This post originally appeared on Stephen Goldsmith's Better Faster Cheaper blog on Governing.com.
Not quite a decade ago, then-New York Mayor Michael Bloomberg put forth a shared-services plan whose goal was to drive efficiency up and costs down among city agencies engaged in similar activities. One of those areas was fleet management, where city officials recognized a need to address a problem that had been growing for decades.
The city's fleet had expanded to more than 25,000 cars, trucks, plows and other vehicles -- the largest municipal fleet in the country -- and the city struggled to coordinate, operate and maintain all of them adequately. Responsibility was distributed across multiple city agencies. As a result, resources such as fueling stations and garage spaces were often underutilized or downright redundant. Officials struggled to understand costs and performance issues because each agency used inconsistent performance metrics to track their operations. As of 2012, fleet operations cost more than $600 million annually, a number that the city was eager to bring down.
The problem wasn't how big the fleet was but fragmented management, as well as overlapping and inconsistent data, infrastructure and practices. In fact, the size of the fleet would be a virtue to reformers -- even small efficiency improvements spread across such a large fleet would amount to significant wins. Accordingly, the city decided to focus on its existing resources and how they complemented one another, and in April 2012 Bloomberg created a new interagency management group dubbed the Fleet Federation.
Getting the Fleet Federation off the ground was far from easy. It was a near-herculean effort because each agency was loyal to its own fleet manager, suspicious of centralization and convinced that its management approach was necessarily unique. Even with a direct order from Bloomberg and support from his successor, Mayor Bill de Blasio, the consolidation required a highly focused and sustained effort.
First, a working group was established that included not only the fleet managers from each of the major departments but also senior City Hall leadership and key operations officials. From its inception, the Fleet Federation benefited from the Police Department's leading work using data to improve fleet operations, and the analytic effort was eventually supported by a central operations group not beholden to any one agency. According to Keith Kerman, who became chief fleet officer and deputy commissioner at the Department of Citywide Administrative Services, the group began with an assessment of services provided by each agency's fleet as well as the relevant internal core services, such as management and procurement, that often determine if agencies are efficient with their spending.
Second, City Hall needed to communicate that consolidation efforts like this one are more than just cost-cutting exercises. If the city had presented the Fleet Federation as a simple down-sizing, agencies would have fought against it tooth and nail, relying on their ability to outlast and exhaust. Instead, talking points and goals focused on the desire to improve, modernize and have as many shared wins as possible.
Of course, leadership always matters. Agencies might not like to admit it, but they would often rather be a little costlier and less efficient if that means they can have complete control over their fleets. Ultimately, it's up to city leadership to do the necessary wrangling and coaxing to get all their ducks in a row. The issue of which agency would control what parts of the fleet was put off until the working committee could dig into the data.
The city is now seeing the benefits in terms of costs, reduction of downtime and increased vehicle reliability. The consolidation effort reduced the number of vehicle repair facilities from 47 to 37 and formed space sharing agreements among garages. Kerman retains the authority to coordinate systems and approaches across all garages through his involvement with city procurement and budget officials.
The consolidation of the work of so many agencies allowed the city to not only reduce redundancy and waste but to also think more strategically about how best to organize available resources. The police department, for example, has the most light duty vehicles, so it now services similar vehicles from other agencies, including transportation and environmental protection, thus better coordinating fleet repair assets.
The effort resulted in estimated combined total savings over its first four years of $368 million, which included $82 million in fleet costs, $187 million in capital costs and $99 million in operating expenses. This January, the city extended its fleet shared services initiative by welcoming the New York City Housing Authority's nearly 1,000-vehicle fleet into its fold.
What made the fleet consolidation successful, Kerman noted, "was that it wasn't just a cost-cutting initiative, but was done with two goals. In the first place, we reduce costs in non-core support areas like garage buildings, fuel, auto parts and auctions. Secondly, we invested in core operations: in replacement and upgrade of vehicles and hiring of city mechanics. That dual focus helped to make this change more palatable so that others were willing to work with us."
Nearly a decade after the ideas behind the Fleet Federation began to take shape and in the second term of a new mayoral administration, the project is still in place and moving forward on sustainability, safety and vehicle tracking. It is a lesson in the art of the practical and of a city making the best use of the resources it has.