By LILLIAN ROBERTS
Executive Director
District Council 37, AFSCME

Recent developments on the national economic scene have shed light on how New York City can deal with its contracting out scandal. The federal Securities and Exchange Commission investigated Goldman Sachs — Wall Street’s most powerful investment bankers — and filed fraud charges against the firm for selling investments that were designed to fail, just like subprime mortgages.

Greedy, risky financial practices like these inflated the housing bubble and then burst it, collapsed the financial sector and tanked the economy. Millions of families have been thrown out of their homes, millions of workers are unemployed, and states and cities are slashing education, health care and jobs.

President Barack Obama spoke here in late April as a champion of change. He told the bankers and brokers of Wall Street that the working people of America deserve tough regulations to prevent another financial crisis. And he urged the Republican obstructionists trying to block reform to back down “in the best interests of the country.”

With New York City facing a severe budget crisis, we need an investigation of our own and we need new regulations of our own. We deserve to know how a city administration that received federal bailout funds can continue to hand out over $9 billion a year to private contractors while it cuts services, increases the burden on taxpayers and eliminates thousands of city workers by attrition and layoffs.

City Council Contracts Committee Chair Letitia James has already demanded a criminal investigation of one contract, the CityTime timekeeping system, where the price has soared from the original $68 million to an astounding $722 million and 40 consultants get over $500,000 a year apiece.

We have exposed the vast overspending in contracting out, but the administration has taken no action. Now the public deserves tough regulations. In February 2009, DC 37 issued “Massive Waste at a Time of Need,” a White Paper that detailed $130 million of overspending in just 10 contracts. We asked the city to examine all 18,000 outside contracts for work that city employees could do more efficiently at lower cost.

One year later, the recession has cut revenue and driven the city’s human needs to record levels, but no such study has been done. Instead of providing more workers to cope with the huge lines at city Food Stamp centers, for example, Mayor Bloomberg is raising contracting-out from $9.2 billion annually to $9.5 billion.

We kept investigating, and it makes me angry to see that the waste is growing. The city is now paying an average of $350,000 a year to more than 1,500 consultants for work that city employees do for $140,000 (including the cost of benefits and pensions).

But there are also examples of government units saving millions of dollars without cutting services or throwing dedicated employees into the streets. Finance Commissioner David Frankel announced that his agency will save $5.9 million next year by replacing 29 computer consultants with full-time staff. And New York State will save $15 million by shifting 500 information technology positions from consultants to public employees. A recent executive order requires state agencies to perform cost-benefit analyses before entering into professional, technical or personnel services contracts.

To end the waste and focus scarce funds on human needs, the city needs to emulate these examples in tough new regulations on contracting out. The following good government guidelines would save taxpayers’ money and provide jobs in communities citywide through the civil service system.

These are reasonable proposals, and we deserve action now to end the city’s disgraceful waste of our money at a time of great need.