Cut private contracts, save city money

It’s a new Mayor, but the same story.

Once again, New York City is facing a budget deficit: this time, approximately $5.4 billion. This deficit is one of the first tests of Mayor Zohran Mamdani’s commitment to a democratic socialist platform.

Can democratic socialist Mayor Mamdani convince Albany to tax the rich and invest in the public good, or will he be forced to make painful cuts to essential services? Should Albany fail to tax the rich, the Mayor does have one method of cutting costs that would align with his democratic socialist bona fides: cutting back on the city’s bloated contracts outsourcing work to consultants.

Contracts represent a substantial source for cost savings. The city has a staggering amount of contractors on its payroll: $42 billion in Fiscal Year 2025, which is over a third of the city’s $112 billion budget. Simply rolling back spending on contracts to 2023 or 2024’s spending levels could close most of the $5.4 billion deficit. 

Some contracts can be cut, but many others would instead need to be insourced. This would mean investment in additional city workers.

But this would still be cost-effective for the city, as consultants are paid more per hour than city workers, often for lesser quality work. The specific reasons for this are many, but the primary driver is the profit motive: unlike the public sector, private firms prioritize profit over effectiveness. Non-profit organizations that rely on government contracts and private donations for money are not exempt from this self-sustaining motivation of private firms.

Insourcing is not only a good way to cut costs: it is also good democratic politics. The politics of anti-privatization has a long history on the Left in New York City.

Mayor Fiorello La Guardia, whom Zohran Mamdani has cited as an inspiration, created the publicly-owned transportation system we know today by purchasing the two private transit corporations operating in 1940 and putting the private trolley companies out of business with a city bus service. La Guardia also fought against private utilities and pushed for publicly-owned municipal power plants.

The mid-1930s were also when public sector unions began fighting privatization. This time, the fight was against La Guardia, who had laid off most of the City's engineers, and who supported the successful push by the lobby of private contractors to insert language into the City Charter stating that all major public works projects would be “farmed out” to private design firms.

My union, Local 375, the Civil Service Technical Guild, was founded to respond to this threat. And we won that fight.

Albany eventually passed the Buckley Law, which removed the "farming out" provision from the City Charter. But this victory was short-lived.

Outsourcing has been the trend in city government since then. The Mamdani administration has the opportunity, well-suited for the city’s first socialist mayor in a generation, to reverse this trend and strengthen New York City’s public sector for the first time in almost a century.

Mayor Mamdani and his administration already know the value of cutting back on the city’s bloated private contracts. Mamdani mentioned insourcing multiple times in his Feb. 17 press conference announcing the preliminary budget, and they are one of the ways the City’s new Chief Savings Officers (CSOs) are being asked to find cost savings.

However, the administration risks defaulting to familiar austerity tools — program cuts and workforce reductions — rather than fully pursuing insourcing. The administration’s walking back of the campaign promise to expand rental assistance, and their contingency plan of dipping into the retirees’ healthcare benefit suggest that austerity is a real possibility.

A Mamdani administration committed to democratic socialist principles should balance the budget through taxes on the rich and insourcing bloated contracts, not cuts to jobs and services.

So, which contracts should the Mamdani administration take on?

This is where rank-and-file city workers can play a key role. We know where the waste is, and we know where our teams can do the job better than our contracted counterparts.

City workers can meet within our agencies to develop a list of contracts for elimination or insourcing that we can then share with our agency’s Chief Savings Officer.

Any city employee or recipient of public benefits can tell you a story about a wasteful private contract they have encountered. Some are small, like a contract to build a technical system that is renewed year after year because of a failure to train city employees on the system’s maintenance, or a city-funded non-profit taking advantage of vague performance indicators and unclear oversight to overbill and underdeliver.

Some are large, like the four-year delay to the city’s $7 billion borough-based jails construction project, or the botched $432 million contract for asylum seekers awarded to DocGo.

Some are cartoonishly corrupt, like in housing, where shelter provider CEOs make close to million-dollar salaries, engage in conflict-of-interest subcontracting practices like awarding maintenance to companies affiliated with the building owner and have even bribed New York City Housing Authority (NYCHA) employees over $2 million in exchange for over $13 million in no-bid contracts.

Some are no-brainers, like the many contracts that outsource the supervision of other contracts: at minimum, city workers can supervise our own agency’s contracts! The important thing is for city workers to work together and develop a proposal for their Chief Savings Officer, using our on-the-ground perspective to identify which contracts can be cut or insourced to improve the way our city serves New Yorkers.

We have no time to waste.

Chief Savings Officers have been instructed to present their findings to the Mayor on March 20, so we must immediately begin to identify bloated private contracts for them, especially if we want to persuade the administration that cost savings in excess of the 2.5 percent in Fiscal Year 2027 across agencies can be found through insourcing.

And we can’t stop at just cutting bloated contracts. The city must also invest in hiring more qualified, cost-effective city workers to do the job contractors were doing.

Thankfully, this work has already begun. In the Department of Parks & Recreation, a pilot has begun to explore whether the city’s contract for tree planting can be brought in-house. And a coalition of unions, progressive non-profits, and socialist organizations traveled to Albany on Feb. 25 to demand we tax the rich for a New York we can afford.

The Mamdani administration and city workers should join in these efforts. We don’t need austerity when we have a generational opportunity to take on greedy firms bleeding the city dry, make the rich pay and expand public service in New York City. Let us seize the moment together!