Hidden Branch of Government
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The Hidden Branch of Government: Pulling back the curtain on State of California contract spending and performance

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Each year the State of California spends billions of dollars on thousands of service contracts, yet the state’s tools for tracking contract spending and performance are inadequate and outdated. The value of the 13,600 personal services and consultant contracts currently in effect is $34.7 billion. Disclosure about the state’s contract spending, however, is so flawed that neither the legislature nor the public has any way of really understanding how much money state agencies are spending on contracts in any given fiscal year. Considering the immense amount of California’s scarce public funds tied up in costs in outsourced contracts, combined with the confused and fragmented system for reporting on those contracts and their performance, we must conclude that state government in effect has another branch, one that is hidden from legislative oversight or public review.

In this paper, we propose two important reforms in how the State of California tracks and monitors its contracting out. The first reform we address focuses on the State Contract Procurement Registration System (SCPRS) operated by the Department of General Services (DGS) to track contract spending. The transparency requirements of Assembly Bill 756 – a detailed annual public report of contract spending by department – rest on a reformed or replaced SCPRS as a prerequisite.

A second critical reform is to establish a tracking and monitoring system that enables public scrutiny of the performance of large projects. By holding all involved in large projects accountable to the public, private contractors are likely to improve their record of contract compliance. Both reforms will contribute to a full revelation of the waste inherent in much of state contracting out and – in many cases – the savings to be obtained through bringing the work back to state employees.

These reforms, including the passage of AB 756, will pull back the curtain on this hidden branch of government so public policy-makers can make rational decisions on behalf of the public.