Firm’s report informed Reynolds’ state government reorganization plan

DES MOINES — Selling off some state-owned land should be fairly easy. But reducing the state government office footprint in Des Moines, or standardizing community-based corrections programs under the state umbrella, could prove more difficult.

Those are among the assessments in a 68-page report by a Virginia-based consulting firm hired by Gov. Kim Reynolds and paid nearly $1 million to analyze and make recommendations for the governor’s proposal to realign and streamline state government.

The consultant, Guidehouse, recommended reducing the number of state departments with directors who report directly to the governor from 37 to 16. The firm’s report says that streamlining plus other recommended changes and moves could save Iowa state government nearly $215 million over four years.

The Guidehouse report was the basis for Reynolds’ sweeping legislative proposal to realign state government, a massive bill that is nearly 1,600 pages.

“The current structure of executive branch under the control of the governor presents a rich opportunity to realign and streamline the organization to better serve the people of Iowa and continue excellent stewardship of taxpayer dollars,” the Guidehouse report says. “A realigned state government will enable the governor to continue to prioritize a government that is efficient and effective; responsive and accountable; citizen-focused; built on leading practices and data-driven decision making; ensuring Iowa’s economic prosperity.”

Guidehouse was paid $994,000 by the state, which selected the firm under a competitively bid master agreement between the state of New York and Guidehouse, according to the governor’s office.

To fund the project, the governor’s office used federal pandemic relief funding from the American Rescue Plan Act, which Reynolds publicly opposed when it was approved by Congress and President Joe Biden in 2021.

Guidehouse has not previously been contracted by Iowa state government, but the firm says on its website that it has served 45 state governments in customer and citizen engagement, cybersecurity, program management, grant management, sustainability and workforce planning.

On its website, firm says it offers federal and state governments “a unique combination of public sector analysis and practical experience,” and its experts’ insights “help government officials simplify complex procurement processes and produce efficient, optimal outcomes.”

Guidehouse has been on Bloomberg Government’s list of the top federal contractors in consecutive years, ranked 64th in the most recent Bloomberg report with more than $1.2 billion in contracts for the year.

Guidehouse in 2021 came under scrutiny for its role in operating New York’s $2.4 billion rental assistance program, for which it was awarded a $115 million, no-bid contract by former Gov. Andrew Cuomo. New York’s program was plagued by delays and glitches early on, then ran out of funds, sparking a lawsuit from groups that advocate for tenants.

In 2022, the Washington Post reported that the chief executive officer of Guidehouse told its employees that the company made a 38 percent margin on its contract with New York. The company in a statement said the CEO misspoke, saying the figure represented pre-expenses calculations and that the company’s profit margin was more in line with its historic averages of 13 to 16 percent.

Guidehouse will not operate any government functions as part of its contract with Iowa. Its role in Reynolds’ government reorganization plan is purely for consulting and making recommendations, the governor’s office said.

The contract called for Guidehouse to “assist in development and implementation of a more efficient organizational structure for the delivery of state government programs and services under the direction of the governor,” and to “identify and recommend operational efficiencies and cost savings,” according to the task order with the state. The contract with Guidance ended Dec. 19, 2022, according to the task order.

Reynolds announced her proposal during her Condition of the State address Jan. 10, and the legislation was introduced Feb. 1.

Detractors of the proposal, including Democratic state lawmakers, have criticized the process, saying Guidehouse consulted only with top-level state officials, not with those who run programs at the community level or who lead state boards and commissions.

During its process, Guidehouse “worked with a variety of executive branch staff to gather and collect information for the report, including agency heads, senior staff and other technical and programmatic experts within departments,” a spokesman for the governor’s office told The Gazette.

In its report, Guidehouse projects with what degree of ease each broad recommendation may be achieved.

Guidehouse projects selling state-owned lands near prisons and recovering $3 million in Medicaid prescription drug rebates from the federal government will be very easy. Realigning state workers, creating a more uniform technology system across state government, and securing more federal Medicaid funding will be moderately easy. Reducing the executive branch’s state office footprint in Des Moines and standardizing community-based corrections programs as they are shifted to the state corrections department will have a low level of ease — in other words, they likely will prove difficult.

While the report does not make it a formal recommendation for the initial state government reorganization, it suggests that in the future the state should consider the privatization of some state entities as a cost-saving measure. It lists as potential candidates for privatization Iowa PBS, the Iowa Communications Network, the State Historical Museum and the Volunteer Iowa program.

Twin bills carrying Reynolds’ proposal, Senate Study Bill 1123 and House Study Bill 126, have been advancing through the legislative process on the support of Reynolds’ fellow Republicans.

In the Senate, the bill has cleared the committee phase of the legislative process and is eligible for consideration and debate by the full Iowa Senate.

Comments: (515) 355-1300, erin.murphy@thegazette.com