How outsourcing highway jobs drained money from Utah’s roads
In Utah, auditors last year found that outsourcing public transportation work is expensive – really, really expensive.
The Beehive State’s Department of Transportation, according to the audit, spent big on contractors — up to three times as much as state employees to do the same tasks — for road and bridge design work, engineering and construction management.
Auditors found, for example, that a state-employed Engineering Manager cost the state $68.97 per hour, including benefits. Utah’s cost for the same work performed under contract with a private firm: $183 per hour.Utah’s outsourcing tripled costs of keeping work in-house
In other words, replacing two engineering contractors with two state hires would save Utah taxpayers about $1.9 million over four years.
The audit’s conclusion:
“The higher cost of outsourcing UDOT functions means less money for roads. … The department needs to analyze their costs and benefits before filling vacant in-house positions with consultants.”
Utah auditors reported they had a tough time figuring out how much the department was spending on outsourcing state work. Unlike state employee costs that are meticulously tracked, the contract labor expenses were baked into various aspects of projects and made them difficult to extract, the auditors said.
After “several weeks” spent untangling the numbers, they concluded that the agency’s consultant costs approached $129 million in fiscal year 2011, about $2 million more than the Transportation Department spent on its own 1,600-employee workforce.
That was a busy road construction year, fueled by a flood of federal stimulus money. But as the work slowed in subsequent years, the state made a curious choice to keep paying more for contractors and leave cheaper state positions vacant.Utah: State shed highway staff, despite budget that allowed hiring
In 2014, the last fiscal year that auditors examined, consultant costs were “about two-thirds of total personnel costs,” according to their report.
So Utah paid more — a lot more — for private-sector consultants who, auditors said, were often difficult to distinguish from their state-employed counterparts.
You might understand the decision if the contracted workers were brought for their expertise or to fill a short-term emergency demand. But auditors observed that many contractors had no experience and needed to be trained just like new employees.
At the other end of the spectrum, some contractors had been around for years. In one instance, a contract engineer had been working at 90 percent of full time or more for a decade.Utah DOT Temps Worked Up to 10 Years for State
Blue-collar work cost Utah more to contract out, too. In 2011 and 2012, the state spent a little over $100,000 when employees mowed the grass. In 2013, contractors took over the work and billed taxpayers nearly $150,000, according to auditors. The following year, the mowing charges soared to $450,000 then about $375,000 in 2015 – still more than three times the cost of having state employees do the work.
Taxpayers took a similar beating when the state handed over culvert cleaning and maintenance work to private companies, auditors said.
Their admonition: “We recommend that UDOT conduct a cost/benefits analysis before outsourcing in-house positions.”
In its response, the department agreed “to conduct a cost/benefit analysis when determining whether to utilize in-house or outsourced resources.”
In sum, Utah’s contracting tale illustrates the impact on public finances when outsourcing creeps up and takes over public services.