State government’s new contract watchdog agency is one of many that have faced budget cuts in recent years.

But key state lawmakers now are questioning whether the decision to effectively strip the Contracting Standards Board of all funding this fiscal year is costing more money than it’s saving.

“This was one of those penny-wise and pound-foolish cuts,” Sen. Gayle Slossberg, D-Milford, said Wednesday. “There is no other time when we need this board up and running more than we do now. It was short-sighted.”

Slossberg was referring to the decision by the legislature and Gov. M. Jodi Rell to cut the planned appropriation for the contracting board from $950,100 to $10,001. The latter is more of a token amount used to keep the agency’s account open rather than an allocation intended to fund any work.

The board, which began work in January but still lacks an executive director, was the linchpin of the so-called “clean contracting” statute enacted in October 2007, largely in response to the contracting scandals that drove former Gov. John G. Rowland out of public office into July 2004, and into a 10-month federal prison term. Rowland admitted he accepted about $100,000 in gifts from state contractors and from his staff.

“I really think we need to take another look at this next session,” said Rep. Christopher L. Caruso, D-Bridgeport, who co-chaired the Government Administration and Elections Committee in 2007 when the panel drafted the “clean contracting” statute.  “The whole reason this was set up was to avoid corruption, but also to find efficiencies in government.”

Since the statute was enacted nearly three years ago, state officials have grappled with several budget deficits, and the contracting standards board has been one of several fiscal casualties.

The board was given a $665,000 budget in the 2008-09 fiscal year, during which it was supposed to prepare for full-scale operations in 2009-10. But both Rell and legislative leaders were slow in appointing board members, and most of those dollars went unspent.

Similarly, most of last fiscal year’s $775,000 for the board was canceled to help close a budget deficit.

Rell’s office declined to comment Wednesday, but both the administration and legislative leaders have defended the funding cuts in the past, arguing tough choices had to be made to close budget deficits.

Gale Mattison of West Hartford, who chairs the 14-member, volunteer standards board, said recently the panel has been unable to hire either of the two key paid staffers it needs to do its work, an executive director and a chief procurement officer.

One of the board’s primary responsibilities is to administer a new series of rules governing when state agencies can hire private sector contractors. Before privatizing most services currently performed by state employees, agencies must develop a cost-benefit analysis that demonstrates at least a 10 percent cost savings, and no loss in quality of service.

The law also makes the presumption that a “core governmental function should not be privatized,” and any department’s cost-benefit analysis arguing that private contracting is necessary must demonstrate that the agency in question lacks staffing to do the job properly.

One of the contracting board’s first challenges recently arose when the union representing about 1,000 transportation engineers, analysts and inspectors challenged the administration’s long-standing practice of hiring private companies to perform bridge inspection work.

The DOT insisted that because of its history of hiring private contractors in this area, a cost-benefit analysis wasn’t required, and Mattison said that after a review, he agrees.

But Mattison, a retired executive financial officer from the state Office of Policy and Management, also said the law empowers the standards board to order a review of any state service program once per year, regardless of other conditions. And given new questions raised by a DOT analysis of bridge inspection costs, he said he believes the contracting board should review the inspection program. But that would require the board to have paid staff to carry out the work.

“I thought the DOT was very forthright in what they were giving us,” he said. “But it still raises some questions about cost-effectiveness.”

The report submitted by Transportation Commissioner Jeffrey A. Parker and released by the State Contracting Standards Board showed the agency spent $50.1 million on private bridge inspectors and $24.1 million on comparable in-house work between the 2006-07 and 2009-10 fiscal years.

That same report also said state workers inspected about 46 percent of all highway bridge deck square footage. Highway structures comprise the bulk of bridges under DOT supervision, totaling about 5,300.

Local 2001 of the Connecticut State Employees Association-Service Employees International Union quickly hailed that as evidence that public sector employees, in this instance, were more cost effective.

“This shows the cheaper, better faster myth of the private sector is just that, a myth,” union spokesman Matt O’Connor said.

But Parker’s report did detail several factors that could explain higher costs tied to private sector work.

Private firms generally are assigned “the largest and most complex structures and bridges with difficult or time-consuming access requirements,” the report states, adding that larger bridges often require equipment the DOT either doesn’t have, or lacks sufficient numbers of, such as bridge scaffolding and lifts mounted on barges or boats.

The DOT also relies exclusively on the private sector to inspect the 330 railroad bridges under its care, which further inflates the cost of private inspections.

DOT spokesman Kevin Nursick declined to comment about the report Wednesday.

But O’Connor charged the agency’s reliance on contractors also is driven by insufficient staffing, a longstanding union complaint.

Parker’s report does state that “the department does not have on its staff personnel qualified to perform underwater inspections or the mechanical and electrical inspections of movable bridges.”

The report adds that “inspections of movable, suspension and other bridges with unusual design features often require highly specialized inspection knowledge and procedures. This expertise is most easily secured by CE (Consultant Engineering) firms which can access the needed engineering personnel from anywhere in the country.”

O’Connor said that the department’s inadequate staffing levels and longstanding practice of hiring private contractors has created a situation where a relatively small number of businesses can win contract awards at despite relatively high bids. According to Parker’s report, the DOT currently contracts with eight consulting engineering firms for bridge inspection work.

Slossberg said regardless of which side is right in this debate, if a contracting board analysis helped save even $1 million, it would cover the board’s entire budget – as originally planned – for this year.

“We know in the past that the state wasted millions of dollars on contracts and that’s why we passed this law,” added Slossberg, who has been a co-chairwoman of the government administration panel since 2007.

With state government facing a $3.37 billion deficit projection for the upcoming fiscal year that starts July 1, 2011, Slossberg, who also leads a legislative task force charged with finding efficiencies in state government, said the contracting board could be an effective complement to that effort. “It’s like there’s a storm coming,” she added, “and now that it’s raining, we’ve canceled our insurance.”

Keith has spent most of his 31 years as a reporter specializing in state government finances, analyzing such topics as income tax equity, waste in government and the complex funding systems behind Connecticut’s transportation and social services networks. He has been the state finances reporter at CT Mirror since it launched in 2010. Prior to joining CT Mirror Keith was State Capitol bureau chief for The Journal Inquirer of Manchester, a reporter for the Day of New London, and a former contributing writer to The New York Times. Keith is a graduate of and a former journalism instructor at the University of Connecticut.

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