Public Employee Press

Cities and states look for savings by renegotiating contracts with consultants

"The American people's money must be spent to advance their priorities, not to line the pockets of contractors," said President Barack Obama, as he ordered new guidelines last year to bring federal contracting under control.

"We will stop outsourcing services that should be performed by the government," he said, pointing out that spending on private contracts doubled to more than $500 billion a year under former President Bush.

The Washington Post recently reported that a highway design firm charged the public for lavish perks, exorbitant executive pay and other unallowable expenses to the tune of $73 million. A report from the U.S. Dept. of Transportation showed contractors billing the government for sporting events, luxury cars and golf shirts.

"With the nation's economy in tatters we cannot afford the fraud and abuse that this report indicates is rampant in contracting out essential government services," said Gerald W. McEntee, president of DC 37's national union, AFSCME.

With the deepest recession since the 1930s shrinking their tax revenue, some cities and states are now beginning to join Washington in taking a closer look at contracting out. They are finding it wanting as public policy and overpriced as fiscal strategy. As they cut jobs and services, they are demanding that contractors bear a fair share of the pain, just as DC 37 has done in New York City.

• Mayor Richard M. Daley announced earlier this year that Chicago would reevaluate its outside contracts and cut them by 10 percent to save up to $13 million. "I've made it a priority to improve the way we manage government to protect our taxpayers," Daley said.
• The state of Florida has saved $420 million by renegotiating contracts with suppliers eager to keep their business with the state government.
• AFSCME Council 24 in Wisconsin convinced legislators and Gov. Jim Doyle to enact a law requiring state agencies to do a cost-benefit analyses before contracting out any work. "The idea that outsourcing is cheaper is a fallacy," said Ken Weaver, who chairs the council's contracting-out committee.
• In Massachusetts, one of the biggest items in the state budget is snowplowing payments to a patchwork of private contractors. After a study, the state decided to do the work in-house, saving millions of dollars a year.

— Alfredo Alvarado