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Wednesday, Aug. 20, 2014

Exclusive: Milwaukee County Zoo Food, Catering and Retail Concessions May Be Privatized

No public warning on fast-tracked bid requests

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With no public discussion, the Milwaukee County Zoo offered a request for proposals (RFP) to operate and manage its lucrative food service, catering and retail operations from interested private vendors.

The timeline is tight.

The RFPs were sent out on July 18, on-site visits were scheduled for July 30 and 31, and bids were due last Friday, Aug. 15.

The five-year contract would begin Jan. 1, 2015, if the county decides to move forward with privatizing these operations, which generated $5.8 million in revenue in 2013.

But you’d have to be an insider to know about this fast-tracked privatization plan.

The matter never came before the Milwaukee County Board of Supervisors, nor was it included in last year’s budget.

Milwaukee County Executive Chris Abele doesn’t appear to have talked about it in public, either, and his aides wouldn’t respond to the Shepherd’s request to comment for this article. [UPDATE: The county responded long after the Shepherd's deadline. See their response below.]

But the RFP is mentioned in the zoo’s 2015 budget request, drafted this summer, saying that the department is “in the process of evaluating whether a concessionaire for catering, novelty sales and concessions is more financially beneficial than running the operations in house.”

It continues, “If the analysis shows that the shift to an outside vendor is more cost effective, the Zoo will recommend the concessionaire initiative be included in the County Executive’s Budget.”

The county executive officially presents his budget to the board on Oct. 1, giving the zoo just a month and a half to vet the proposals and vendors and send its recommendation to Abele.

Supervisor Gerry Broderick, the chair of the Parks, Energy and Environment Committee, said he hadn’t heard about the RFP and that his committee had not discussed privatizing these operations with zoo representatives or the Abele administration.

The Abele-backed Act 14, which stripped the board of much of its oversight of contracts, only allows the board to review contracts worth more than $300,000 once Abele decides to award a contract to a vendor. This RFP would seem to be worth far more than that, so it would appear that supervisors could review the final contract, if one is awarded.

“Now that the state Legislature has neutered us, it’s an interesting question as to what we get to review on behalf of the people,” Broderick told the Shepherd. “A lot of us are still struggling to understand where, exactly, the lines are being drawn here. And that’s being taken advantage of [by the Abele administration], I suspect.”

In 2010, when Scott Walker was county executive, the Zoo had hired an outside consultant to look at its long-term finances, which critics warned was simply paving the way to privatizing it. In his proposed 2011 budget, Walker had even earmarked $40,000 for legal expenses related to privatizing the zoo by Oct. 1, 2011. But the board stripped that out of his budget and Walker became governor in 2011.

The zoo and Walker’s successor, Abele, seem to be intent on privatizing at least a part of the zoo’s operations as they work toward finishing Walker’s agenda at the county.

AFSCME District Council 48 Executive Director Boyd McCamish slammed the county’s attempt to sell off a cash-generating operation that’s owned and overseen by the public.

“This is the looting of the public trust,” McCamish told the Shepherd. “This is a public asset that the citizens of this county have paid for and it’s going to be given away to some private company to make money off of. That’s what it’s about. We know we’ve got a 25-year sample of what happens in privatization schemes like this. And the public always loses. The details are always different but the outcome is always the same.”

 

Little Is Said About Workers

McCamish, whose AFSCME District Council 48 represents many of the affected zoo employees, got a heads-up memo from Zoo Director Chuck Wikenhauser dated July 14. The memo states that it’s “your official notice of our contemplation of this outsourcing initiative.”

McCamish told the Shepherd he hadn’t been told the RFP was being offered.

“Sometimes they’ll say, ‘We’re just thinking about it’ and sometimes they’ll have something cooked up,” McCamish said. “Sounds like they had something cooked up on this one.”

Little is said about the affected workers in the RFP, but it appears that they will become the employees of the operator, not the county.

“The operator shall provide direct compensation and benefits to, and assume all responsibilities for, hiring, training, scheduling and supervising all employed personnel,” the RFP states.

Three top positions—those of concessions and merchandise coordinator, merchandise sales coordinator and assistant concessions coordinator—are “critical to the ongoing success” of the zoo, but the zoo would “entertain creative solutions to managing these positions.”

The operator would have to abide by the county’s minimum wage ordinance, but McCamish said that few zoo employees would be affected by it.

McCamish called the zoo’s attitude toward its employees in the RFP “an afterthought.”

 

The Financial Details

While there are few details about the affected workers, the RFP includes more financial information for potential operators.

The zoo appears to be looking for a financial package in which it would receive a percentage of gross sales with a guaranteed minimum annual payment. But that minimum annual payment could be adjusted downward if attendance falls below 1.2 million visitors.

According to the zoo’s 2015 budget proposal, 1.23 million individuals visited the zoo in 2013, and it’s projected to attract 1.3 million visitors this year. Attendance is shaky at the moment, according to the zoo’s budget documents, because of the impact of the Zoo Interchange construction just outside its doors.

The vendor would also need to make any capital investments in the food and retail facilities as well.

This RFP is vastly different than the one Abele had issued last year to find a new operator of the Milwaukee County Transit System. In that RFP, Abele had somewhat unusually guaranteed the vendor a set amount of tax levy—$164 million annually—for operations.

In this RFP, the zoo is selling off operations to the highest bidder.

The zoo RFP doesn’t indicate who, exactly, would make the decision about the winning bid, simply “the Zoo and its Selection Committee.”

If the zoo decides to go ahead with the private operator, it will meet with the highest-rated vendors for an on-site presentation, the RFP states.  

Again, that contrasts Abele’s approach to the transit RFP. The department announced its intent to award the $492 million, three-year contract to MV Transportation without meeting with any of that company’s representatives or, apparently, calling or verifying any of its references.

When the losing bidders argued that Abele’s transit RFP process was flawed, a review panel made up of supervisors agreed and scuttled the deal. No new RFP has been issued.


UPDATE: Here's the response from Vera Westphal, deputy director of the Milwaukee County Zoo:

"The Zoo is always looking for ways to increase the value we provide to our customers. For this reason we are always looking at our operations and trying to identify ways to improve quality and increase variety of amenities, as well as identify ways to decrease costs and/or increase revenues. A focus on sustainability is critical to make sure we can continue to attract people who consider the zoo a prime regional attraction.

One of the best ways we have to compare the efficiency of our operations to what is best possible practice is through an RFP process. The RFP released for zoo concessions is a way for us to explore what vendors can offer, in terms of more and better service at a lower price.

As you'll be aware, the Zoo contracts with outside vendors for various services regularly.​  You ask, 'Why would the county want to lose this revenue stream?'  We don't, obviously.  We want to explore increasing it so we can continue to improve the zoo.  Why would anyone want to diminish​ revenue to the county?  If we thought that was a possible outcome of any proposal, we would actively oppose it.

The RFP process consists of a panel of experts who independently review all proposals and make a decision based on a predetermined set of criteria, as defined in the RFP. If, through the process, the panel identifies a vendor that can offer more and better service at a lower price – that proposal would proceed to the County Board, where it would receive a public hearing."