In new White Paper, DC 37 Executive Director Lillian Roberts charges that School Construction Authority could eliminate more than $200 million of overspending by replacing contractors with public employees.

By GREGORY N. HEIRES

The city could reduce its school construction costs by $200 million in fiscal year 2003 and avoid substantial waste in the future by eliminating profit-driven consultants, according to a new DC 37 white paper.

“Building Better Schools for Less,” (PDF format*) released at a news conference on Feb. 19, concludes that consultants significantly drive up the price of designing school projects because of excessive profits, procurement costs, flaws in drawings and oversight expenses.

And while schools designed by consultants cost $430 per square foot to build, designs from civil service architects and engineers are constructed for only $340 per square foot, according to the report. “Our report shows tremendous financial waste in cost overruns due to inferior designs, excessive profits and cronyism,” DC 37 Executive Director Lillian Roberts said. The union produced the report as the independent School Construction Authority prepared to lay off 49 members in late February. Civil Service Technical Guild Local 375 represents all but one of the downsizing victims.

“It is outrageous that the city is moving forward with layoffs when the SCA hasn’t even done a cost-benefit analysis of its decision to decimate its in-house staff,” said Local 375 President Claude Fort. “This action will cost more in the long run by forcing the city to rely more on consultants, whose work is more expensive,” said Zygmunt (Ziggy) Jagiello, president of Local 375’s SCA Chapter 5. The mass layoffs would cripple the oversight role of the SCA, whose employees monitor consultants and sometimes must take over contracted-out projects because of shoddy work and cost overruns, Mr. Jagiello said.

All told, the city expects to eliminate up to 600 jobs as the Dept. of Education merges the functions of its Division of School Facilities with the SCA. It plans to cut 150 positions at the division and 450 SCA jobs.
Among the major findings of the report:

• In fiscal year 2001, changes in capital improvement projects done by private consultants amounted to 16.6 percent of the original cost. By contrast, the changes in projects done by in-house civil servants amounted to 7 percent. Thus, the consultants’ cost for redoing work exceeded that of civil servants by $30.6 million.
• In projects contracted out from January to October 2002, design errors and omissions by consultants that exceeded the original contract cost by at least 5 percent forced the city to pay an extra $55 million. The National Society of Professional Engineers says the acceptable range of design error and omission rates should be 2 to 3 percent of the construction cost. The contractors’ rate was 10.4 percent, while the in-house staff’s rate was 2.1 percent of the original contract amount, totaling only $11.5 million.
• The Dept. of Education could save $1 million by assigning 82 school renovation projects that require a certificate of occupancy to the in-house staff at the Division of School Facilities. The department assigns that work to contractors, which typically charge $20,000 per certificate. The in-house staff has done that work for $7,500 per certificate.
  

The new DC 37 White Paper, prepared by Council Rep Henry A. Garrido, estimates that the city could save $834 million over five years by assigning a greater portion of design work to in-house staff. The estimate is based on assigning 100 percent of the work to civil servants, rather than the current 40 percent, the minimum required by the law that created SCA.

DC 37 released its first white paper in spring 2002, showing that the city could save several hundred million by eliminating waste and consultants. The second white paper examined the Dept. of Education’s contracts for food, computer, accounting and other services, pointing out $245 million in possible savings in fiscal year 2003.