PEF Identifies Big Savings from Reducing Consultants

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The New York State Public Employees Federation has released new research that identifies savings of $300 million annually if the state takes reasonable steps to reduce the excessive use of consultants.

The state spent $2.8 billion on consultant services in fiscal year 2010-11. The majority of the money was spent on information technology and engineering services for work that cost an average of 70 percent more than what it costs to have state employees do the same work, including the cost of state employee benefits.

"Too often, state agencies rely on costly contractors for services due to the lack of sufficient in-house staff, even though in-house staff is usually the most cost effective solution. The situation has been exacerbated by years of attrition and hiring freezes," says PEF president Ken Brynien, who is an AFT vice president.

"The best example of the state's wasteful spending on engineering consultants is the bridge inspection program," Brynien says. "State and federal laws require the inspections at least once every two years. The Department of Transportation complies with these requirements by using a blend of in-house staff and consultants, even though their own studies show consultant inspectors cost up to 50 percent more than state employee inspectors."

The average hourly rate for an IT consultant is 77 percent more than the average state employee hourly rate.

"We have long acknowledged there is a need for private consultants on short-term projects," Brynien adds. "But on continuing work, such as bridge inspections and IT services, the state is needlessly wasting millions of taxpayer dollars. The governor has announced several efforts to identify and reduce state waste through mergers and consolidations. The potential benefits of reducing the state's reliance on consultants and contractors must be a part of the savings strategy."

PEF is urging legislators to pass laws, which has been introduced in both the New York Assembly and Senate, that would require state agencies to do a cost comparison to determine whether state employees could do the same work at a lower cost. [PEF press release]

May 5, 2011