to operate a full-service maintenance facility.
Some fleet managers who have elected to sublet this work
say that it allows them to concentrate on their core goals,
such as providing superior customer service, improved vehicle
utilization, vehicle procurement, and maintain compliance
with various federal environmental regulations. These
are the same fleet managers who are confident about the
performance of their fleet operation and see themselves
more than capable of competing with private sector companies
on a competitive bid basis. As one public fleet manager
said, his philosophy is to do in-house what he does most
economically to keep his internal customers satisfied and
outsource those services that can be better accomplished by
specialists. Also, affirmative action requirements influence
the procurement process for public sector fleets. Many government
agencies are required to offer Small & Minority
Vendor programs, which favors outsourcing.
Stumbling Blocks to Doing Business
In the past, several fleet management companies made
strategic decisions to pursue government fleets, creating entire
departments to achieve this objective, only to see these efforts
fail and now view any further use of resources, strategic focus,
or dollars to be a questionable investment.
However, as one consultant indicated, there may never be a
better time than now for fleet service providers to market their
services to the public sector. He argues that some government
agencies are complacent when their coffers are full and not very
receptive to outsourcing proposals. However, with government
budgets contracting due to declining tax revenues, public fleets
are looking anew at propositions to sublet certain work.
Despite this, there still exist a number of stumbling blocks
for fleet service providers.
From the public fleet manager perspective, there is a perceived
loss of control and accountability for services that are no
longer managed in-house. Many public sector fleets are also
maintained by a union force, which lobbies vigorously, and usually
successfully, against privatization attempts.
Some public fleet managers rightly observe that many fleet
service providers often regard them as clients of last resort. They
point out that the proportion of solicitations received from fleet
service providers tend to increase when economic times are bad
and decrease when the economy improves.
Another stumbling block is the needless antagonism that is
created when private sector companies attempt to bypass the
fleet manager in soliciting work to be sublet to them. Universally,
public sector fleet managers say that a service provider
would be more successful by establishing a relationship with the
fleet manager and showing how they can help them.
Looking to the Future
Despite these stumbling blocks (and the others discussed in
the August issue), many public sector fleet managers say that
they represent a receptive market for the fleet services offered
by private sector companies.
In the long run, a partnership between public fleets and fleet
service providers can be a win-win situation for everyone.
Let me know what you think.
Originally posted on Automotive Fleet