State must reign in consulting contracts

There has been an explosion in the number of contracts the state awards for various consulting services. State agencies and departments currently spend approximately $7 billion on 16,000 contracts; many are for services that may be unnecessary or could be performed in-house.

As Treasurer, I chair the Streamlining Government Commission’s Advisory Group on Efficiency and Benchmarking. During our meetings, we have heard testimony about dozens of state agency contracts that warrant further scrutiny. Some examples include a contract for $600,000 for legal services, one for $94,000 to teach kids to play at recess, and a $412,000 contract for a public relations campaign. These unfortunately just scratch the surface of questionable state agency contracts.

My Advisory Group has made several recommendations to the Commission for reigning in state contracts. First, the state should restrict private contracts to those that provide well-defined benefits that outweigh the costs. Each contracting department should be held accountable for monitoring a contract’s cost, the quality of service and the level of cost-benefit.

Second, all state departments and agencies should be required to justify the need for these contracts. The justification should include the scope and selection process for each consultant and a detailed explanation of why a service cannot be performed more cost effectively in-house. Contracts must also be approved by the Legislature’s Joint Committee on the Budget.

We should take these recommendations one step further. The state should eliminate 25 percent of contracts across the board to generate a potential savings of $1.75 billion. We can start by looking at services that could be performed by public employees already on the state’s payroll.

All state contracts are not bad or excessive, and some may fulfill a worthwhile purpose. But, if we are serious about downsizing state government and cutting costs, we must reign in wasteful spending in consulting contracts.