A booming market for consultants may be coming at the expense of Arizona taxpayers, according to a report by the state Auditor General’s Office. The study found that as of January the state Department of Transportation had 430 contracts with 121 private consultants worth $559 million.
They were involved in chores such as obtaining necessary rights of way for highways and preparing projects for bidding to the actual design of roads.
Potentially more telling, the agency’s use of outside consultants has increased by 424 percent over the last decade, even after adjusting for inflation.
Auditor General Debbie Davenport said there are benefits to using consultants, including the flexibility to deal with changing workloads while not increasing the staff.
But Davenport said studies suggest that farming work out does not reduce costs overall. In fact, she said, it may actually be more expensive for taxpayers because state employees are still needed to monitor the work being done.
She also said this lack of internal experience can have fallout because many of the people who monitor the work don’t have the background.
And Davenport said the situation has a cascading effect: More contracting with outside companies means fewer people on staff with the expertise to do these jobs, which, in turn, can increase the need to contract jobs out.
Much of that outside expertise actually appears to have started at ADOT.
Davenport noted that ADOT’s Intermodal Transportation Division, which constructs and manages the state’s highway system, surveyed nine companies which do consulting for the agency and found that 45 percent of these firms’ workers were former ADOT employees.
Part of the problem, though, could be money.
ADOT reports that nearly half of its resident engineering positions were unfilled as of February, forcing the state to turn to outside consultants. And the agency reports that one out of seven workers who left in 2005 did so because they were offered better jobs or higher salaries in the private sector.
And an ADOT survey concluded that engineer salaries were anywhere from 13 to 26 percent lower than other public or private positions.
Davenport said the agency has tried to retain some of these workers who submit their resignations with counteroffers. But she said many workers are not receptive, either because they’ve already accepted another job or that the new salary is too high for ADOT to match.
The audit said this situation presents dangers above and beyond the higher cost to taxpayers. And key is lack of competence.
She said the average experience of state engineers actually has declined in the last five years.
Complicating matters, Davenport said, is that the less experienced the staff, the less competency for those who are left to manage the projects now being farmed out to consultants. And she said a study done for the Georgia Department of Transportation found that the use of consultants resulted in less accountability and less control in the timing and quality of projects.
Davenport said while ADOT believes that field inspectors — the people who go out daily to monitor projects to ensure they are being done right — need at least five years of experience, one-third of them do not meet that qualification.
ADOT Director Victor Mendez said the problem will continue as long as state salaries run less than those in the private sector.
“It is probably unreasonable to try to compete directly with the private sector on salary in the current economy where the demand for engineering services is so high,’’ Mendez said in a formal response to the audit.
Mendez said ADOT was allowed to adopt a new salary structure for workers. But he said the Legislature never provided the necessary funds.
He said the agency is using other techniques to fill vacancies.
For example, ADOT runs an internship program for college students to try to recruit them. And he said the agency runs what he called “sunshine ads’’ in newspapers in the Midwest and on the East Coast during the winter to try to entice engineers to move to Arizona.