State sends only a small percentage of its contracts offshore

By: TOM CHORNEAU - Associated Press | Thursday, January 20, 2005 9:43 PM PST ∞

SACRAMENTO -- Even as unions brace for reorganization plans from the Schwarzenegger administration that could send thousands of government jobs overseas, an audit released Thursday found state agencies have only a handful of contracts where work is being performed offshore.

The review also found, however, that documenting where work is being done is difficult and there are few rules guiding state officials when evaluating contractors and subcontractors who may use offshore workers.

"It is difficult in this environment because state departments do not collect or track information on how much work is being done offshore," said Steven Hendrickson, chief deputy to State Auditor Elaine Howle. "If the Legislature wanted to know more about it, which may not be a bad idea given the policy issues, they would have to direct it to get done."

Still, auditors surveyed 35 state agencies and five University of California campuses and found 185 contracts with a combined value of $640 million in which at least some of the work is believed to be performed offshore -- at least half of which were computer-related services such as software development and maintenance.

Because the state is not required to collect information from contractors where work is performed, auditors said it is unclear how much of the $640 million in work is actually done overseas. But state officials said among 109 contracts, which comprised about $350 million, less than 3 percent was done overseas.

One of the largest offshore contracts is with J.P. Morgan Chase, which has a nine-year, $451 million contract to help oversee the state's food stamp program and uses the call centers offshore to handle questions from beneficiaries. State officials estimate that only about $900,000 of the contract is done overseas.

Even though the amount of state work done overseas is a tiny faction of the nearly $5 billion the state spends on goods and services each year on contracts with private vendors, union officials point out that ratio could change.

Gov. Arnold Schwarzenegger's landmark program for making the state more competitive and efficient, the California Performance Review, calls for the removal of barriers to private companies from competing for work not done by state agencies.

Indeed, many of the companies that helped shape the administration's Performance Review and influenced its recommendations, have sent thousands of jobs overseas to cut costs.

"The CPR clearly encourages contracting out and we're clearly concerned about it," said J.J. Jelincic, president of the California State Employees Association, the state's largest public employees union.

"To the extent that you send work out of the country, it displaces jobs here. We want state jobs to stay in the state."

No decision has been made by the administration to support any of the privatization ideas proposed in the Performance Review and Schwarzenegger himself has not said if he supports the concept. But, last fall the governor vetoed several bills aimed at restricting the offshoring of state jobs.

"There is a right way and a wrong way to expand economic opportunities in California," the governor said in his veto message of AB1829 from Assemblywoman Carol Liu, D-La Canada Flintridge. "The wrong approach is to implement measures that restrict trade, invite retaliation or violate the U.S. Constitution and our foreign trade agreements."

On the Net:

http://www.bsa.ca.gov/bsa/index.html

California State Auditor

http://cpr.ca.gov/

California Performance Review

First name only. Comments including last names, contact addresses, e-mail addresses or phone numbers will be deleted. Attempts to misrepresent your identity or impersonate any person will not be approved. All comments are screened before they appear online, so please keep them brief. Comments reflect the views of those commenting and not necessarily those of the North County Times or its staff writers. Click here to view additional comment policies.