PEF Identifies $300 Million in Savings

ALBANY, NY -- The New York State Public Employees Federation (PEF) released new research today 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 SFY 2010-11. The majority of the billing went to information technology (IT) 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," said PEF President Ken Brynien. "The situation has been exacerbated by years of attrition and hiring freezes.

"The best example of the state's wasteful spending on engineering consultants is the bridge inspection program. State and federal law 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," Brynien said.

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 added. "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," said Brynien.

PEF is urging legislators to pass cost-benefit analysis legislation (S3093/A5128-A) sponsored by Senator Joe Robach and Assemblyman Harry Bronson. The bill would simply require state agencies to do a cost comparison to determine whether state employees could do the same work at a lower cost.

Consultants – Cost Benefit Analysis

PEF plan reveals millions in cost-savings

Albany - The New York State Public Employees Federation (PEF) today released comprehensive research that reveals the state can save $656 million over three years by implementing PEF’s cost-savings recommendations. The research also includes examples of irresponsible uncontrolled spending by some state agencies, a complete disregard of state law by others, and sloppy and incomplete record keeping by many.

“At a time when the state is facing severe fiscal constraints, spending on consultants rose to $2.9 billion; a $100 million increase,” said PEF President Kenneth Brynien. “That’s the equivalent of 23,329 full-time consultants working for the state, over 2,500 more consultants than the previous fiscal year. If that many state employees were added to the payroll during this fiscal crisis, there would be outrage.”

PEF’s research revealed some state agencies incurred astronomical consultant costs. The Racing Association Oversight Board paid a New York City law firm $689,901 for 1,275.40 hours of legal services which breaks out to $541 an hour. The same board paid paralegals even more. The law firm billed the state $51,535 for 93.20 hours of work by paralegals. That comes to $553 an hour! These are just some of the examples of irresponsible spending.

The biggest savings is in replacing Information Technology (IT) and engineering consultants with state employees. This week, the governor announced an effort to in-source IT consultants for an estimated savings of as much as $3 million. While we applaud the governors acknowledgement of what PEF has been saying for years that state employees can do the same work for much less than consultant, the governors plan doesn’t go far enough. PEF’s proposal to cut the use of IT consultants is much more aggressive and can save the state a minimum of $116.9 million by replacing half of the IT consultants with state employees. Our plan to replace engineering consultants can achieve a minimum savings of $95 million annually.

The potential future savings from PEF’s consultant reduction plan could be even more because only 20 percent of total consultant expenditures are filed properly with the state Comptrollers Office as required by the contract disclosure law. Some reports that were filed are so riddled with errors and typos that the New York State Research Foundation reported paying a consultant less than a penny per hour.

“This out-of-control spending, and improper and sloppy filing is costing the state millions. New York’s professional workforce has come up with ways to change that. Now it’s up to the governor and legislative leaders to make that change happen,” Brynien said.