The New York-based consulting firm Alvarez and Marsal has been awarded two efficiency study contracts in Wyoming totaling $2.175 million through the Government Efficiency Commission. The consultants make more money for each new efficiency study they conduct no matter if the state saves money.
Former Gov. Matt Mead wanted the state to become more efficient, and I believe he tried hard and I am thankful for his efforts. Now this monster task is in Gov. Mark Gordon’s hands, and I wish him the best.
In testimony to the commission on May 2 the consultants recommended Wyoming spend $45 million to $55 million more with the hope of saving over $200 million in the 2023-24 budget, yet there doesn’t seem to be a single guarantee. Dr. Pat Arp, Gov. Gordon’s chief of staff, pointed out that the consultants’s $2 million study has stopped short of showing if and how the savings can be implemented.
The consultants have conducted similar multimillion-dollar efficiency studies for Kansas, Louisiana and North Carolina, and the savings in those states seem uncertain at best. Is it asking too much to have the consultants verify the exact amount these other states saved?
Mark Howard, Alvarez and Marsal’s Denver consultant, took the floor to remind us that we are right where we need to be (after we’ve spent $2 million). The consultants have a set of ideas to introduce savings, he said. They have a long list of ideas, but the next step would be to invest $10 million to recover savings. He also added that such studies are not new, but “the studies are done, you farm out all the recommendations, nobody knows what happens.” I guess the initial $2 million just got their teeth wet.
With the new software the consultants purchased for the state, it will be the state’s responsibility to track savings. Is this setting up Wyoming’s state employees to bear the blame if no savings are ever realized?
Many of the consultants’s recommendations do not seem feasible; others are already being implemented.
When responding to questions about educational savings, the consultants offered up their Kansas study. Spoiler alert: According to the Kansas Board of Education, their recommendations seem to have never been implemented. Yes, J.W. Rust, a consultant at Alvarez and Marsal, employed an example of a savings recommendation that was never used, but he failed to mention that to the panel. One of their Kansas recommendations was to slash teacher benefits. Did we not already know that would save money?
I was relieved that when the consultants were asked how to handle some of their other recommendations they didn’t suggest one of their consultants gain a government position, as happened in North Carolina. The Raleigh News and Observer reports that Rudy Dimmling, one of the firm’s consultants, was being paid roughly $800,000 per year for his services before being appointed as the state’s Medicaid finance director at an annual salary of $175,000. And it looks like he is back to consulting for the firm.
When looking at the consultants’ “shared services” handout at WyoLeg.gov, it appears they recommend we spend $10 million more for a few other recommendations. This is not a typo. The “investment” for a recommendation would cost around $10 million. Yes. And then if we actually do some of this, we are possibly looking at spending more money.
Chris Cowley was introduced at the commission hearing as the consultants’ “supply chain and logistics” person and seems to be based in Seattle. He is also their “Wyoming guy,” but I could not find him listed on the consultants’ website. Mr. Cowley mentioned that hard dollars are not the only thing the consultants look for. (Uh oh! I am starting to view statements like this as a disclaimer for later when no savings are realized.)
In their initial $280,000 study the consultants barely mentioned strategic sourcing, suggesting that $126 million in state contracts — copier purchases, for example — could benefit from being strategically sourced. Now it seems they have someone ready to explore this at taxpayers’ expense.
For the past three years I have been advocating for only a strategic sourcing proposal in which payment is based on the percentage of savings. It was probably foolish to think the consultants would have watched a revenue stream walk out the door.
Also, according to the consultants, it sounds like “everyone has to be on board” or this won’t work out. How will we know future elected officials will even be committed to this?
Why don’t we wait and see if the study saves us any money before biting off another $45 million?