Tennessee’s top DOT official says how the state outsourced engineering work was too costly
– and he’s been doing something about it
Several states have figured out over the last few years that privatizing state engineering services costs more than having publicly-employed engineers do it, but a top transportation official recently did something unusual: He said it out loud during a state budget hearing late last year.
Tennessee Department of Transportation Commissioner John Schroer said during the November meeting that his agency saved $54 million in the previous fiscal year by hiring more TDOT engineering and project-inspection staff instead of outsourcing the work.
For years, he testified, the state would hire and train new engineers, only to watch them leave for more lucrative jobs with private firms.
“Then we would just go hire the company that employee went to work for,” Schroer said, “and pay it four times what we paid the employee when he worked for us.”
Shroer could have been speaking for several state transportation agencies around the country that have paid more to contract infrastructure engineering and inspection work that public employees could perform. The latest examples:
- In the spring of 2017, Alaska officials killed a plan to outsource more transportation engineering work after a state employee union and the Greater Fairbanks Chamber of Commerce both raised concerns that consultants cost up to 40 percent more than state employees.
- A 2016 Utah state audit found that outsourced engineering cost up to three times more than having government employees do the work, and that the extra money spent on contracts siphoned off money from projects.
- Rhode Island’s DOT spending on consultants was two to three times that of other small “peer” states, according to a 2015 report. Nearly one-third of the state’s construction dollars went into the pockets of consulting firms, the report by Gordon Proctor & Associates concluded, or roughly $41.5 million for fiscal 2013-14 alone.
- That same year, an analysis of Connecticut’s DOT, according to the New Haven Register, found the state could save “between $575,000 and $4.7 million on inspection services, depending on the size of the project, if in-house personnel are used rather than consultants.”
- California’s state budget analyses for years has noted that a state engineer’s pay and benefits cost about half what the state forks over for a contract engineer to do the same work. In 2016, for example, a state engineer’s pay and benefits cost an average $122,000 a year, compared to $246,000 for a contract engineer to do the same work.
At the November Tennessee DOT budget hearing, Schroer said that his department has been hiring more staff and paring down work sent to costly outside consultants.
TDOT’s hiring initiative ramped up following a 2011 report, TN Forward: Top to Bottom Review, that concluded “by reducing dependency on consultants and increasing the number, skills and capabilities of TDOT’s professional staff” the state would save an estimated $14.5 million per year in the areas of project design/development; environmental inspection, and construction engineering and inspection.
Those funds, the review noted, “… could be made available for reallocation… to additional road and bridge projects.”
The report also recommended that TDOT rebuild its professional engineering and inspecting staff to keep more of that work in-house.
To that end, Schroer said, the department is aggressively recruiting college graduates to get them into public service early.
“We had over 65 (graduates) hired this year,” he said. “We’re one of the few DOTs in the nation doing that.”