New Contracting Out Law Saves Money and Improves Service to the Public

On July 1, 2005 the Personnel System Reform Act of 2002 (PSRA) went into effect. One provision allows state agencies and universities to competitively contract for services provided in the past by state employees. National research shows that competitive contracting typically reduces agency costs by between 10% to 25%, with increases in efficiency, service and quality.

The PSRA also requires that the Joint Legislative Audit and Review Committee (JLARC) evaluate how effectively state agencies have used competitive contracts. JLARC issued its report on January 4th. Disappointingly, in the 16 months since the bill took effect, only three agencies have actually exercised their authority to open some of their work to competitive bidding.