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2009 News Releases

February 25, 2009

Zita Allen, Communications Director
Molly Charboneau
Rudy Orozco

District Council 37 White Paper charges city's $9 billion in
outside contracts "Unregulated fiscal irresponsibility"

Union Says City Can Save Millions Not By Axing 23,000 Workers, But By Slashing Deals With Over-Paid Consultants And Over-Priced Contractors

District Council 37, the city's largest municipal employee union, today issued a White Paper, "Massive Waste at a Time of Need," at a news conference at City Hall. The news conference was followed by a City Council hearing, called by City Council General Welfare Committee Chair Bill de Blasio. The hearing examined one aspect of the study's finding that the city hands over some $9 billion of its $60 billion budget to an unelected, unaccountable "shadow government" of private contractors and outside consultants.

The DC 37 study showed that work done by the private sector often costs a lot more than that done by public employees. While the "shadow government" uses a parallel workforce of more than 100,000 employees-hired without the "merit and fitness" examinations and background checks required of civil service workers-city employees are better trained, more responsible and more cost-effective. The study identifies about $130 million in savings the city could realize by cutting spending on outside contracts with over-paid consultants and over-priced contractors.

"While this study points to specific areas where decisive action can provide immediate savings," said DC 37 Executive Director Lillian Roberts, "I hope that in this era of change, it will also spur public officials and the media to shine light on the "shadow government," work with us to identify and cut the waste, and save the taxpayers hundreds of millions of dollars.

"Since July 2005, funding for the city's contract budget has increased rapidly, climbing to a record high of $9.2 billion for more than 18,000 contracts. The amount the city pays for these contracts is equivalent to 15% of the city's tax-levy budget and more than 46% of the city's controllable spending," Roberts added.

The report focuses on only ten contracts spread across eight city agencies to illustrate the potential savings that could be realized if the work were performed by city workers, for example:

  • The City can save $21.6 million by ending contracts with computer consultants doing non-specialized technical work that can be done by computer professionals employed by the Department of Information Technology and Telecommunications (DoITT) and other agencies.

  • The City can save $14.5 million by ending contracts with custodial services and using Job Training Participants in the Transitional Jobs Program. This would also provide these workers a path towards stability while adding to the City's tax base.

  • The City can save well over $51 million if it ended the practice of the Department of Homeless Services utilizing "per diem" hotels and motels to house an increasing homeless population without a legal contractual relationship as required by the city's procurement rules. We recommend the city ending this practice and instead refer homeless families to the New York City Housing Authority at the "per diem" rate for privately owned shelters.

"Our members have an expertise and a knowledge base no outsider can match," Roberts said. "Our White Paper shows dollar-for-dollar just how valuable our members are compared with the inefficiency of consultants and management. There are also the issues of transparency and accountability that are byproducts of this type of process.

"Six years ago, when we brought this type of waste to light in a White Paper, "We Can Do the Work," the Bloomberg administration cut back on outside contracts and saved the city $175 million. But, since fiscal year 2005, the contract spending has soared by 36% from $6.7 billion to $9.2 billion. In the computer field we have seen an explosion of 147% in contracting costs.

"No responsible government can in good conscience cut vital services and lay off hard-working public employees while real savings are within reach," Roberts concluded.

District Council 37 is New York City's largest public employee union, with 125,000 members and 50,000 retirees.




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