Under the banner “Time for Sunshine in the Contract Mushroom Patch,” members of state employee unions gather in front of DOA Building on June 1 to call attention to the fact that the legally required report to the Legislature on state contracts with the private sector is now eight months late. The Walker Administration shows no sign that it intends to comply with the law.
Every year the state Department of Administration is required to report to the Legislature on state government contracts with the private sector. The Walker Administration has yet to produce the report that was due last October and they show no sign that they intend to comply with the law.
The annual report, entitled “Contractual Services Purchasing Report,” is supposed to detail how much taxpayers’ money the state is spending on contracts with the private sector. It also provides some information on how much it would cost to provide those same services with public employees.
Perhaps No Surprise
“We know the state is paying private companies $300 an hour or more, when the same work could be done less expensively by using state employees,” Duane Konkel told a gathering in front of the DOA office in Madison on June 1. Konkel is a steward with AFT Local 4848. “Perhaps it’s no wonder that the Walker Administration is trying to hide these contracts from the public.”
The GEF-1 Stewards Committee
organized the noontime event to “read a public grievance” to call attention to the missing report. A similar gathering occurred on the UW-Madison campus.
The UW is affected by this privatization as well as other state agencies. Under the previous state law, all state agencies and the university had to perform a cost-benefit analysis before signing contracts for services over $25,000, to determine if the work could be done more efficiently with public employees. And a summary of those analyses had to be included in the annual report. Walker’s budget bill exempted the university from that requirement.
We do know that one UW contract, with Huron Consulting for the “Academic Excellence” project, pays the contractor $325 per hour. Huron is also a vendor working on UW-Madison’s HR Design project and worked on the $81 million payroll system project that began in 2009 at UW System.
One concern is that public agencies, and therefore the taxpayer, lose accountability when work is privatized. Contract agreements make it difficult to find out what work is being done and for how much. In addition, study after study has shown that public agency administrators often do a very poor job of managing contracts, leaving the private contractors to operate more or less on the honor system.
“Under the cover of these obscure contracts, corporations are taking over major functions of state agencies and the UW,” says Carl Aniel, a steward with AFSCME Local 171. “Serving the public is becoming a lower priority.”
To get an idea of the magnitude of the potential problem, the state of Wisconsin contracted for $500.2 million back in 2005. Starting that same year was the requirement that state agencies and the University of Wisconsin conduct a cost- benefit analysis before signing contracts for more than $25,000 and to include a summary of findings in the report.
In the light of open government, and under the watchful eye of public employee unions and other good government activists, the total amount of these private sector contracts fell steadily over the next five years. The last report, in 2010, showed the total amount of contracts with the private sector fell to $417.2 million.
In the past, unions have used that report to make the case that government employees usually can do work better and at lower cost than private sector contractors. Given Governor Walker’s love for the private sector, and hostility to the public sector workforce, speculation is that there is a lot more wasteful contracting out going on today than in years past.
In one case, the cost-benefit analysis of the Department of Transportation’s (DOT) Highway Improvement Program showed that more than 60 percent of the work could have been completed less expensively by state employees than by contractors. A recent WISC-TV investigative report showed that the state spent $13.8 million more just in the first four months of 2012 by outsourcing DOT engineering rather than performing the work in house with state engineers.
And, that’s just in one state agency.
The state Legislative Audit Bureau recently reported that the Department of Health has increased the number of contracted staff for the Medical Assistance Program from 599 to over 1,127, with limited oversight and monitoring.
While much of the public concern for wasteful contracting out tends to focus on those $300 an hour salaries, there is a disturbing new trend developing. Last July the state signed contracts with several temp agencies to provide low- wage workers for government agencies and the UW has began hiring custodial workers from temp agencies for as little as $8 an hour.
Of course, while these workers get poverty-level wages, the state pays the temp agencies considerably more per head than what the workers are paid.
“We’re also concerned about the potential to reward campaign donors by giving them lucrative public contracts,” Konkel told the small gathering in front of the DOA Building. “Even minimal safeguards to provide the Legislature basic facts on state contracts are being ignored. The Walker Administration’s disregard for the public’s right to know is disturbing.”
Not A Mistake
It’s not as though the Walker Administration just forgot about the missing report. Back in February, when it was only four months late, Greg Georg, president of AFT Local 4848, wrote a letter to DOA Secretary Mike Huebsch, to inquire about the status of the report.
State Senator Julie Lassa and Representative Andy Jorgensen made similar requests that same month.
Neither Walker nor DOA Secretary Huebsch have responded to the inquiries. While the unions involved have lost their collective bargaining rights under Walker’s Act 10, they continue, as one member of the Steward’s Committee put it, “to mobilize and plead our case in the court of public opinion.”
–Originally published in the July, 2012, issue of Union Labor News.