State doesn’t outsource federally funded social service contracts

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AUGUSTA – Pick up the phone in New Hampshire and try to get help with child support enforcement, food stamps or welfare and you could find your call routed to another country.

Here, it’s different.

Maine is the only state in New England and one of only seven nationally that does not outsource some federally funded, state-administered social service contracts to companies outside the United States, according to a March study from the Government Accountability Office.

The lack of foreign contract is not intentional, said Becky Wyke, commissioner of the Department of Administrative and Financial Services.

While the GAO study was limited to six federal programs, Maine law requires the Department of Administration and Financial Services to compile a report listing the number of state contractors who have employees outside the United States. For 2005, Maine had 2,635 documents comprising contracts, contract amendments and cooperative agreements with the university system. The overwhelming majority were with local contractors, the report said. One contractor had employees who performed services in Canada.

“For us, it’s more a function of the way we expect to do business,” Wyke said. “Proximity is usually a major factor. We require contractors to be on-site.”

Other factors that influence contracting decisions include expertise and price, Wyke said.

The GAO studied six federally funded programs that state’s are responsible for running. It found that 43 states and the District of Columbia outsource at least some of the work for the programs. The study looked at the administration of food stamps, Temporary Assistance for Needy Families (TANF), child support enforcement and unemployment insurance. It also examined Pell Grants and Federal Family Education Loans. Due to restrictions on the student aid programs, they aren’t outsourced to other countries.

Forty-three states and the District of Columbia send at least some work overseas. Thirty-one states contract with foreign companies to handle food stamp work, 16 for TANF, 13 for child support enforcement and nine for unemployment insurance.

The work that the states most frequently reported sending offshore were customer service and call center jobs for food stamps and TANF and software development for unemployment insurance and child support, the GAO found.

As the state and federal governments have looked for ways to reduce costs for social services, offshoring has become a popular option.

States have found that offshoring can save money. Alaska and Idaho reported that a cost comparison showed they could save 18 percent on the food stamp work performed outside the United States. New York reported its savings at just 0.3 percent for food stamps and TANF, but that totaled $24 million.

In addition, the GAO found that states rarely contracted directly with foreign companies. Instead, it involved U.S. contractors using subcontractors in other countries.

India was the most popular destination for jobs, followed by Mexico. Some work was also sent to Canada, Ireland and Poland.

The GAO is the nonpartisan, investigative arm of Congress. The full report can be found online at: http://img.slate.com/media/53/gao.pdf.

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