The City of Philadelphia will be terminating its contract with PhillyCarShare and switching to Boston-based ZipCar. The city had been paying PhillyCarShare $35,000 per year to use between 6 and 10 cars each day. The new contract with ZipCar will provide the same service but cost $5,000 less.
The city's competitive bidding process requires the contract to be awarded to whoever can provide the service at the lowest cost. Saving money is always a good thing, but the singular focus on the bottom line seems to miss some important factors. There are a number of reasons why PhillyCarShare might have been a better choice, but none of them could be considered by city officials because they are not financial.
PhillyCarShare and ZipCar are two very different entities. PhillyCarShare is a non-profit organization and ZipCar is a private company. Accordingly, they have very different missions. PhillyCarShare sees itself as part of the broader environmental movement while ZipCar exists to make a profit for investors. That distinction seems important when evaluating the best use of municipal resources. The social impact of using ZipCar or PhillyCarShare never comes into the equation because the bid process is entirely driven by costs.
The most basic argument for choosing PhillyCarShare over ZipCar is that purchasing services from local companies is better than sending public dollars to companies other cities. PhillyCarShare exists to provide car sharing to the Philadelphia-area, while ZipCar is looking to expand to markets across the country. Choosing PhillyCarShare ensures that much of the $35,000 would be returned to the local economy in some way. That is clearly not true of ZipCar. The company is based in Boston and operations in cities across the country.
Another item worth considering is the role that PhillyCarShare plays in encouraging other environmentally-friendly initiatives. For example, the non-profit has been involved in helping get a bike sharing project off the ground in Philadelphia. ZipCar is not going to invest time and resources into these types of things. Again, it comes back to the social mission of a non-profit vs. the profit motivation of a private company. PhillyCarShare invests their revenue into things that are good for Philadelphia.
The bidding process has been praised for being transparent and accountable. The impulse to award contracts to the vendor who offers the service at the lowest cost is understandable. However, the inflexibility means that city government cannot consider other social benefits related to awarding contracts. In the case of PhillyCarShare vs. ZipCar, it's not clear that paying less was the best deal for the city.
Comments (8)
I disagree. Philly Car Share lost the business fair and square. Perhaps if they invested in less glamorous cars (seriously, why does PCS need mini coopers, audis and bmws!) they would be able to beet Zip Car on the price.
I would say that any car share program, including Zip Car, also promotes the same environmental goals as PCS. They help reduce the number of cars in the city. The fact that they're not simultaneously trying to launch a "bike share" doesn't mean that they're heart's not also in the right place. Your piece makes it sound like Zip Car is run greedy money grubbers while everyone at PCS works for free out of the kindness of their own hearts.
Frankly I think PCS wastes money on flashy cars and ubiquitous paid parking spaces. Props to Zip Car for cracking the market that is being handed to the PCS people, whom I'm sure receive a hilarious amount of public funding. Double-props to Zip Car for promoting car sharing on a national scale!
Not-for-profits does not equal no bid contracts!
Posted by Matthew Lewis | June 11, 2008 3:16 PM
haha, I wrote "beet" them on the price
hopefully they won't use a tomato, or it might be considered assault with a deadly weapon
Posted by Matthew Lewis | June 11, 2008 3:20 PM
Agree with Matthew. While I agree that decisions shouldn't always be driven solely by financial considerations, I fail to fully grasp your arguments on PCS vs. ZipCar. Being beholden to their shareholders doesn't preclude private companies from being beneficial to the environment. As far as I can tell, ZipCar provides pretty much the same service as PCS, even if they aren't local (which probably means PCS is more beneficial to the local economy, but not necessarily).
Posted by Goofy | June 11, 2008 5:03 PM
I have you both beat, I'm a member of Zipcar and Philly CarShare. They both have their strengths and weaknesses. Zipcar is a private company with an environmental/activist tilt. Make no mistake, it's private, but they wouldn't do it if they didn't care. Frankly, dealing with them at times feels like a non-profit (ie. disorganized but enthusiastic). I've been incredibly frustrated with Philly CarShare's service and accountability at times, but I do agree that it might be better to keep local dollars, local.
And the argument for the cars? That's a non-starter. Perhaps you don't understand that those are options they've added to attract people to the service and compete with the likes of Zipcar, which company, by the way, has far more "luxury" models than carshare, including BMWs, volvo a4s and the like. It might tweak your sensibilities that they use what you consider flashy cars, but it only puts them on the same footing with private companies for attracting members, and users pay more for the privilege, so the cost is born out by choice. Actually, let's put it this way, isn't choice a very American thing? Philly CarShare is just being really patriotic then, right?
Furthermore, Matthew, why would you make a comment about them getting "a hilarious amount of public funding"? Do you know what they receive? Are you saying they didn't win those contracts fair and square like Zipcar did in Philly's case? Maybe you shouldn't make a comment like that without substantiating it.
I've had my battles with both companies actually, over customer service issues, but I wouldn't trash either of them. All in all, I think Ben Waxman's comments are on point. Unless there are more compelling reasons other than cost, it might be better to keep the contract local. Frankly, Zipcar could just be low-balling to get the contract, it's good PR and it puts pressure on a competitor. You may not be aware of this, but Flexcar is out of business, it was absorbed by Zipcar. I can tell you car rental prices are far lower in Philly than in NYC (where I just moved) and Zipcar has no competition up here, whereas in Philly, you have two large, pretty healthy players. I know NY is more expensive, but that doesn't explain the 4 - 5$/hr differential in even the lowest rates.
Talk amongst yaselves...
Posted by Ed M. | June 12, 2008 9:36 AM
Oops, didn't read Matthew's last paragraph about the public funding. Don't know what that's about.
For the record, I'm a PCS member and have been pretty satisfied, so far. Most of PCS' problems seem to be caused by its members, more than by management, IMO.
I've also been seriously thinking about checking out ZipCar since, although PCS has the closest pod to me, it's always (and I mean _always_) reserved when I try to use it. ZipCar has a couple pods that are at least as close at the next closest PCS pod, so it might be to my benefit to be a member of both (yes, competition/choice is a very good thing).
Posted by Goofy | June 12, 2008 10:02 AM
Car sharing in the United States is still in its infancy period and it will take a lot more capital investment and reinvestment before anyone makes any money.
While Zipcar raises this capital through private channels, PhillyCarShare does it through tax deductible donations and grants.
DVRPC gave a $4 Million TIP grant that to PhillyCarShare over a three year period (2005 through 2007)so they could expand carsharing in the region. PCS reports that in 2006 they had somewhere around $10 million in revenue, of which they were able to reinvest $1 million of that back into they company.
Posted by Writely Wrong | June 12, 2008 6:32 PM
I totally agree with this post but I think it would be helpful to make the case for Philly Carshare not in terms of financial vs non-financial benefits for the City, but rather in terms of short-term vs long-term financial benefits.
Awarding the contract to Zip Car provides a short-term financial benefit for the city: the payoff comes at the end of the budgetary year, when the $5,000 they saved helps offset other public expenses.
Awarding the contract to Philly Carshare, it could be argued, would have provided the city with a long term financial benefit: by supporting a local business (albeit a non-profit one), the city invests in jobs and infrastructure over several decades. Same goes for supporting a business whose mandate is provide a transportation alternative to Philly residents that is environmentally clean, relatively inexpensive, and reduces traffic and parking congestion.
As a taxpayer in Philadelphia, I would like to see more long-term in city policy. Therefore I would have preferred if the city gave the contract to Carshare.
Posted by Anonymous | June 16, 2008 3:10 PM
Just occurred to me:
Does PCS pay business taxes to the city, as a non-profit? Does ZipCar?
Posted by Goofy | June 16, 2008 4:38 PM