The state has begun to scrutinize proposed contracts with private companies to determine whether they comply with an 18-year-old court decision that limits privatization of government services in Hawaii, and officials so far have identified 99 contracts that may need to be phased out because they conflict with that ruling.
The state likely will need to hire more government workers to handle tasks being performed under some of the contracts, but state officials have no idea yet how many additional workers could be required or how much the shift to public workers could cost, said Mike McCartney, chief of staff to Gov. David Ige.
McCartney said it is too early to say whether there could be a large-scale phase-out of contracts. “I think we just need to take a look and make that evaluation, and we’re just starting to do that,” he said. “This agreement is new.”
McCartney added, “We need to look at how government is going to function and make sure those services are provided. This is the beginning of the analysis.”
State Sen. Sam Slom (R, Diamond Head-Kahala-Hawaii Kai) said he expects the Ige administration will have to ask state lawmakers for more money next year to hire workers to handle what is being done under the existing contracts with private companies.
Slom said that years ago when the counties undertook similar reviews to comply with the 1997 state Supreme Court decision called Konno v. County of Hawaii, “we saw that there was additional cost, additional public workers and less choice, and I expect the same thing is going to happen as we take a look at what’s happening right now.”
In Konno v. County of Hawaii, the court ruled it was a violation of state law for state or county agencies to hire private contractors to perform tasks that were traditionally handled by civil servants.
The Ige administration July 1 instructed state departments to submit proposed contracts to the Department of Human Resources Development for review if the work to be done under those contracts has customarily and historically been performed by members of the United Public Workers union.
UPW filed grievances against the state over the contracting issue in 2007, and filed a prohibited labor practice complaint in 2009 in connection with the contracts.
Honolulu and the neighbor island counties reached agreements with UPW to resolve their disputes over similar contracts, but the state and the UPW argued for an additional six years over the issue. McCartney said he did not know why it took the state so long to resolve the dispute.
The Ige administration finally agreed in July as part of a court-ordered mediation process to begin screening contracts before they are given final approval to determine whether they comply with the Konno ruling.
According to data released by Ige’s office, 506 proposed contracts have been reviewed by Human Resources officials under the new process, and none has been rejected outright.
Of the contracts that were reviewed, 105 that covered areas such as automotive repair, plumbing and tree cutting were approved on an emergency basis to ensure the work is quickly completed.
An additional 99 contracts covering areas such as air conditioning and electrical repairs, janitorial work, refuse disposal and pest control were given conditional approval, meaning the departments are expected to request funding for public workers to handle this work in the future.
Under the “letter of understanding” between the state and UPW that describes the new contract review process, the union “will assist the departments for successful passage of their budget requests that include the additional (UPW) employees” needed to perform the necessary work for the state.
An extra 91 contracts were returned to departments without a decision to obtain additional information, and 158 contracts are pending.
State Sen. Gil Keith-Agaran (D, Waihee-Wailuku-Kahului) said that when the counties made a similar transition, the UPW was flexible about allowing contracts to continue temporarily when there were no public workers to handle the work.
Keith-Agaran, who served as director of public works on Maui, said he did not recall a large increase in costs because of the Konno decision, “but it was just a matter of going back and looking at these agreements and seeing if they could be structured in a way that was acceptable to the union.”
