DOT Outsourcing Costs Taxpayers Millions

The Wisconsin Department of Transportation is spending millions of dollars on outside contractors when even state officials admit the work can be done cheaper by state employees.

Declining numbers of state engineers and retirements are bringing the issue of private consultants to the forefront, and the total price tag may come as a surprise for some taxpayers.

In the first four months of this year, it cost taxpayers a total of $13.8 million extra to have private engineering consultants do work on projects rather than state employees, WISC-TV reported.

“Right now, what’s happening is we’re paying someone else to do it for more money,” said Mark Klipstein, president of the State Engineering Association.

The oversight of construction for a portion of work on Northport Drive in Madison cost the state nearly $100,000, but that’s almost $16,000 more than it needed to cost.

“When you’re trying to save money and the state is broke, let’s look at the most cost-effective way to deliver the transportation system — it’s to have state engineers do the work,” Klipstein said.

Klipstein said that when there isn’t enough state DOT staff to handle a growing workload of highway projects, the state hires out engineering work to private contractors. The practice has been going on for years, back well into the Doyle administration.

The DOT completes cost-benefit analysis reports for contracts with outside consultants.

“Most of these reports, they compare the consultant and state worker, and most reports show the consultants cost more money,” Klipstein said.

WISC-TV analyzed the cost-benefit analysis forms done by the DOT for contracts executed in the first four months of this year.

The reports require the DOT to explain why it decided to use private contractors for a project rather than the state workforce.

Klipstein said that time and again, the answer given on the reports is, “There’s no one available. There’s no one available. There’s no one available.”

In some 300 projects, WISC-TV found that 80 percent of the reports said just that — there was no DOT staff available to do the work.

As a result, in Dane County work on reconditioning Highway 14 from Madison to Oregon is costing about $35,000.

A real estate purchase in Sauk County for bike paths and sidewalks is costing $50,000 more.

In Milwaukee County, two pieces of a huge interstate reconstruction project being done by private contractors cost almost $3 million more than using state workers.

Overall, it cost taxpayers an extra $13.8 million to have private consultants do this work, WISC-TV reported.

“I don’t disagree that if we had additional staff, we would be able to deliver a greater percentage of the program than we do now with internal staff, and there are instances where we can do that more cost effectively,” said Wisconsin DOT Secretary Mark Gottlieb.

Gottlieb said the DOT is filling 50 engineer positions but that the department has a vacancy rate of 15 percent and more than 75 retirements this year alone.

“I think our goal is to have ready when the next budget comes around, we’d make a budget submittal for the 2013-2015 budget that we want to have a robust workforce plan that we can take to the governor,” Gottlieb said.

WISC-TV asked Gottlieb why the department is waiting to submit a budget request for more staff.

“It’s not a faucet you can turn on and off, and we didn’t get to where we are overnight. We’re not going to get out of it overnight, but I think we’ve turned a corner,” Gottlieb said.

Ron Becker, an engineer who just retired after 23 years at the DOT, said he fears the retirement of more than 75 senior-level engineers like himself will only make the issue worse.

“There’s not been a perception that there’s a need for these folks out there, and I know over the years there’s been a reluctance of leaders to ask for additional positions to cover this,” Becker said. “I hate to see money wasted and doing things in the most inefficient way. That was a factor in my decision to retire when I did. What I was afraid of is, you’re going to have people retire; you’re going to have a big hole.”

And that hole could cost taxpayers even more money.

Gov. Scott Walker has proposed holding transportation funding steady in this coming two-year budget and, at the same time, his budget green-lights some new major road projects.

Walker’s proposal calls for not adding any positions in the department, getting rid of some long-vacant positions and shifting some state sales tax money to the transportation fund to fund some major transportation projects. Those projects include the Milwaukee zoo interchange and an expansion of the interstate between Beloit and Madison.

When asked whether the state would consider forgoing some projects in the interests of being more cost-effective, Gottlieb said that’s not an option.

“I think we can create a resource plan that will allow us to deliver the program. The highway program that has been put together is an important part of the governor’s plan to grow the economy and create 250,000 jobs in Wisconsin. It’s not an option for us just to say, ‘Well, we can’t meet our obligations. We can’t preserve and maintain the state’s infrastructure,'” Gottlieb said.

Lawmakers will consider the transportation budget this week, in light of the numbers WISC-TV showed them.

“In general, I never want to waste taxpayer dollars. So if it’s less expensive and we can get the exact same job done using a person who is a state employee versus someone who is an outside contract, I think we should do that,” said Rep. Robin Vos, R-Burlington, co-chair of the Legislature’s Joint Finance Committee.

“Certainly if we can put more resources into having state workers do this job for less and do it better, than we have an absolute responsibility to move in that direction,” said Rep. Tamara Grigsby, D-Milwaukee.

An audit done by the state in 2009 showed that at one point consultants were doing 70 percent of state projects, sparking concern from lawmakers at that time but no action.

But it remains to be seen if there will be any changes this week in the state budget addressing the issue.

“Nobody has brought an idea to me that has an easy answer that we can include inside the budget, but I am very open if people do have those ideas,” Vos said.

The State Engineering Association said it told the Governor’s Commission on Waste, Fraud and Abuse about the issue.

“If it keeps showing that the private sector costs more, then do something about it,” Klipstein said.

A spokesman for the governor confirmed that consulting costs are being discussed. The Commission on Waste, Fraud and Abuse has a preliminary report due on July 1.