Tax Watch

Gov. Andrew Cuomo vetoed legislation this week that would have required state agencies planning to contract out work that would cost more than $500,000 in a 12-month period to compare the contract amount with how much the services would cost if kept in-house. Contracts for services such as analysis, training, data processing, health care and auditing would have been included. But professional design services, legal services and services in connection with litigation, such as expert witnesses, would have been excluded.

The legislation would have required the state Office of General Services to prepare an analysis by Dec. 31, 2015 on the effectiveness of the cost-comparison studies and the cost savings associated with them.

The governor’s veto message has not been posted yet on the state’s legislative information website.

According to the bill’s sponsors, New York spends more than $2 billion a year on consultants, and in many cases, the work could be done more cheaply by state employees. A 2009 analysis by the Assembly estimated that the state could save $250 million over three years by reducing the use of information-technology consultants. In 2010, the Senate Task Force on Government Efficiency estimated the state Department of Transportation could save roughly $46 million annually by decreasing the use of consultants.

The legislation had the support of state-employee unions, including the Public Employees Federation.

UPDATE — The governor said in his veto message that the state “already analyzes and weighs the beneift of consulting services to the state.

“The State Finance Law already requires that agencies establish and document the need for services and ensure that the cost is reasonable. The State Finance Law also requires that service contracts be awarded on the basis of ‘best value,’ which optimizes not only cost, but also quality and efficiency. This bill, on the other hand, focuses on cost alone. For these reasons, I disapprove this bill.”