FRANKFORT — After receiving complaints from local school officials about a state-mandated change in education software, Rep. Brad Montell promised to scrutinize the contract as a member of the legislature's Government Contract Review Committee.
He waited for months, but lawmakers weren't asked to review the expenditure. "It never came through," the Shelbyville Republican said.
He later learned that tens of thousands of the state's deals with private companies never come before the legislative committee that is charged with ensuring that contracts — some of them worth millions of dollars — follow state purchasing laws.
A review by the Legislative Research Commission in June 2008 found that the state signed 47,330 contracts worth as much as $3.1 billion from July 1, 2006, to May 31, 2008, that were never reviewed by the legislature. In comparison, the committee inspected 12,182 contracts worth as much as $3.3 billion in the same period.
"Where's the oversight?" Montell asked. "One of the things that we ask is, 'Is this really necessary? Can we get this done in-house?' And it looks like about half of what we contract has not been questioned."
How much the state is spending on private contractors has become a hot topic in Frankfort as legislators deal with a projected $1.5 billion shortfall in the next two-year state budget.
Leaders in the House and Senate, and Gov. Steve Beshear, have zeroed in on contracts as a way to cut expenses, but lawmakers have been frustrated that so many contracts are not reviewed, particularly personal-service contracts.
Those types of contracts are often used to hire lawyers, doctors and engineers, but the state also can use the contracts to hire general laborers for janitorial or clerical work. House Speaker Greg Stumbo, D-Prestonsburg, said the state's personal-service contracts could be worth $1 billion, but it has been difficult to get exact numbers.
Those general labor contracts are not subject to review by the Government Contract Review Committee, unlike contracts for professional services. Also exempt are most contracts for commodities such as construction material, furniture and computer hardware and software, according to state statutes.
"During this period of economic downturn, everyone has become more aware of these contracts and how important it is that we know exactly how the state is spending its money," said Sen. Vernie McGaha, R-Russell Springs, co-chair of the Government Contract Review Committee.
Lawmakers are now racing to rectify the problem. House Minority Leader Jeff Hoover, R-Jamestown, filed a measure earlier this month that would require the state Personnel Cabinet to give lawmakers quarterly updates on how many full-time and contract employees each state agency employs.
Without that information, it's hard to know what should be cut, Hoover said.
If House Bill 387 is approved quickly, it could help legislative leaders craft a two-year budget by early April. Rep. Mike Cherry, chairman of the House State Government Committee, said it's likely that his committee will consider the measure soon.
Crystal Pryor, a spokeswoman for the state Personnel Cabinet, said the cabinet would not have any problems complying with Hoover's bill.
Meanwhile, legislation that would put more contracts under the committee's spotlight is gaining traction.
Democratic Rep. Brent Yonts of Greenville, a former co-chair of the Government Contract Review Committee, has been pushing the proposal for more than three years. Yonts said he hasn't yet filed the bill, which the House has approved in previous years, because it has never passed the Senate. He's waiting for "some assurances that it will be heard in the Senate," Yonts said.
He has an ally this year in McGaha.
McGaha, who has been on the committee for a little more than a year, said he has reviewed Yont's proposal and probably will file similar legislation in the Senate as early as next week.
"The goal of my bill will be to get more contracts into the committee," McGaha said.
McGaha said Friday that Sen. Damon Thayer, chairman of the Senate State and Local Government Committee, is supportive of the measure.
Cindy Lanham, a spokeswoman for the Finance and Administration Cabinet, which oversees most government contracts, said the administration is not opposed to more oversight but has concerns about creating more bureaucracy. The vast majority of the contracts that the committee does not review are for commodities, not labor, Lanham said.
"The executive branch needs the flexibility to operate government programs for the citizens in the most efficient manner possible," Lanham said. "While we do not oppose appropriate oversight, we are looking for opportunities to streamline the delivery of services, not make the process more bureaucratic."
If approved, the measure would provide much-needed accountability and the potential for savings, Yonts said.
"This committee is an oversight committee; its job is to look at how the executive branch is spending the money," he said.
Gov. Steve Beshear said this week that he has no problem with the legislature looking at contracts to save money.
"We have been reviewing personal-service contracts for the two years that I've been here and reducing them and cutting them out when they are not needed," Beshear said. "We're going to continue that process."
Beshear included in his two-year budget proposal more than $33 million in savings from a host of efficiencies, including combining contracts for information technology and postal services.
