New York State is deploying several thousand contact tracers, workers tasked with interviewing COVID-stricken residents and notifying the people they may have infected. But Governor Andrew Cuomo is taking a notable step that will likely make the effort faster and more efficient: he’s having someone else do the hiring.

Instead of working for a state agency, the tracers will be employed by Public Consulting Group, a Massachusetts-based firm. The state has paid PCG over $273 million since 2012 for work on technology-focused projects related to Medicaid and state Education Department data, among other things.


This is an installment in a special series of #NYCoronavirus chronicles by Empire Center analysts, focused on New York’s state and local policy response to the coronavirus pandemic.


Consultants like PCG operate outside the state’s civil service rules and labor contracts. That gives them greater flexibility and discretion in hiring and deploying employees, and makes them attractive to state agencies looking to tackle specific challenges. Consultants can also pay higher salaries in part because they aren’t forced to participate in the state’s archaic pension system (and employees aren’t stuck paying in, either). Most importantly, consultants know that if they can’t deliver the products or services they’ve promised, competitors are lined up waiting to replace them.

Public employee unions view the state’s use of consultants as an existential threat. The unions, and the state lawmakers they help keep in office, deride consultant agreements as “wasteful spending” and Cuomo has vetoed legislative efforts to create obstacles to awarding new ones. The governor has been allowed to exercise special emergency powers with respect to state procurement, but under normal circumstances, consulting contracts have to undergo robust review by state officials. And Cuomo is motivated to use consultants responsibly because he ultimately has to balance the budget.

It’s remarkable—and indicative of a deeper problem—that the state is leaning on outside vendors when an unknown but presumably considerable fraction of its workforce is getting full pay while staying at home and not working. Many of the workers now telecommuting for state agencies could only do so after the Cuomo administration and unions hammered out new labor agreements. And it again begs the question of how much of the state’s COVID response has been hindered by its own labor policies.

Cuomo is lucky to have the flexibility to get the contact tracing operation underway. Hopefully the experience motivates him to champion legislation giving local governments and school districts similar latitude, especially with state aid being on the chopping block.

As E.J. McMahon and Terry O’Neil explained in Taylor Made, local officials are routinely hamstrung in their efforts to make government more efficient by using outside firms:

Virtually any idea for saving money through outsourcing or consolidation of services must first be negotiated and agreed to by the union representing the employees who currently provide the service. Thus, absent a union’s agreement, the taxpayers may be forced to shoulder the burden of outdated, inefficient or costly delivery of services.

Of course, the fact that a public official can use consultants to deliver services more efficiently doesn’t mean he or she will: New York City’s contact tracing effort was set to run through a non-governmental organization, POLITICO reported. But union pressure prompted Mayor Bill de Blasio to instead have the city’s Health and Hospitals Corporation quarterback the effort. City contact tracers will now be subject to city hiring and employment rules—and eligible to join the municipal employees union.

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