One of the chief arguments contained in the New York comptroller’s study is that private-sector salary costs tend to be higher than those for public employees and that this causes overall costs to rise. PSMJ concludes that this effect on costs is less than 1 percent.
Yet another problem with many of the studies is lack of scope. Primarily focused on agencies at the state level—more specifically, state DOTs—the studies fail to take into account other departments or, more important, local governments (cities, counties, regional transportation authorities). This is a problem because
“contracting out public work is more common at local agencies.”
Smaller government organizations may only occasionally support capital projects, and when they do, the projects are frequently of a diverse nature. Due to budgetary, staffing, and recruitment constraints, as well as fewer and smaller projects, lower levels of government are more likely to rely on consultants for project delivery. In order to correct for the lack of data, studies should be undertaken examining the use of consultants for similar projects at the local level, allowing for comparative research between state and local authorities.
Other problems exist with the data itself. First of all, different accounting systems are used in government agencies and the private sector. Government procedures are adjusted to fulfill state and federal fiscal reporting requirements, which are often different from practices used by the private sector. The new accrual accounting standards being adopted by state and local governments over the next few years will go a long way toward helping with this problem.
Second, while it is not difficult to determine the cost of consultants—it is simply the amount paid—the cost of an in-house project depends on accurate recording of time spent on the project, the estimation of overhead, and the accounting of the cost of activities associated with the project (travel and subsistence, materials,
supplies, and lab tests).152
Time sheets are not often a priority in state departments, and since many state
employees are required to work on multiple tasks simultaneously, the record of time allocation is not very
“Department monitoring of in-house work has been inadequate, primarily due to poor time
reporting and inadequate tracking in costs.”154 State agencies need to keep better records of time and materials spent on projects. Again, like the problems with accounting, changes would allow for fair comparisons of the public and private sectors.
Furthermore, the accessibility of data is suspect. Most researchers report that the data needed to conduct their investigations were not easy to access. “The main reason is that the purposes for which data typically are used
in state [agencies] usually do not include systemwide analysis.”
Databases often serve specific purposes, so
using them for other purposes is difficult at best. Data is our most important tool—so long as it can be put to beneficial uses. Agency data is terribly inaccessible. To have proper analysis, agencies need to improve their databases.
Little Hoover Commission, Too Many Agencies, p. 99. Wilmot et al., “In-House Versus Consultant,” p. 156. Ibid. Wisconsin Legislative Audit Bureau, Evaluation of Use of Engineering Consultants, p. 3. Ibid., p. 156.