Contracts not working out

Instead, Gov. Phil Bredesen is looking to shift contract workers back into state employees.

In a series of public hearings this spring, state commissioners said Tennessee could save money by eliminating contractors and hiring state employees. Similarly, a state audit found that converting contractors to employees would save $5 million under just one contract.

Last year, the Legislature authorized Gov. Don Sundquist to shift from contract positions to state employees if it would be cheaper. Questions are being raised over why the Sundquist administration didn't move more quickly in doing this.

Warren Neel, who was finance commissioner at the time, says that it's not a process that can be completed overnight. New people have to be absorbed and supervised. A concern also was expressed about putting companies out of business if state contracts were abruptly pulled.

There will be further state inquiries into this aspect of taking back contracted work. In general, though, what went wrong with the idea of contracting out the work in order to save money for the state?

Apparently, the state didn't do a particularly good job of monitoring the contractors' work and the amounts they were billing. Questions also have been raised over whether the state has been violating federal labor law by treating the contracted workers as state employees but not similarly compensating them --and raising liability concerns in the process.

What is the moral to this story? Perhaps it will be that it is easy enough to say that government should be run more like a business. But -- given the unique attributes of government -- it is much more difficult to actually implement the process and make it work in a cost-effective manner.

Originally published Tuesday, April 22, 2003

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