Wisconsin DOT and GOP get busy fuzzing up reports that identify wasteful state outsourcing | Wis.Community

Wisconsin DOT and GOP get busy fuzzing up reports that identify wasteful state outsourcing

[img_assist|nid=135013|title=|desc=|link=none|align=left|width=175|height=115]Back in 2005, Republican Assemblyman Mark Gottlieb authored a bill requiring state agencies to perform cost-benefit estimates before letting out most public contracts worth more than $25,000. The estimates were to be done before each project began, and were designed to compare the costs of using public employees to do the work instead of outsourcing the work to private firms.

The bipartisan consensus then was that this was a good idea and a way to identify waste in state spending. The bill passed.

Now, thanks to some sleight of hand by Governor Walker's Commission on Waste, Fraud and Abuse, lobbying from private consultants and a more partisan GOP-led legislature, that law is about to be mashed under a steamroller -- but only in the case of projects handled by the state Department of Transportation (DOT), which annually spends huge amounts of money on private consulting.

And, who is one of the people now in favor of giving DOT a pass on the outsourcing cost-benefit requirement? Why, Mark Gottlieb, now DOT secretary. At a public hearing yesterday before the Assembly's Transportation Committee, Gottlieb's executive assistant told legislators that Gottlieb believes the law he authored has failed and is too expensive to carry out. The missing question: Compared to what?

Rep. Mark Honadel (R-South Milwaukee), has authored a new bill, AB 522, which he claims will fix the existing outsourcing cost-comparison law. Honadel told the committee the cost-benefit reports were not only hard to produce but not very accurate or useful. His bill would require only that DOT do a year-end report comparing costs, only after project contracts had proceeded without prior analysis. Oddly, perhaps, the bill would not end the cost-benefit analysis requirement for other state agencies or the University of Wisconsin system. Read on to see why I say "oddly, perhaps."

This bill's arrival is interesting, given that a variety of reports, studies and audits -- including a 2004 opus by the DOT itself, plus a 2009 Legislative Audit Bureau report -- show just the opposite. An analysis by WISC-TV News (Channel 3 in Madison) last year reported that a sampling of DOT cost-benefit comparisons showed the state had spent nearly $14 million more on highway engineering design projects because it outsourced them to consultants.

[See below for a link to WISC's text version of the story and a link to the video report along with past coverage. There's also a link to a newspaper column from a state engineering union official who questions AB 522. Finally, you can also watch the Transporation Committee's entire proceeding at WisEye.com which link, sadly, we cannot embed here.]

The DOT's underplayed but rather illuminating response at the hearing to those past findings of wasteful outsourcing was basically (and I paraphrase): Well yeah, but that extra cost is inevitable, because DOT doesn't have enough state engineers on staff to do the work for less. DOT says it had at one recent point 200 vacancies in state engineering staff positions; it has reduced that by 60 or so in the past year. But -- and this is interesting in the context of Walker policies -- the DOT is finding it hard to hire replacements. 

You'll love hearing the DOT's explanation for precisely why it's hard: Gottlieb's assistant, Steve Kreiser, told the committee members that last year DOT saw a "significant" number of engineers retire or quit. "Hiring an engineer is really a different ballgame," he said, because private engineers now make more than those in the state's employ.

Hmmm. Gee. wonder why that's the case? Could it be, oh, um, I dunno  .... Scott Walker-driven compensation clawbacks for public employees?

Beyond that, the governor's waste commission pulled a snarky move setting up Honadel's insta-bill. In its "final" report (which Democratic minority commission members were never allowed to see or vote on before it was made public), the commission acknowledged evidence showing the state wastes millions of dollars on outsourcing DOT and other agency work, even though in the case of DOT the agency itself has found that keeping work in-house is about 18 percent cheaper.

From that promising factual basis, however, the Walker-stacked commission took an unexpected freeway exit ramp and went on to decide that the state could fix this waste problem not by hiring more state engineers and not by toughening the cost-benefit analysis law (2005 Act 89) but by gutting Act 89's advance cost-estimate requirement. Which, as it happens, was one of the helpful suggestions of the American Council of Engineering Companies of Wisconsin -- a trade group that represents the consultants who get many of those fat DOT contracts.

Willie Haus, attorney for the State Engineering Association of Wisconsin, which represents state employees who are engineers, said Honadel's bill weakens transparency -- a direction which seems to have become commonplace under Walker and the GOP-led legislature. Haus told WISC's Jessica Arp it doesn't even make sense that the DOT would want to air its dirty laundry by providing a useful annual report of its own outsourcing after the fact. From WISC's report:

 "Why would you want to document decisions that you made, that cost the taxpayer extra money?" said Haus of DOT officials. "You don't want to document that, particularly if you aren't interested in changing the decisions to achieve more cost-effectiveness." 

Honadel and the DOT oddly insisted that his law's requirement for an annual, after-the-fact report on outsourcing costs would be much more illuminating than doing the cost-benefit analyses up front along with an annual report. An annual, after-the-fact report is already required under Act 89. The Department of Administration is supposed to produce such a report, which looks at Act 89 performance across all state agencies every year, although the public hasn't seen anything of the sort coming from the DOA's direction since Walker took office.

In other words, the figurative elephant in the room full of GOP elephants at yesterday's hearing was that this new law is by and large designed to make the consultants happy while hiding the poor, politically inspired policies and wasteful practices inflicting DOT and other agencies. 

Let's not forget that roadbuilding firms gave huge amounts of campaign cash to Walker in 2010.

The bill still needs a committee vote before it could move to the Assembly floor and then the Senate would have to concur. Will the Act 89 cost-benefit law be gutted? Stay tuned.

Published

February 8, 2012 - 12:47pm

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