Oregon Pays Big Bucks to Contractors

Oregon may be in the middle of a budget crisis, but that hasn’t stopped state officials from committing nearly $10 billion to outside contractors, an Oregonian investigation has found.

While talking about furlough days for state workers and cutting services to the poor, lawmakers approved spending more than $4 million on a consulting firm to represent the state’s interests in the Portland Harbor Superfund cleanup.

Oregonian reporters have reviewed thousands of state contracts, some of which appear to contradict the penny-pinching messages coming from state leaders. Others simply show a state willing to pay top dollar when it needs outside help.

Examples include $100,000 to the pro-consumer group OSPIRG to drum up opposition to insurance rate increases; at least $100,000 for diversity training and other employee workshops; and tens of thousands of dollars to a headhunting firm to place help-wanted ads on the Internet and in local newspapers.

“It’s truly not rocket science to go to Craigslist and place an ad,” says freshman Rep. Julie Parrish, R-West Linn, who recently began scrutinizing state contracts. “I mean, how much hiring are we doing anyway? You can’t manage that in-house?”

The review also found money is flowing out of state.

Of Oregon’s $9.7 billion in active contracts with more than 4,000 private vendors, at least $3.3 billion, or about a third, is going to out-of-state companies. A Michigan-based printer, for example, got a $133,000, 10-year contract to print and bind the Oregon Blue Book, the state’s official almanac.

Sometimes there was no competition. State law that requires competitive bidding to keep costs down is riddled with exceptions, and some deals go through without public bids. For example, the Oregon Health Authority inked a $650,000, no-bid contract with a Washington, D.C., consultant to help navigate state and federal health reforms.

Retirees got a piece of the action. The state spends millions of dollars on contracts that go to former state employees who “retire,” form consulting companies and work on contracts at rates that can exceed $100 an hour.

The size and scope of state contracts range widely, from plastic chairs for prison inmates at $133 apiece, to highway construction projects and computer technology upgrades that run into the tens of millions of dollars.

Lawmakers, both conservative and liberal, and union leaders complain about the difficulty of monitoring how much is spent and who gets paid.

“We’ve been trying to draw attention to the number of contracts, the type of contracts and the accountability of contracts for a long time,” says Heather Conroy, executive director of Service Employees International Union Local 503. “It’s such a large expenditure, and a lot of times these go unscrutinized.”

Oregon lawmakers, hamstrung by the economy, have cut programs and reduced the public payroll to plug a $3.5 billion budget hole. Recent forecasts show they may have to cut more. But amid the austerity, The Oregonian has found plenty of business as usual.

The state has an open-ended $1 million contract with Bernard Hodes Group, a New York-based recruitment company, which is under contract to place all job ads for the state and track responses. Over the past year, the state spent $200,000 for the work.

“It’s a convenient way to place ads,” says Barry Emmerling, who handles recruitment at the Oregon Liquor Control Commission. “We’ve had some good luck with them.”

There are times when it makes sense to seek expertise outside the state, says John Tapogna, economist and president of EcoNorthwest in Portland. But he adds, “If Oregon firms routinely can’t compete well in some areas, it’s important to ask why.”