IT company in LA gets $1.23M city contract


City News Service

The City Council on Monday authorized a $1.23 million contract with a private company based in the Los Angeles area to take over information technology support services from the city-controlled San Diego Data Processing Corp.

The City Council voted 7-1 to approve the one-year contract with Gardena-based En Pointe Technologies. The contract includes an option for two, two-year extensions that would need City Council approval.

At the start of a more than three-hour hearing on the contract, Mayor Jerry Sanders testified that outsourcing help desk and desktop support services from Data Processing Corp. will save the city about $1 million annually.

Sanders said plans are under way to bid out to private companies the rest of the services now provided by Data Processing Corp., an agency he described as a “bloated bureaucracy that for decades has overcharged this city millions of dollars.”

Councilwoman Sherri Lightner cast the lone dissenting vote.

Lightner said she was “not comfortable” with the selection process or the projected savings.

“I recognize the need to save money to preserve city services and address our structural deficit, but in order to do that we need to follow a clear, transparent RFP (request for proposal) process where all bidders are evaluated fairly and on an even playing field,” Lightner told her colleagues.

She cited transition costs that city staff said could run $400,000 to $600,000 in the first year.

Data Processing Corp. has managed San Diego’s information technology services for the past three decades. The quasi-city agency employs more than 250 people, about 26 of whom will likely lose their jobs when the contract goes to En Pointe.

The agency, which is charged with maintaining thousands of city computers, telephones, providing technical support and operating San Diego’s Web site, has an annual budget of about $42 million.

The city now pays Data Processing Corp. about $2.32 million for help desk and desktop support services. The agency was one of nine entities that bid on the contract. It came in third with a bid of $1.8 million.

The City Council’s overwhelming support for the contract with En Pointe was unexpected.

The Rules, Open Government and Intergovernmental Relations Committee agreed last month to forward the contract to the full City Council for consideration, but there was little support for the idea. At the time, City Council President Ben Hueso said the work should go to Data Processing Corp. Council members Donna Frye and Todd Gloria also expressed reservations.

They agreed to approve the contract Monday only after assurances were made that any extensions would require City Council approval, that there would be quarterly progress reports and that a committee hearing will be held before any future outside contracts are considered for services now performed by Data Processing Corp.

During Monday’s hearing, dozens of Data Processing Corp. employees pleaded for their jobs.

“In most outsourcing instances, the employees of the company which is being outsourced have an opportunity to become employed by these companies,” Linda Berns, a longtime Data Processing Corp. employee told the council. “This is not the case here since these jobs are being moved out of San Diego.”

“There was absolutely no consideration for the current employees,” she testified. “We will be dismissed.”

Others said they support the contract with En Pointe, arguing they will get better service.

“he help desk run by San Diego Data Processing Corp. has not been able to provide our crews with the level of service that meet our needs,” San Diego Fire-Rescue Department Assistant Chief Brian Fennessy told the City Council.

The outsourcing of Data Processing Corp. is seen as a bellwether for San Diego’s voter-approved managed competition program, which allows private companies to compete for work now performed by city employees.

Because Data Processing Corp. is technically a separate entity from the city, and its employees are not part of any municipal union, it is not covered under the managed competition program, but it is the first municipal entity in San Diego that the mayor’s office has sought to outsource. Managed competition was approved by voters in 2006, but its implementation has been stalled by San Diego’s employee labor unions.