Wasteful Contractors

I've been seeing DC 37's subway ads about wasteful City spending on private contractors and consultants recently and wanted to find out more about it. So I looked at the municipal union’s White Paper, "Massive Waste at a Time of Need," which is available on their website.
 
Its president Lillian Roberts and DC 37 expose a troubling problem in our city’s expenditures:  Since 2005, spending on outside contractors has jumped from $6.7 billion to $9.2 billion – a 36% percent increase. 
 
This means that instead of giving work to city employees who have passed civil service exams and background checks, we are outsourcing jobs to contractors who are often both more expensive and not accountable to the public interest. Also, we are discouraging people from entering the city’s workforce by blocking many city workers from promotions and hurting morale.
 
Many of these contracts are done without a bidding process, meaning that that we cannot know if the City got the best deal for it could have.  For example, as Comptroller William Thompson pointed out, over $300 million in no-bid contracts have been awarded by the Department of Education alone since Mayor Bloomberg took office.  Not surprisingly, in 2007 and 2008 one in five contracts awarded by the Department of Education exceeded the maximum amount in the contract by 25% or more; in 2009, more than a fourth of these contracts exceeded that percentage.
 
While many such contracts can be necessary to a well functioning and efficient government -- say, providing a specialized service that city workers probably cannot -- we shouldn't give in to the notion that private invariably equals better. Indeed, the private sector is often less efficient than the public sector, and the statistics on the DOE contracts bear this out.
 
DC 37’s paper is not just complaining.  It proposes $130 million in savings over eight city agencies simply by cutting down on hiring outside consultants and contractors, and instead letting city employees trained for those tasks force do the work.  An example of savings they found is the Department of Health and Mental Hygiene, where the City pays contractors to provide nurses for children.  By hiring DC 37 nurses to do the work in-house, the City could save about $8.8 million, due to lower hourly costs and savings in the fees to do background checks and fingerprinting by the contracted nurses.   
 
In addition, the school food delivery process that is contracted out to vendors has been marred by cost overruns and poor service for years, partly due to minimal financial incentives on the part of vendors to provide food paid for and warehoused by the USDA.  The paper proposes hiring civil servants to deliver donated frozen goods to schools, saving the city about $4 million.
 
New York State takes a different approach to outside contracting.  Under a 2008 executive order, a Task Force was created to monitor outside contracting and to insist that the State can only enter into a contract if it is necessary for public health or safety or if it is more efficient or cheaper than using state employees.  The next Public Advocate should work with City Hall to implement a similar program here.