That's a surprising sentiment as state agencies brace themselves for a severe global recession. Government, like all sectors of the U.S. economy, will be expected to do more work with fewer workers during this economic uncertainty. Some agencies will undoubtedly have to forgo hiring full-time employees for new IT projects.
The DIR has a readymade alternative: its retooled IT Staffing Services program. The department's program offers competitively awarded contracts for temporary technology staff -from software testers to programmers - at wages capped at a maximum hourly rate.
Sherri Parks, the director of the DIR's Contracting and Procurement Services Division, said she thinks Texas will likely use the staffing services program more frequently during the economic downturn to control costs. It provides a cost-effective option, Parks said, especially if the state freezes hiring because of budget shortfalls.
And a bad economy means that more-qualified workers will be available. "When folks lose their jobs, this becomes a more viable alternative; vendors are able to attract a higher level of expertise for our agencies to take advantage of," Parks said.
In fiscal 2006, the DIR revamped its staffing services contracts as part of a larger cooperative program for information and communications technology contracts. The DIR knew internally that its workflow processes were too cumbersome, inflexible and costly to meet the needs of the state agencies and municipal governments that use them - like the Health and Human Services Commission, the Employee Retirement System, the Department of Transportation and the city of San Antonio.
The agencies and customers that used the old contracting program had to sign an interagency contract with the DIR. When they wanted to select a worker, they'd send their requirements to the DIR, which would send out a solicitation, and then staffing services vendors would send resumés back to the DIR - those steps of the process are mostly unchanged in today's system. But other requirements have since been streamlined to eliminate unnecessary paperwork: No. 1, the DIR would also do a full contract amendment with each vendor every time a worker was hired; No. 2, the vendors would invoice the DIR; and No. 3, the DIR would bill the end-user customer. An interagency contract with the customer is no longer needed.
"It was very administratively burdensome," Parks said. "It required us doing the billing, having a contract with the customer and doing an amendment every time we hired a worker."
Furthermore, it could take at least a month from the intent to hire to actually hiring a temporary IT staffer. "It was nearly impossible with the prior process to get someone onboard in a matter of days," said Cindy Reed, the DIR deputy executive director of operations and statewide technology sourcing. Now a CIO can complete a temporary hire in as soon as one week.
Besides simplifying the bureaucratic hurdles, the DIR made other changes to help its customer agencies. The department consolidated the job descriptions for these temporary IT employees to 15 categories - there were 51 prior to 2006.
Parks said the DIR modified its job titles to fit the state auditor's job titles, which were already familiar to contract users. "It really wasn't difficult, and it made it better for our customers because they already understand the state auditor office job titles and descriptions, so it falls in line with the state job classifications."
The paring of job categories allowed the DIR to go a step further and enact a "not-to-exceed cap" on the hourly wages of temporary IT staff hired under these template contracts. The most expensive job category makes no more than $125 per hour, though before, the contracts could balloon much higher. "For instance, you might have a programmer
where a vendor could bid anywhere from $50 to $600 an hour depending on what specialty that programmer was, so the rates were not really controlled," Parks said.
By controlling costs in this manner, the DIR generated an estimated savings of $21 million in fiscal 2008. At the same time, more state agencies and local governments are participating in these contracts that the DIR has made with staff services vendors. In fiscal 2006, the DIR did about $42 million in sales from the staffing services contracts. In fiscal 2007, after the retooled contracting process, sales jumped to $71 million. In fiscal 2008, sales totaled an estimated $90 million.
That volume is expected to grow further because customers' usage of the staffing services contracts is growing at double the rate of the DIR's other contracts, according to Dana Parker, the director of the DIR's Supply Chain Support Office.
Short-Term Flexibility
According to the DIR, the most common job category that's hired is a "developer analyst," accounting for 26 percent of total hires. Duties include "analyzing systems to develop programs for computer applications, writing solution programs, documenting the methods and procedures used in program development, and testing and correcting programs." Pay for a developer analyst ranges from $63 to $107 an hour, depending if the worker is hired for an "emerging," "core" or "legacy" technology - the three general categories of expertise that the DIR hires under. "If some new whiz-bang technology comes out, it's going to be classified in the emerging technology," Reed explained.
State agencies use all the job categories. Project managers, PeopleSoft developers, testers and break-fix workers are commonly needed. When the Texas Health and Human Services Commission (HHSC) took over operating some of the Texas Integrated Eligibility Redesign System from a vendor about a year ago, the HHSC leaned on temporary workers hired through the DIR's staffing contracts to meet this new duty.
"We use a combination of state and contractor staff, but if they have a highly required protocol that you just can't find off the street, we basically have to solicit for it, then we use the [DIR] process for that," said Eugene Lopez, the HHSC's director of budget and procurement. "We have some technical contractors here. It's the only way you can get those people with that background." The HHSC has about 130 contractors working at any one time, he said.
Mel Mireles, CIO of the Texas Employees Retirement System, also uses the DIR's staffing services contracts. His agency has six to 10 contracts aboard during a typical time frame, he said. Prior to coming to work for the Employees Retirement System, Mireles was the CEO of HBMG Inc., which was awarded DIR contracts for providing staffing services. So Mireles has been on both sides of the fence as a government employee and a vendor.
The DIR wage caps are either a godsend or a nuisance, depending on which side you're working for, he said.
"From the agency's standpoint, they're a good thing because now you can budget, as long as you know the [job] category that you're looking for. The issue is that you get what you pay for," Mireles said. "From the vendor's standpoint, it's very limited because you're pricing yourself down from the market. In other words, I may have a very good candidate who could get this stuff done and he's very good, but he exceeds the [$125] price cap on your labor rates. I can't send him. So I'm going to give you my substandard person who is just as good and he doesn't cost as much, but it's going to take you longer - so, in essence, what have you accomplished?" (The DIR disagrees with this interpretation, citing that usage of these contracts has doubled and the number of resumés meeting requirements has also increased.)
In addition, some vendors are bothered that
they are now only allowed to submit one resumé for each hiring solicitation, Mireles said, unless the government agency specifically asks for more.
"From the vendor's standpoint, it's very limiting. I might have two, possibly three good candidates, but I couldn't submit them - so from the vendor's standpoint I didn't like it," he said. "From the standpoint of the agency and the DIR, they have to do that, and I understand that now, because otherwise you're going to get 300 bodies. It's too much work."
When the DIR put the staffing services contracts out for bid, the department took all vendors' rates and performed a statistical analysis of those market-driven rates Parks said, to formulate the DIR's "not-to-exceed" rates. On average the vendors pay 3 percent less than the not-to-exceed rate.
"That's where savings in these economic times really come in, because folks are competing more than they maybe had to in the past," Reed said.
Fishing for Customers
If the DIR's IT Staffing Services program has a flaw, Mireles said it's that he believes the wage cap is too low - an opinion he said most vendors share. "You have to go out and look at what these people are costing today, and [DIR] needs to refresh that. The labor rate hasn't changed for at least 18 months," he said. The DIR will resolicit the program in spring 2009, Parks said, at which time the pay scale will be re-examined.
Because the contracts are streamlined and cost-effective, the DIR expects more government entities to use them. "One of the initiatives we're working on contemporaneously is how we can promote and increase the awareness among those customers that are external of state agencies to the breadth and extent of contracts that we have in place for staffing services," said DIR's Parker. The DIR advertises the program at conferences attended by IT professionals, and also sends mailers, brochures and e-mail blasts.
The DIR believes an untapped market exists, composed of independent school districts, and city and county governments. That's because 75 percent of the DIR's total spending comes from those kinds of "volunteer" customers, rather than state agencies. Yet 95 percent of IT Staffing Services dollars are spent right now by state agencies.
Reed wants everyone in Texas government to know that the DIR's contracts can save time and money.
"Sometimes you can't hire on a full-time employee because of the marketplace, or you'll need them only for six months," Reed said. "I think employee turnover is another reason these contracts are valuable. And I think flexibility is the biggest selling point of these contracts because it gives the flexibility to meet immediate demands without having to go through a long, cumbersome selection process. They can call up on a Friday and have somebody onboard on Monday."
The DIR frequently uses these staffing services contracts when the department identifies an issue that needs a specific level of staff expertise. "From that sense, it has allowed us to react and address any pending problems - we don't have to say, 'Oh gosh, we don't have the right level of expertise here. How are we going to get it?' We just go to our contracts."
