NYC Council Passes Law to Limit Contracting
October 10, 2011
Around Town By Neal Tepel
At the October 5th NYC Council Stated Meeting the Council approved a strengthening of Local Law 35 of 1994. This common sense legislation will increase transparency and maximize cost efficiencies when entering into contracts that could displace City workers.
In the last fiscal year, the City spent more than $10 billion working with private contractors. While some of this outsourcing was necessary and cost-efficient, more than $3 billion of this money was spent contracting out standardized and professional services jobs, such as general maintenance, cleaning, data entry and computer programming. Governments often claim that such services can be provided more cheaply if outsourced, yet recent studies show the privatization and outsourcing of these very types of services has often been more costly to taxpayers
“Outsourcing is not always the way to go. A recent study shows that privatization and outsourcing can be on average, almost twice as expensive for taxpayers,” said Council Speaker Christine C. Quinn. “It is time for outsourcing practices to change. In the current fiscal climate, we literally cannot afford to overlook the possibility that city workers may be able to do the job for less.”
The current law requires agencies to determine whether a proposed services contract would displace City employees and if so, to conduct a cost-benefit analysis to determine if outsourcing makes the most sense for the City. Unfortunately, the current law has not lived up to its promise. Agencies have interpreted the law to apply only to a very narrow universe of contracts and over the past 10 years, have never made a determination of displacement or conducted any cost-benefit analysis.
Under the Outsourcing Accountability Act, the law will be clarified to ensure that it applies to a broader universe of contracts, require City agencies to explain in detail their non-displacement determinations and in certain circumstances, presume displacement so that the agency would be required to conduct the cost benefit analysis envisioned under the original law.
Further, under the Act, agencies will be required to publish a services contracting plan at the beginning of each fiscal year, mapping out each agency’s planned service contracts. This blueprint will give City employees as well as private vendors the ability to see what services agencies need so they can prepare accordingly to fill those needs. The advance notice will afford both City employees and private companies greater opportunities to compete since they will have more time to prepare their proposals.
In these ways, the Act will foster competition, increase transparency and protect taxpayer dollars.The legislation is not meant to hinder outsourcing. Rather, the Act will help ensure that outsourcing contracts are in the best interests of the City. Specifically, the Act will amend the current law in the following ways.