Lines Drawn Over Outsourcing State Jobs

The latest version of a bill that would crack down on the outsourcing of government jobs has been toned down enough to calm the Connecticut Business & Industry Association.

But Attorney General Richard Blumenthal is a hard-line opponent of the trend, and remains adamant that the state should, at the very least, learn more about how government jobs are being outsourced.

“We cannot accept outsourcing — in the face of such unfair competition — as an inexorable or inevitable economic trend,” he said. “We should not be supporting outsourcing.”

CBIA takes the opposite position.

Outsourcing is, in fact, an inevitable economic trend, and those who buck it risk undercutting the Connecticut economy by driving off valued employers who routinely outsource to cut costs, CBIA officials say.

“What the legislation fails to recognize about outsourcing is that it is sometimes vital for our companies to survive,” said Jesmin Basanti, a staff attorney at CBIA. “It’s kind of a double-edged sword because while jobs are outsourced, there are still economic benefits brought to the state for this work.”

The scaled back version of the outsourcing bill would require Gov. M. Jodi Rell to prepare a report by Jan. 1, 2009 listing the contracts under which state funds are being paid for services performed either outside of Connecticut or outside the United States.

The report would also assess the economic costs and benefits of the outsourcing of state contracts. Currently, that information is not available.

“First and foremost, this bill very simply and solely requires the state to do its due diligence,” Blumenthal said. “It doesn’t bar companies from bidding on a contract; it simply requires that we collect the knowledge and data.”

An earlier version of the bill, passed unanimously by the Committee on Labor and Public Employees, would have gone much further.

The bill would have required every company that responded to a request for proposals from the state to detail where any contract or subcontract used would involve work done outside Connecticut.

Unions Voice Opposition

It had the support of the Working Families Party and Council 4 of the American Federation of State, County and Municipal Employees.

Brian Anderson, with AFSCME Council 4, said the state is constantly losing “good paying” manufacturing jobs and the outsourcing bill could stem the tide.

The provision addressing RFPs, in particular, raised the hackles of the CBIA. It was dropped in a substitute version of the bill that passed the Government Administration and Elections Committee by a 7-4 vote.

Basanti of the CBIA said similar measures had been introduced in other states but have languished. However, she said CBIA remains on guard against the possibility that an amendment it considers anti-competitive will be attached at the last minute.

In particular, she said, her association wants to derail any effort to adopt a “mirror rule” that would create reciprocal rules to deal with any state that restricts job outsourcing to Connecticut.

The problem with such “retaliatory” legislation is that it has the potential to put Connecticut in a negative competitive light when it recruits new business, Basanti said. She noted that such a law would be inconsistent with the state’s efforts to recruit foreign companies to Connecticut.

The CBIA has received calls from member companies expressing concern about the outsourcing bill. Many have become accustomed to outsourcing certain work to cut costs to keep pace with competitors, and they are alarmed that the state might tie their hands.

Anti-Competition

Asks Basanti of the CBIA: “Do we really want to tell a company with 300 jobs in the state that they can’t outsource and then they have them move to another New England state?”

Blumenthal said he supports the outsourcing legislation because of his long-standing concern about where state money is spent.

“We need to really assess and evaluate all of the costs associated with outsourcing and the effects on working labor,” he said.

Straddling the middle ground is the state Department of Administrative Services, which supports domestic products and services and the need to assist local companies.

But in its official testimony, DAS expressed concern that restricting outsourcing could “have an unintended detrimental impact on most of Connecticut’s own businesses” and lead to possible “retaliation by other states.”

The legislation may prove to be costly to enact, according to the Office of Fiscal Analysis. Because a cost benefit analysis would need to be completed in short order and many state agencies do not have the expertise to do it, “significant costs” would be incurred to hire consultants.