And that’s not such a good thing, as former deputy state comptroller Billy Hamilton pointed out in testimony before the House Select Committee on Government Efficiency and Accountability.
Don’t expect savings anytime soon. Check out other states that tried the same. Chew the fat with experts and possible vendors. Make sure the private sector’s offering to do it for 30 to 40 percent less than your state agency can, because you have “lower wage costs and no profit requirements.” Write down everything you expect — down to the tiniest detail — before you solicit bids. Bring good lawyers and don’t walk away when the deal is inked: Watch the contractor like a hawk.
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Rep. Pete Gallego, D-Alpine, the panel’s chairman, asked Hamilton why there are so many problems with Texas outsourcing efforts. Gallego mentioned the Accenture contract to run call centers for social services signups, and other committee members mentioned the fiasco with an IBM contract to consolidate state computer services.
Hamilton said there is a “weird dynamic between state and vendors where the state people sort of imagine in their heads what they want, but can’t articulate it on paper, and the vendors — who want these very large projects — say, ‘Yes, we can do whatever you want.’ And then once the contract is signed, … things go awry.” Bureaucrats ask for things they believe they requested, he said. Contractors respond that it will take a change order and cost the state more money. Things then go downhill rapidly, Hamilton said.
I’ve talked about this before when writing about the state’s outsourcing efforts, and I’ll say again that this is no different than how it usually goes in the private sector. The buyer and the seller have very different ideas about what is and isn’t covered in the contract, and in the end it always costs more and saves less than whatever both parties were saying at the time of the signing. In the case of the state of Texas and the religious fervor with which many of our officials believe that the private sector is always better than the public sector, it’s a recipe for disaster, as we saw with HHSC and Accenture. I don’t know what schemes might be cooked up by the next Legislature as part of its efforts to balance the budget, but if any are, we should keep Hamilton’s words and our own past experience in mind.