OLA#: 016-03L

LEGISLATIVE ANALYST REPORT

TO: Honorable Members of the Board of Supervisors

FROM: Office of the Legislative Analyst

DATE: June 6, 2003

SUBJECT:Employee Suggestion #510: City Messenger Service

EMPLOYEE SUGGESTION

The employee suggestion commented that "departments should use internal resources to move their time sensitive materials, rather than use an expensive courier service... By bringing this service in-house, we could save costly delivery/messenger charges." The respondent further recommended that the City's Reprographics and Mail Department provide messenger services for a fee to departments who need to courier documents, either within divisions or departments or even to private companies. This could provide San Francisco City and County with revenues in excess of $118,000 per year, perhaps a great deal more. Potential revenues, however, might be offset by the costs to hire and train additional employees.

EXECUTIVE SUMMARY

A City and County of San Francisco employee suggested that messenger services be provided in-house to city departments for a fee, in order to avoid excessive expenditures to private couriers. Many departments, including the City Attorney's office and the Department of Public Health, spend vast amounts of money per year using couriers to deliver documents in a rapid timeframe. Perhaps this money could be saved and returned to the city by establishing a competing service in-house.

ANALYSIS & RECOMMENDATIONS

Contracts and expenditures for courier and messenger services among city departments are not uniformly kept or recorded. The Redevelopment Agency reported that its departmental budget for messenger services, with a company called On Target Delivery Services, totaled $71,050 in 2002-03. Other departments do not keep records of this data. RDA solicits three-year contracts with messenger agencies and use one primary vendor at a time for scheduled daily mail pickup, City Hall pickup, deliveries to commissioners, and approximately 20-30 unscheduled pick-ups per week.

Other departments that are heavy users of such services include: the City Attorney's office, the Department of Public Health, Public Works, SF General Hospital, and SF International Airport. The primary vendor for many of these departments, indeed for the City Attorney, is Professional Messenger. The Professional Messenger's Union reports that between 1997 and 2000, revenue from the City and County of San Francisco totaled $267,800. According to the company's current account payable records, a total of 11 active accounts totaled $47,065.54 in messenger expenditures for the past 12 months (see Table I below). This proxy provides a good indication of the degree to which various departments employ messenger services.

Table I. City & County of San Francisco

Services Contracted with Professional Messenger¹

Professional Messenger offers four main categories of service within San Francisco, and rates vary depending on geographic zones:

Regular Bike Service ($5.00-$9.00)

Rush Bike Service ($7.50-$12.00)

Regular Auto Service ($11.00-$16.00)

Rush Auto Service ($14.85-$21.60).

For messenger service,

Any weight over 10 pounds costs $1.00 for each 10 pound increment.

Extra waiting time (at pick-up or delivery) is $30.00 per hour, pro-rated.

Proof of delivery is available on request.

Second stop at the same building costs $3.00.

There is additional charge for incorrect addresses.

A 20% insurance/regulatory surcharge applies.

Bicycles are available 8:00am to 5:00pm Monday through Friday only.

Collection calls outside 415 area are billed to customer.

$3.00 charge is assessed for oversized bicycle deliveries.

The City and County of San Francisco could save and potentially profit by keeping messenger expenses in-house.

By combining the aggregate dollar amount spent by City Departments over the past 12 months with Professional Messenger - approximately $47,000 - with the $71,000 reportedly spent by the Redevelopment Agency with On Target Delivery Services, the city could re-direct approximately $118,000 from private contracting sources to bring this activity in-house.

The Department of Reprographics and Mail could either

individually train city employees, or

hire trained couriers for services such as filing motions or briefs in court.

Important to note are the potential costs to the city associated with establishing a messenger service, including hiring and training new employees. Such costs - salaries and operational expenditures - might offset the potential savings realized by bringing the service in-house. However, the city would be at liberty to set a more flexible fee schedule and avoid future fee increases by private firms in order to meet the needs of city departments.

¹ Data provided by Professional Messenger Accounts Receivable, a division of Professional Courier Systems

² Periods represent one month, but are not necessarily consecutive. Timeframe covered in above data runs from 2001 to May of 2003.