Rocky Chavez’s Plans to Reduce wasteful State “General Services Dept”. End its 30% overhead cost on State Projects

 

In this Commentary,  former Undersecretary of Veterans Affairs  Rocky Chavez  chides a State agency which needs a crash Diet  (see their  Taj Mahal HQ above).  Rocky seeks the open 76th  State Assembly District.

“The recent resignation of US Government Services Administration (GSA) Administrator Martha N Johnson because of her acknowledgement that “taxpayer dollars were squandered” during a conference that included a “clown” and a “mind reader” near the Las Vegas area may lead one to wonder about California.   California also has a government agency that oversees contracting and is designed to ensure the thoughtful spending of taxpayer’s dollars . . . 

It is called the Department of General Services  (DGS).    DGS has approximately 4000 employees and a budget in excess of one billion dollars. 

When I was the Undersecretary of the California Department of Veterans Affairs (CDVA), I interacted with DGS on a weekly basis as California built and opened new Veterans Homes in Los Angeles, Ventura, Lancaster, Fresno and Redding.  I was less than impressed with their performance. 

……  STICKER  SHOCK:    30%   Overhead   Charge!

Two salient issues caused me some alarm in learning about how California spends our money. One of the common charges in construction of a facility or administration of a contract is administration/ oversight cost.   Depending on the service provided it could be from 5-20% of the total cost of a project.  When I was being briefed by my staff on the cost of DGS, I was shocked.  DGS charges approximately a 30% fee for the monitoring and management of building a state facility. 

The Federal Government provides funds 66% of the construction costs of these veteran’s homes.  The state is then required to fund the remaining 33% of the construction cost.  When one factors in the Management fee of 30%;  the state’s portion of the cost was essentially paying for state bureaucracy; not the brick and mortar to build the facility.  When I visited the site of the Fresno facility, as it was being constructed, DGS had a small trailer on site. 

…. What Taxpayers Get for 30% …. Paperwork !

 I asked the civilian contractor actually building the facility what did DGS do; his response was they make us do reports.  When I had problems with the final completion of the Los Angeles facility and requested an accounting by DGS on why we did not have hot water at the Los Angeles facility to allow CDVA to open the home and be certified, DGS response was “talk to the construction company”; no accountability.

Because of the two experiences in Los Angeles and Fresno, I started looking at the DGS operation.  What stuck me first was their budget and size of the organization.  Generally, governmental agencies’ main costs are people (they do not produce a product but manage a process).  When one looks at a government agency, personnel cost can be as high as 90%.  If an agency has 4000 employees you can assume the personnel cost is somewhere around $400 Million (at a cost of $100,000/person). 

…. That  Large  Gold  Building

If the agency budget is in excess of $1 Billion, where is the other $600 million?  If you are ever traveling through Sacramento, along the Interstate 5 and are crossing the Tower Bridge, look towards the river and notice a large gold building shaped like a pyramid; that is DGS.  Its physical presence sets the tone for a governmental agency that needs to be evaluated.

California government needs to look at how it operates and see where they can be more efficient.  Every business in California has had to deal with being more efficient over the past ten years often cutting back staff while California government has actually grown in size.  The Federal GSA is reevaluating; it is time that California’s DGS do the same.”

 

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DISCLOSURE:  Rocky Chavez for Assembly 2012 is a client.