Legislators fault state on IT outsourcing
Local 1000 representatives outlined to state legislators Wednesday how the explosion in unwarranted and potentially illegal private contracts for computer technology goes largely un-policed by the state.
“The increase in our dependence on private contracts is staggering,” said Margarita Maldonado, chair of Bargaining Unit 1 and an IT professional working for the Department of Justice. “Every month we see more contractors doing work that state employees can do for half the cost. Over and over we see illegal contracts challenged and overturned by our union.”
Maldonado cited a report released this week by Local 1000 research staff that shows the state could save up to $100 million annually by reducing its reliance on IT contractors.
“The more we spend on contracts, the less we spend on oversight,” said Assemblymember Mike Eng, (D-Monterey Park) chair of the Business and Professions Committee. “If there were no SEIU … these complaints may never have seen the light of day.”
“Maybe we need to take the money out of internal oversight and give it to you guys,” Eng joked to Local 1000 members near the end of a joint hearing before his committee and the Assembly Business & Professions Committee. Legislators from both committees faulted the state on its oversight of private contracts as well as the personnel process for hiring, training and retaining IT professionals.
During the hearing, legislators heard testimony from state officials who could not adequately explain why the number of private information technology contracts has tripled from 1,800 in 2003-03 to 5,500 in the first eight months of Fiscal 2007-08.
Maldonado and Local 1000 members Marie Harder and Stephen McVeigh all testified that rationale for using outside contractors instead of state employees was routinely abused by state managers. They also pointed out that the state’s personnel process for hiring and promoting information technology is cumbersome, outdated and unable to meet the state demands for trained workers.
“It is a very convoluted process’’ to fill IT positions, said Harder, a senior information systems analyst with the Center for Health Statistics . Complicated, outdated civil service procedures have made it “easier to hire a consultant than a civil service employee.”
“I do not understand why it is easier to get approval for consultant dollars than it is for state positions,” she said. “It’s very easy for the number of civil service employees to go down and the number of consultants to go up but nobody sees that number…I rarely see anything about consultant dollars in the budget.”
“It’s very difficult for many state employees to sit side by side with a consultant who is in effect doing the same work but the consultant is being paid significantly more,” Harder said. “It’s bad for morale.”
McVeigh, an associate information systems analyst at the State Compensation Insurance Fund, said the number of contractors has risen in the past decade as “IT civil service positions were reduced or remained vacant.”
But McVeigh said that State Fund officials have recently begun working more collaboratively with Local 1000 to reduce outside contracting, increase training for IT professionals and have created some opportunities for employees to take on responsibilities that were being performed by contractors. McVeigh said that Local 1000 and management are working to develop meaningful employee development plans to increase IT training for employees
Local 1000’s report—titled IT Contracts: Too Many, Too Much, Too Little Oversight—follows a 2006 report by the independent California Research Bureau that outsourcing IT work costs 50 percent more than doing the work in-house.
Local 1000 has challenged 47 IT outsourcing contracts since 2005. Of the 25 cases that have been adjudicated, the State Personnel Board invalidated 18 contracts and in three others said similar contracts would not be approved in the future.
Eng is sponsoring proposed legislation, AB 2603, that would require state departments to report IT contract expenditures so that they could be compared to the cost of state employees doing the work.
Eng pointed out that state agencies have been unable to police themselves in determining if proposed contracts with private technology firms are legal. He said the state’s efforts to track illegal contracts make about as much sense having a traffic cop only enforce the law “when someone would flags him down and says someone is speeding.”
Legislators invited private contractors to testify at the hearing but none accepted. Representatives of the State Personnel Board, Department of Personnel Administration, Department of Technology Services and the Department of General Services all testified
To see Local 1000’s report on IT outsourcing click here. To see view a copy of the Sacramento Bee’s March 12 story on the problems with IT outsourcing click here.