NYS
agencies waste millions on IT consultants
When private profits trump public good
By SHERRY HALBROOK
If the state is serious about stopping wasteful spending and getting more value
for taxpayers’ dollars, IT would be an excellent place to start.
PEF has just completed an analysis that reveals at least $27 million has been
wasted by the state Department of Taxation and Finance (T&F) since 2000 on
various information technology (IT) projects through its use of costly private
contractors.
A few months ago, PEF studied the use of IT consultants by the state Office of
Mental Retardation and Developmental Disabilities (OMRDD) and found that agency,
too, was wasting a lot of money hiring consultants to do work that could be done
just as well and for far less expense by its own employees.
PEF isn’t the only one to draw this conclusion. According to an extensive study
last year by the Fiscal Policy Institute, the state could save at least $172
million annually if it pulled back just half of its IT contracts and let state
employees do the work.
On the taxpayers’ tab
“You might think the department charged with collecting the state’s taxes and
managing its finances would be especially keen on getting maximum bang for the
taxpayers’ bucks,” said PEF President Roger Benson. “Unfortunately, that’s not
what the record shows.”
Since 2000, T&F has spent more than $86 million on IT contracts for work that
could have been performed by state employees at a cost of $58 million, according
to the study by PEF’s Civil Service Enforcement Department.
An examination of numerous T&F contracts with three different contractors, shows
the state is spending at least 53 percent more for private contractors than if
it used in-house employees.
The average hourly earning for the typical IT private contractor at the
department is $77.12, compared with $50.43 for the average state IT worker. And
that includes benefits.
The disparity is even worse when New York imports IT consultants from other
states.
Such a deal
Many state agencies have wasted millions of tax dollars on IT consultants. PEF
found another classic example when it took a look at OMRDD’s contract with
Currier/McCabe Associates (CMA).
According to news reports, since 1997, CMA has received payments in excess of
$55 million for its contracts with New York State.
The pre-approved “not-to-exceed” hourly rates for the IT titles under the CMA
contract allow the contractor to bill between $69 and $270 for the services of
an entry-level programmer analyst, which amounts to $136,000 to $526,000
annually for a consultant with less than two years experience.
“They can charge the state more than half a million dollars in one year for a
single entry-level programmer analyst!” Benson said. “I find that stunning.”
OMRDD said it found it necessary to hire outside consultant staff to,
“…supplement state staff working on mission-critical development projects.” And,
“…OMRDD has not been able to hire state staff to work on this project.”
State agencies frequently use the state hiring freeze to justify giving their
work to private contractors.
OMRDD said it was “unable to hire state staff to work on the project,” yet it
was able to hire consultants that cost 43 percent to 97 percent more than the
highest paid state IT professional. When you compare the average maximum cost of
the four state titles to that of the consultants, the consultants were paid 85
percent to 156 percent more.
CMA did not complete the project on time, so, OMRDD extended the contract.
“In the twisted logic used for privatization of public services,” Benson said,
“this extension was portrayed as cost-effective by OMRDD, which said it
‘leveraged’ the knowledge and experience gained on the project with no increase
in the consultant’s hourly rates.
“OMRDD paid almost $1 million dollars to hire two consultants to work as
supplemental help for 18 months and says it was a bargain.”
Is your state agency wasting money on private consultants/ contractors? If it
is, get the facts and share them with PEF. Contact the PEF Department of Civil
Service Enforcement at (518) 785-1900 or (800) 342-4306, ext. 280.
So far, PEF and the NYS Fiscal Policy Institute have identified more than $500
million wasted annually by the state on “deals” with private contractors for
work that could be done better and for substantially less by state employees.
The Communicator April 2006
Features
Agencies wastes $ on
consultants
Members
work to stop bad budget
DOT members
meet lawmakers
PEF gets
support in stopping cuts
DOT members
tell all at hearing
New program
addresses grievances
Battle for
accountability heats up
Departments
President's Message
You Said It
Retirees In Action
Membership Benefits &Travel
Union Matters
PEF political
endorsements...
Probation
officers want fairness
Parole
officers caseload is murder
Nurses must mobilize
to pass...
Performance
award checks coming
Progress: Stop Workplace Violence
Promotion Test
Battery update
PS&T
Contract Survey
2006
Conv. Delegate Information
State must
re-bid Rx contract
New web site
shows benefits
Other Links
Professional Directory
Members' Classified
Member Communicator Feedback
Prefer The Online Edition?
How To Advertise Here
The Communicator Staff
Questions on this
site?
Email the
Webmaster