Originally created 12/30/00

Outsourcing takes tenth of agency funds



ATLANTA - Roughly 10 cents of every dollar state agencies spent in the last fiscal year went to contracts performed by outside entities, according to a recent report by auditors.

But 49 of the 75 largest contracts were "outsourced" to other state agencies or nonprofit organizations. Just one-third of the biggest contracts went to private companies.

A $85.5 million arrangement for Medical College of Georgia to treat prisoners for the Department of Corrections was the largest of the nearly 6,000 contracts evaluated by the Department of Audits and Accounts. The 183 outside contracts for the Corrections Department were among the highest number, but it is a tenth of the 1,847 contracts signed by the Department of Human Resources for a total of $648.8 million.

The Department of Community Health spent the next largest amount on outside vendors, $192.8 million, and the Department of Education signed the most contracts after Human Resources with 565.

Many of the Human Resources contracts were with other government agencies or with nonprofit foundations set up to provide services to people with handicaps who qualified for state assistance.

On the other hand, Human Resources got $54 million for two contracts with the Department of Community Health to administer benefit programs.

The report was prepared at the request of Rep. Alan Powell, D-Hartwell, chairman of the Outsourcing and Request for Proposals Study Committee of the House Appropriations Committee.

It did not include comparisons to prior years or show what portion of each agency's budget is outsourced. Gathering the data for one year from 87 agencies was difficult, with many inconsistencies in how agencies reported contracts, said Paul Bernard of the Audits Department.

One of the seven state entities that didn't supply information to auditors was the Governor's Office. The report also intentionally omitted the Department of Transportation, which generally contracts with private companies for construction, and it didn't include the University System of Georgia.

Half the contracts were for shorter than one year, and 78 percent of them were for less than $100,000. Of those not for basic services such as prison beds or medical care, the largest category was computer services, with more than 200 contracts worth $67 million.

Rep. Terry Coleman, chairman of the Appropriations Committee, asked Mr. Powell to review the state's practice of contracting with vendors and how requests for proposals are distributed.

"Sometimes, I believe the requests for proposals are not uniform," said Mr. Coleman, D-Eastman. "RFPs sometimes are exclusive in some ways that may be unnecessary and unnecessarily expensive."

So far, no legislation has resulted from the outsourcing report, Mr. Coleman said, but further study during the upcoming General Assembly session could lead to a bill being drafted.

Contracts

Below are the 10 state agencies that reported the most contracts with outside entities (excluding the Department of Transportation and the University System of Georgia) followed by the number and value of the contracts:

Department of Human Resources; 1,847; $648.8 million

Department of Education; 565; 38.2 million

Department of Corrections; 183; 163.3 million

Department of Natural Resources; 181; 100.9 million

Department of Community Health; 180; 192.8 million

Department of Technical and Adult Education; 113; 9.7 million

Department of Administrative Services; 94; 71.8 million

Board of Pardons and Paroles; 75; 2.0 million

Georgia Public Telecommunications Commission; 74; 4.5 million

Soil and Water Conservation Commission; 70; 1.0 million

Source: Department of Audits and Accounts

Reach Walter C. Jones at (404) 589-8424.



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