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Your Tax Dollars at risk!

How about just posting the info. I don't like sites where the only info on the site says "click here for more info". Nothing to spread around with that!

reply to momus_98
Thanks momus ............. very informative. I'll spread the word.

reply to momus_98
Ok - the basic thought here is that Texas state gov't has started contracting some jobs rather than hiring full time employees.

Some, such as momus_98 see this as a bad thing for a variety of reasons.

I'll play devil's advocate and take the other side:

These types of programs have been used by other government agencies at all levels (city, county, state, federal) and for the most part they seem to be effective.

Total cost of operation often drives this. There are financial advantages to it over the long term. Probably the biggest is that the 'client' (state) doesn't have to fund for long term benefits such as retirement. They also can reduce the cost of support services, like health and welfare programs and the personnel to run them. If you don't have employees, you don't need a personnel or HR department. Or at least with fewer employees you can reduce the size of those.

Viewed at the surface level, it may not look cost effective. People say for a person doing such and such a job, we only have to pay them $20/hour, but to contract that same position we'll have to pay $34/hour. In truth, the $20/hour employee was probably costing the state about $31/hour anyhow. That extra $11/hour coming in the form of things like having to pay for their unemployement insurance, the state's share of other taxes, funding the health and welfare of the employee and, of course, chipping in to any 401K or retirement plan along with the cost of general administrative personnel to support those actually providing direct service to the community. All of that kind of stuff would be included in the $34/hour that the contractor charged the state for that person.

One argument that always comes up is that it is so difficult to get rid of a poorly performing gov't employee. That problem will definitely go away in a position provided by contract. In that case the state supervisor will simply point and say "that guy is not performing well, get me a replacement" and the contractor will comply. That ability is normally written right into the contract between the gov't and the contractor.

Another argument is that quality of service may falter. It shouldn't. Not if the contract is monitored and managed properly. Such contracts are usually term limited - having to be rebid every few years. In order to have a chance at winning on the recompete, the incumbent had better have a good record of providing quality service. These contracts are usually considered "low risk" - little doubt that the state is going to run out of money and declare bankruptcy leaving the contract with a bunch of unpayable salary checks. So there is usually strong competition for them when time comes to compete for them.

One final area I'll address is the "lost jobs" - that doesn't need to be as disastrous to the people doing the job on the state payroll as you might think. Presuming they're good at what they do, no reason at all that they shouldn't be able to offer their services to the companies competing for the contract. Hey, it gives them a leg up in the bid to be able to say "we will man the contract with experienced people, the ones currently doing the job". And it is not untypical for such incumbent employees to sign letters of intent with every contractor competing for the contract. All that says about the person doing it is "I like the job I'm doing, and don't much care who signs my paycheck, as long as I can cash it without any problem".

The down side: loss of tenure and time built up toward retirement. But if that much time is involved, I'm thinking the state will probably find positions to put heavily vested employees into to finish out their time. If not, take the money given at separation and start a 401K with it.

So long as the jobs don't get taken out of state, I don't think it will be a long term disaster. Of course, for anyone who does lose a job over it, the long term view is probably not what they're interested in.
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...then THINK! again!!

2kmaro brings up some very salient points, especially with regard to total cost of operation.

While it is very true that the state could be poised to save quite a bit of money, and it is true that some tasks (such as janitorial services in state facilities) has already long-ago been contracted out, it is also true that this could turn out to be a fiasco.

Some specific examples: As reported in the Dallas Morning News, Dallas Independent School District (DISD) contracted with FedEx/Kinko's to provide district-wide printing services, which was projected to save the district millions of dollars that the district could then reinvest back into the schools. Plus, teachers could better spend their time doing other chores directly related to teaching, not to mention a district-wide linked printing system would be put in place to enable teachers to print materials at any school they happened to be.

This has not turned out to be the case, as the plan is costing each school's budget as much as eight times more than predicted. The costs are so great that the district itself is having to bear some of each school's burden, which is in turn eating into DISD's own budget. The entire article can be found here (registration required).

What is also not generally known by the public is that some state services are already outsourced. Several years ago, mainframe/computer operations for the Dept. of Human Services (DHS) was outsourced to Northrup-Grumman in San Angelo, TX. I do not know how much money this has cost the state, but I do know that the program has been plagued with problems from the start, including communications and data transfer outages from San Angelo to DHS's headquarters in Austin. In fact, when this new contract is negotiated for this latest round of outsourcing, I hear that Northrup-Grumman will not be considered for contention, nor will their current contract with DHS be renewed.

I do work for a state agency dealing with unemployment benefits, and my fear is not losing my job necessarily (although I am quite concerned about that), but that our good reputation will be tarnished. Sure, the general feeling around my shop is that this could be a good thing, depending on the vendor. If IBM were picked, for example. But if it's, say, Convergys, the company currently fouling up the state's implementation of the federal food stamp program, then this might be terrible. As reported here.

And as 2kmaro pointed out, "if the contract is monitored and managed properly" the contract could be rebid if services falter, but let's be honest here. How often does this really happen, especially when you are talking about government agencies? Look at Halliburton as much as admitting they overcharged the federal gov't for meals they were supposed to have fed the troops. As reported here. What sort of punitive action was taken and what real impact has this had on their bottom line?

Once these services transition over, it is next to impossible to get them back. Even if the contract isn't rebid, it would be too cost prohibitive to bring those services back under state control. And forcing the contractor to say "sorry, it'll never happen again" does nothing in terms of restoring service to acceptable levels.

Finally, outsourcing is not a dirty word and I am not against the idea in principle. There are many agencies that are relatively tiny, with no real need for a full-time mainframe/Operations staff. But my agency is a 24-hour/6 day operation (Saturday night is the exception). Some of our services are even available on holidays and weekends. (For example, our telephone unemployment claims filing system takes claims 6 days a week, 8 am to 5 pm CST, ALL holidays included). And there is always a live person monitoring those telephone systems throughout the day, every day (again, except Saturday).

Creating the proposed Statewide Data Center would save money since the state wouldn't have to license and service many different hardware and software configurations among the smaller agencies. But it is important that this remain under state control, not be given to a private vendor.