MEASURING THE HIDDEN WORKFORCE

Though residents may assume that state and local government work is generally performed by public sector workers, in fact, a huge number of jobs are in the hands of third-party contractors and consultants. This can include garbage collection, road and bridge construction, and a wide variety of health and social services.

Additionally, as cities, counties and states increasingly depend on technology, many – particularly smaller entities – don’t have the internal capacity or expertise to carry out the many jobs necessary to keep computers (and, increasingly, these days, artificial intelligence) running smoothly.

While many government entities have performance management systems in place to measure the success or failure of the work that’s done in house, this can be trickier when it comes to the contractors and consultants who are sometimes referred to as the “hidden workforce.”

When we regularly review performance audits, we often discover that the lack of oversight and measurement of contracted work is extremely commonplace. 

Last month, for example, we came across an audit from the Austin, Texas Auditor’s office, and its findings were alarming. During Fiscal Years 2023 – 2025, the city spent over $279M on consultants – a tidy pile of cash used by almost all the city’s departments.  Here’s what the auditor found:

• 82 percent did not have a formal evaluation showing why the work could not be done by city staff

  
  

• 64 percent of them did not include a formal performance appraisal

  
  

• What’s more, even when there were evaluations, they were not always accurate.

One of the complexities involved in effectively measuring the performance of individual contracts is that in many instances, they are overseen by multiple agencies. So, even though one agency may be carefully monitoring performance for some of the services delivered, other important issues may easily be overlooked.

In addition, even when procurement departments carefully include performance measures in a contract, that doesn’t guarantee that agencies, which oversee the contract, will follow through to see that planned targets are achieved.

This work, we’d argue, can’t wait until a performance audit comes through and discovers that they’re needed. They should be part of a city, county or state’s ethos, and preferably done in real time, so that problems are uncovered as quickly as possible and can be ameliorated before a little cavity in the teeth of a city turns into an abscess and requires the municipal equivalent of an extraction.

One of the most important things to measure is the project completion rate. When project managers let things slide, it’s easy for a contracted task to be completed months or years after originally promised. A common problem involves scope creep, when a company realizes that additional money is needed to fulfil the task, and requests an extension to the original timeline and an addition to the budget, as well.

The solution to this very common issue doesn’t come into play once the project has gotten rolling. Instead, it can help be prevented when key performance indicators are established before anyone has signed on the dotted line. When there’s a clearly defined metric, and it’s addressed, it’s easier to turn down a contractor’s request for new features that may be unrelated to that output.

Additionally, it’s good practice to make sure there’s regular face-to-face contact with the contractor or consultant. A weekly, monthly or quarterly conversation can be a straightforward way to catch problems before they expand. Ongoing contact and careful performance monitoring, removes the temptation to hide problems until the auditors step in.

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