Relates to the cost effectiveness of consultant contracts by state agencies; defines "consultant services".
TITLE OF BILL: An act to amend the state finance law, in relation to the cost effectiveness of consultant contracts by the state agencies
PURPOSE OR GENERAL IDEA OF BILL: Sets forth conditions when an agency shall enter into a contract for consultant services. Requires agencies to conduct a cost comparison prior to entering into a contract for consultant services to determine if there is a less expensive alternative.
SUMMARY OF SPECIFIC PROVISIONS: Amends the state finance law by amending section 163 to add a new subdivision 15, setting forth conditions that must be met when an agency shall enter into a contract for consulting services of more than $500,000. The agency shall compare costs to determine whether the work can be performed at lower cost by utilizing state employees rather than consultants. Certain exceptions are specified when this cost comparison is not required. The agency must retain documentation of the cost comparison as a public record.
JUSTIFICATION: The purpose of this bill is to require state agencies to do cost comparisons before entering into contracts for consultant services. Any time the taxpayers' money is used to fund a contract for services there is a need to insure that this expenditure is necessary and prudent. The State of New York spends over $2 Billion per year on consultants. In many cases these consultants perform work that could be done by professional state employees and the cost of using consultants is substantially higher.
In 1998 the use of engineering consultants by the State Department of Transportation was studied by the State Comptroller and OSC concluded that the State could save millions of dollars by reducing the use of consultants. The Comptroller recommended cost/benefit analysis prior to contracting with consultants. other studies have confirmed this finding, including an analysis by the State Assembly in 2009 that estimated the state could save $250 million over three years by reducing the use of information technology consultants. In 2010 The state Senate Task Force on Government Efficiency estimated that the Department of Transportation could save about $46 million per year by implementing this policy.
In 2009 the Federal Office of Management and Budget issued a directive to Federal government agencies that calls for them to perform a cost benefit analysis before entering into contracts and to initiate pilot projects for in-sourcing work in cases where the cost analysis supports the conclusion that the work can be performed by government employers at lower cost that by using contractors. OMB estimates that this and other contracting reforms can save the Federal government $40 Billion.
LEGISLATIVE HISTORY: New Bill.
FISCAL IMPLICATIONS: None.
EFFECTIVE DATE: This act shall take effect on the ninetieth day after it shall have become a law, with provisions.
STATE OF NEW YORK ________________________________________________________________________ 3093--A Cal. No. 665 2011-2012 Regular Sessions IN SENATE February 8, 2011 ___________Introduced by Sens. ROBACH, ADDABBO, AVELLA -- read twice and ordered printed, and when printed to be committed to the Committee on Finance -- recommitted to the Committee on Finance in accordance with Senate Rule 6, sec. 8 -- reported favorably from said committee, ordered to first and second report, ordered to a third reading, amended and ordered reprinted, retaining its place in the order of third reading AN ACT to amend the state finance law, in relation to the cost effec- tiveness of consultant contracts by the state agencies THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Section 163 of the state finance law is amended by adding a new subdivision 15 to read as follows: 15. CONSULTANT SERVICES. A. BEFORE A STATE AGENCY ENTERS INTO A CONTRACT FOR CONSULTANT SERVICES WHICH IS ANTICIPATED TO COST MORE THAN FIVE HUNDRED THOUSAND DOLLARS IN A TWELVE MONTH PERIOD THE STATE AGENCY SHALL CONDUCT A COST COMPARISON REVIEW TO DETERMINE WHETHER THE SERVICES TO BE PROVIDED BY THE CONSULTANT CAN BE PERFORMED AT EQUAL OR LOWER COST BY UTILIZING STATE EMPLOYEES, UNLESS THE CONTRACT MEETS ONE OF THE EXCEPTIONS SET FORTH IN PARAGRAPH B OF THIS SUBDIVISION. AS USED IN THIS SECTION, THE TERM "CONSULTANT SERVICES" SHALL MEAN ANY CONTRACT ENTERED INTO BY A STATE AGENCY FOR ANALYSIS, EVALUATION, RESEARCH, TRAINING, DATA PROCESSING, COMPUTER PROGRAMMING, ENGINEERING, ARCHITEC- TURE, ENVIRONMENTAL, HEALTH SERVICES, MENTAL HEALTH SERVICES, ACCOUNT- ING, AUDITING, OR SIMILAR SERVICES, BUT SHALL NOT INCLUDE LEGAL SERVICES OR SERVICES IN CONNECTION WITH LITIGATION INCLUDING EXPERT WITNESSES AND SHALL NOT INCLUDE CONTRACTS FOR CONSTRUCTION OF PUBLIC WORKS. FOR PURPOSES OF THIS SUBDIVISION, THE COSTS OF PERFORMING THE SERVICES BY STATE EMPLOYEES SHALL INCLUDE ANY SALARY, PENSION COSTS, OR OTHER BENE- FITS INCLUDING ANY INCREMENTAL COSTS THAT ARE REQUIRED FOR EQUIPMENT, FACILITIES OR OTHER OVERHEAD. THE COSTS OF CONSULTANT SERVICES SHALL INCLUDE THE TOTAL COST OF THE CONTRACT PLUS ANY COSTS INCURRED BY THEEXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD08715-02-2 S. 3093--A 2
AGENCY IN ADMINISTERING THE CONTRACT OVER AND ABOVE THE COSTS WHICH WOULD HAVE BEEN INCURRED BY THE AGENCY IF SUCH SERVICES HAD BEEN PERFORMED BY STATE EMPLOYEES. THE COST COMPARISON SHALL BE EXPRESSED WHERE FEASIBLE AS AN HOURLY RATE, OR WHERE SUCH A CALCULATION IS NOT FEASIBLE, AS A TOTAL ESTIMATED COST FOR THE ANTICIPATED TERM OF THE CONTRACT. B. A COST COMPARISON SHALL NOT BE REQUIRED IF: (I) THE SERVICES ARE INCIDENTAL TO THE PURCHASE OF REAL OR PERSONAL PROPERTY; OR (II) THE CONTRACT IS NECESSARY IN ORDER TO AVOID A CONFLICT OF INTER- EST ON THE PART OF THE AGENCY OR ITS EMPLOYEES; OR (III) THE SERVICES ARE OF SUCH A HIGHLY SPECIALIZED NATURE THAT IT IS NOT FEASIBLE TO UTILIZE STATE EMPLOYEES TO PERFORM THEM OR REQUIRE SPECIAL EQUIPMENT THAT IS NOT FEASIBLE FOR THE STATE TO PURCHASE OR LEASE; OR (IV) THE SERVICES ARE OF SUCH AN URGENT NATURE THAT IT IS NOT FEASIBLE TO UTILIZE STATE EMPLOYEES; OR (V) THE SERVICES ARE ANTICIPATED TO BE SHORT TERM AND ARE NOT LIKELY TO BE EXTENDED OR REPEATED AFTER THE CONTRACT IS COMPLETED. C. NOTHING IN THIS SECTION SHALL BE DEEMED TO AUTHORIZE A STATE AGENCY TO ENTER INTO A CONTRACT WHICH IS OTHERWISE PROHIBITED BY LAW. D. ALL DOCUMENTS RELATED TO THE COST COMPARISON REQUIRED BY THIS SUBDIVISION SHALL BE PUBLIC RECORDS SUBJECT TO DISCLOSURE PURSUANT TO ARTICLE SIX OF THE PUBLIC OFFICERS LAW. S 2. This act shall take effect on the ninetieth day after it shall have become a law; provided, however, that the amendments to section 163 of the state finance law made by section one of this act shall not affect the repeal of such section and shall be deemed to repeal there- with.