The Business Council opposes this new legislation that would impose burdensome, duplicative and poorly defined analysis requirements on state agencies prior to their entering into a consultant services contract that would be in excess of $500,000 in a twelve-month period.
The bill specifically requires state agencies to determine whether services can be provided by state employees at equal or lower cost. Unfortunately, the bill contains no provisions requiring an assessment of the relative quality of services to be delivered, or whether the same quality of service can be provided through equal or lower costs.
Compared to prior version of the bill, the cost analysis has been made more balanced, by requiring a comparison of all state costs (including costs for any new state employees) compared to the total contract cost.
However, in this cost comparison, the bill makes no mention of the “opportunity” costs related to using or diverting existing state employees to perform the new services. In other words, if the contract is being considered in order to expand the state’s capacity to get work done and/or to expedite project completions, those factor will not be considered in this “cost only” comparison. In contrast, the existing pre-contract assessment, put in place by Executive Order, requires a consideration not only of relative costs, but also whether the use of state employees will delay or impair the purpose of the contract.
This new bill also contains a new requirement for calculating the cost of doing this mandated analysis, without specifying how these costs are to be taken into account in the overall employee versus contractor comparison. Ironically, the “opportunity cost” of having state employees conduct these analysis must be looked at here, but the more significant “opportunity cost” of having employees perform the work to addressed in a proposed consulting contract is ignored.
Finally, this bill remains duplicative of existing requirements. Chapter 10 of the Laws of 2006 significantly expanded the amount and type of information that agencies must report when they hire outside consultants, including the number of consultants utilized on a specific project, historical information about consultant use by the agency, and a projection of future consultant use and costs throughout the term of the contract. An existing Executive Order also requires agencies justify personal service contracts as being more efficient, more effective, lower costs or in the public interest, compared to use of state employees.
With ongoing budget constraints, there is no question that it is important to assure that state resources are well spent. State agencies have had to focus their efforts on continuing to provide the services required of their core mission with limited resources.
Existing statutory and regulatory requirements already require detailed assessment of the value of proposed personal service and consulting contracts. Therefore, there is no justification to add additional analysis burdens which will consume additional agency staff and resources, and add additional costs and uncertainties to the state’s contract review process.
For these reasons, The Business Council opposes this legislation.