Newsroom

Union says city can save millions by slashing deals with private contractors

By MONICA THOMPSON
Special to the AmNews

March 13, 2009

District Council 37, the city's largest municipal employee union, recently issued a white paper, "Massive Waste at a Time of Need," slamming the city for seeking to close a $4 billion budget gap with tax hikes, cuts to health, education, police, fire and sanitation services and layoffs even as it throws $9 billion of its $60 billion budget to fund "a shadow government" of private contractors and outside consultants.

The DC 37 study insists that work done by the private sector often costs much more than work done by public employees. It charges that the "shadow government" uses a parallel workforce of more than 100,000 employees hired without the "merit and fitness" examinations and background checks required of civil service workers and that city employees are better trained, more responsible and more costeffective. The study identifies about $130 million in savings the city could realize by cutting spending on outside contracts that use over-paid consultants and over-priced contractors.

"While this study points to specific areas where decisive action can provide immediate savings," said DC 37 Executive Director Lillian Roberts, "I hope that in this era of change it will also spur public officials and the media to shine light on the 'shadow government,' work with us to identify and cut the waste, and save the taxpayers hundreds of millions of dollars.

"Since July 2005, funding for the city's contract budget has increased rapidly, climbing to a record high of $9.2 billion for more than 18,000 contracts. The amount the city pays for these contracts is equivalent to 15 percent of the city's tax-levy budget and more than 46 percent of the city's controllable spending," Roberts added.

Focusing on just 10 contracts at eight city agencies, the union's report insists the city could save over $130 million if the work that was being farmed out was performed by city workers. For instance, the city could save $21.6 million by end-ing contracts with computer consultants doing non-specialized technical work that can be done by computer professionals employed by the Department of Information Technology and Telecommunications (DoITT) and other agencies.

Using job training participants (JTPs) in the Transitional Jobs Program to do custodial work, the union says, could save the city $14.5 million if it ended ending contracts with outside custodial services. The union insists this would also have the added bonus of giving JTPs a path toward stability and fulltime jobs while also adding to the city's base of taxpaying residents.

Other savings cited in the report include some $51 million by ending the Department of Homeless Services' practice of utilizing "per diem" hotels and motels to house an increasing homeless population without a legal contractual relationship, as required by the city's procurement rules. In fact, the union recommends the city instead refer homeless families to the New York City Housing Authority at the "per diem" rate for privately owned shelters.

The release of the DC 37 report has been followed by a number of City Council hearings, including one by the General Welfare Committee, chaired by Bill de Blasio and a joint hearing by the Education and Contracts committees chaired, respectively by City Council Members Robert Jackson and Letitia James.

City Hall spokesperson Stu Loeser slammed the report as overstating "the cost of functions that could be brought onto the municipal side, while simultaneously understating the full cost to taxpayers of having career municipal employees." Loeser criticized the report for ignoring the "cost of health benefits, training and pensions" that the city seems to have targeted lately.

"Our members have an expertise and a knowledge base no outsider can match," Roberts said. "Our white paper shows dollar for dollar just how valuable our members are compared with the inefficiency of consultants and management. There are also the issues of transparency and accountability that are byproducts of this type of process.

"Six years ago, when we brought this type of waste to light in a white paper, 'We Can Do the Work,' the Bloomberg administration cut back on outside contracts and saved the city $175 million. But, since fiscal year 2005, the contract spending has soared by 36 percent, from $6.7 billion to $9.2 billion. In the computer field, we have seen an explosion of 147 percent in contracting costs.

"No responsible government can in good conscience cut vital services and lay off hard-working public employees while real savings are within reach," Roberts concluded.