WRAL Investigates

Senator: N.C.'s private consulting contracts 'very expensive'

Posted June 1, 2010 6:00 p.m. EDT
Updated June 3, 2010 9:11 a.m. EDT

— More than 150,000 employees conduct the state's business everyday from the highways to college classrooms. But when the agencies look to study an issue or hire top level managers, they often spend public money for private sector help.

“I think it's staring to get very expensive, and we need to be concerned about it,” said Sen. Dan Blue, D-Wake.

Some lawmakers, such as Blue, said they worry government is too quick to pay for private expertise.

Records show one of the state's largest agencies, the Department of Transportation, spent $166 million during the past two years on more than 2,500 private consulting contracts, covering everything from road surveys to bridge design to data analysis.

“It shouldn't be surprising that we have that much. We have a good core of people here, but we still require that expertise from the outside to help us meet that schedule,” said DOT spokesman Scott Blevins.

Blevins says that in a $2.9 billion budget, $166 million isn't much. He says private contractors are cost effective because the state doesn't have to hire more full-time talent. In recent years, the DOT spent nearly $3 million on a management and performance study and $6.4 million studying the needs and future of Interstate 95.

To those who argue that the DOT should rely upon the expertise within its department, Blevins says “we don’t have all the expertise we need.”

“We may be double paying a lot of things while we've got somebody on pay roll who's doing something or is qualified to do something and yet we have a contract with a private entity,” said Senate Minority Leader Phil Berger, R-Rockingham.

Despite that concern, WRAL found a wide range of public money paying for private consulting. The community college system spent nearly $75,000 to study the impact of enrolling illegal immigrants. The Town of Cary invested $30,000 for a bus shelter prototype.

The Department of Correction received a study to improve probation, but didn't pay anything because it was performed by a national group for free.

After an executive committee was formed to find a new athletic director at North Carolina State University, the group's first order of business was hiring a search firm for $75,000.

“While it costs money, it's a bigger investment to make a mistake,” said N.C. State Chancellor Randy Woodson. “If you just put a call out on the street and say, ‘Y’all come,’ you're not going to be happy with the folks who walk through the front door.”

Instead, the chancellor says private firms have a broader, more confidential reach to find top candidates who aren't looking for jobs. A private search firm helped bring him from Purdue University.

“I wouldn't be here if it weren't for a search firm that kept me engaged in the process,” Woodson said.

Erica Baldwin of the State Employees Association said she believes the state should rely on it's own workforce instead of outsourcing. For now though, most agencies argue private contracts are an important part of doing the state's business.

“They need to look first at these high priced consultants before they even think about cutting services,” Baldwin said.

When asked if DOT leaders have had a conversation about reducing the amount they spend on outside consultants, Blevins said: “We have not had that conversation.”

The American Council of Engineering Companies argues private consulting can ultimately achieve a cost savings for the state.

Representatives cited a 2008 study by the Polytechnic Institute of New York University which found that the state of New York could achieve significant cost savings by using private sector engineers for the design of public projects. When compared to in-house design costs, outsourced design costs were found to be at least 14 percent lower, based on conservative assumptions.

In addition, ACEC representatives said public money helps the economy with good private sector jobs.