a LSO estimate.

Analysts from two laboratories, the Crime Lab and PHL, routinely provide court testimony. In 1997, Crime Lab analysts made 50 court appearances and analysts from the PHL chemistry section attended court 75 times. The actual number of court appearances for analysts from these labs is considerably less than the subpoenas received, and analysts spend time in consultation with prosecutors and defense attorneys whether or not they are called to testify. Analysts from the other labs infrequently provide testimony.

All laboratories provide consultation and explanations of their results, often over the telephone. Lab officials generally estimated that ten percent of lab personnel time was spent providing consultation and explanation of results. Further, in several of the labs, managers and some staff have responsibilities within their agencies that extend outside the laboratory. For example, the PHL director is statutorily required to certify local public health laboratories in the state, and an ASL supervisor certifies dairy plants in the state to test raw milk.

In addition, analysts from the Crime Lab and the PHL chemistry section provide formal training to law enforcement personnel throughout the state on crime scene processing and breath alcohol machine operation, respectively. The WSVL director makes multiple presentations throughout the year to provide continuing education for veterinarians and producers across the state.

Planning how to accommodate state lab operations has led to several studies over the years. We obtained copies of reports issued since 1989, although persons we interviewed for this study mentioned even earlier reports. The following is a summary of these reports.

All of the labs reviewed in this report were required to report in 1990. The lab responses varied considerably in thoroughness, but they concluded that privatization would be more costly than keeping all the testing within the state labs. However, in making that determination, only the PHL included capital equipment costs and capital facilities overhead in its cost estimates.

Executive branch officials and affected agency personnel reworked this report and again offered it to the Legislature in November of 1991. This time, the report recommended a consolidation of the PHL and the DEQ labs into an addition to the Laramie facility that houses the ASL and WSVL. The report also recommended adding an uninterruptible power supply (UPS) and making the additions necessary to house the WDA Seed Lab and meet the WSVL’s need for additional space.

Consolidation of the labs in this facility, according to the report, would likely result in benefits from sharing maintenance, purchasing supplies jointly, and sharing the use of conference rooms and storage areas. The authors expected no reduction in laboratory staff, but possible future reductions in support staff. They also believed that it might be possible to avoid some future new equipment purchases and staff increases through cooperative efforts among the labs. The report presented a discussion of the considerations the authors believed precluded privatization of the labs' work.

A planning team made up of representatives from the labs, their agencies, and UW formed to plan the facility. This group established a preliminary occupancy date of the fall of 1997. In 1995, the State Building Commission, acting on behalf of the agencies involved, established a memorandum of understanding with UW, which owns the site, outlining how the proposed facility would be funded and maintained. Through UW, which provided construction management, the Commission also hired a project architect.

During the planning process, differing opinions arose about the Hathaway Building’s adequacy to house the labs, and whether modifications could alleviate the existing problems. Ultimately, executive branch officials made facility and operational changes that made the existing labs safer. Reportedly, out of concerns about escalating cost estimates and at the advice of A&I facility management officials, the State Building Commission made the decision to cease planning for the Laramie facility and directed the agencies to look for alternatives to moving the Hathaway Building labs. During the 1998 Session, the Legislature de-appropriated the funds for the Laramie laboratory facility and requested this study.

Although not adopted by the Legislature, this report proposed legislation creating a commission to consider requests to privatize state services, and creating a privatization plan review process. The committee’s intent was that the state develop a framework to determine what services should be eliminated or privatized.

Another report recommendation was that state agencies should develop total cost allocation processes. This would allow a true comparison of specific services with private sector providers. None of the labs we reviewed had such systems in place.

• The PHL and DEQ labs need to move to a more current, dedicated-use facility.
• The overlaps in service among labs proposed to share the Laramie site are not clear.
• Most of the instrumentation used by the labs is very old.
• It would be prudent to investigate combining the waste water testing done by the DEQ Water Quality Lab and that done by ASL.
• The water testing done by PHL and ASL should also be reviewed with respect to how they might be combined.

The consultant noted that the size of the proposed Laramie facility was appropriate, adding that "if decisions were made to merge lab services, the space vacated may still be put to good use." It was not clear to us that lab or agency officials acted on any of these recommendations, or that they considered them during the planning for the Laramie facility.

Taken together, these reports show considerable and consistent state effort in analyzing state laboratory facility needs and whether some services could be privatized. But to this point, the analyses appear to have been done in isolation. There has been little analysis of the actual provision of lab services, and whether changes might be warranted that would affect capital facilities decisions.

There appear to have been some expectations that, by building a facility large enough to accommodate four labs, Wyoming government would be consolidating them. As noted, we viewed the proposed facility funded by the 1993 legislative appropriation as a move toward co-location rather than consolidation.

To illustrate the differences between these approaches, we looked for an example of a consolidated lab. Lab professionals told us that Virginia is the state that operates most extensively under a consolidated model. The director of that lab willingly shared details about his state’s approach to providing lab services. He also noted that although several states have looked at his state's consolidation model, none have adopted it, and at least one state has reversed its consolidation efforts.

Virginia has combined its environmental, public health, and agriculture labs into one consolidated lab as the Division of Consolidated Laboratory Services (DCLS) within its general services department, with the lab director designated as a department deputy. The lab has a staff of more than 200, including wage employees and supervisors. DCLS serves state agencies, as well as several counties, cities, and the federal government.

The general fund continues to support health services. The DCLS director noted a need to maintain a mix of general fund flexibility with agency-specific funds to meet emergency needs. In addition, the state has made a policy decision to fund most drinking water tests for all public water systems as a health measure.

DCLS is set up in groups according to logical functions. Similar types of tests using similar types of equipment are located together. In order to maintain cross-functionality, the lab is not organized along customer lines, according to the director. The lab also has a separate panel of scientific experts that work with the agency customers to develop new test methodologies, evaluate test effectiveness, design pilot projects, and provide consultation.

In the opinion of the DCLS director, consolidation’s most significant benefit was a decrease in the turnaround time for results. He attributes this to a combination of the lab’s improved customer service efforts and the agencies being more judicious in the number of samples they submit. A benefit resulting from the internal service funding arrangement has been that DCLS is able to place its equipment on an amortization schedule, and regularly replace it without requesting legislative appropriations. The director also claims that consolidation enabled the lab to reduce staffing and cut down on expensive equipment spread throughout the agencies.

The Virginia experience indicates that consolidation may not necessarily arise from co-location alone. A number of circumstances, in addition to co-location, were present in Virginia that facilitated consolidation: an existing facility adequate for all lab functions, an identified problem with existing lab services (timeliness of results), and clear administrative direction.

Wyoming’s attempt at consolidation through co-location did not so clearly include these elements. Although funds were appropriated to build the facility, no entity was charged with integrating lab functions. The appropriation was understood as addressing a facility problem, but no specific objectives were identified for improving lab services through consolidation. There may have been an understanding that integration of lab functions would occur, but no organizational plans or directives were put in place.

To learn about privatization possibilities with respect to the state’s labs, we reviewed a large body of literature about privatization. We found that for years, all levels of government have been experimenting with the privatization of services, with varying degrees of success. Privatization proponents believe privatizing government services results in cost savings, improved timeliness, and better customer service. On the other hand, opponents believe that private gain and public good do not always correspond, and that privatization does not necessarily equate to cost savings.

Determining which, if any, government services to privatize involves many philosophical and value-based judgments. Also, decisions made in one state may not transfer to others. Therefore, we did not identify a model for privatizing state lab services. Instead, we chose to center our research on the process a state can use to make these determinations.

There are two approaches commonly referred to as privatization. First is the concept of outsourcing, whereby government contracts or coordinates with either private sector providers or other governmental entities to deliver goods or services. Implicit in this approach is that government continues to pay for the provision of these services, and that it generally retains responsibility for them.

Alternatively, policymakers may decide to stop providing a service so the private sector can assume the function. Such a move is called service shedding. In this case, government divests itself of the responsibility for performing a public function, and no longer funds the provision of the services.

Other literature recounting states’ experiences with privatization tends to agree on several factors that affect the success or failure of privatization. First, it is important to define the problem that privatization is expected to solve. Second, a state should establish formal decisionmaking procedures to evaluate candidates for privatization. For example, several states have set up boards which do a pre-privatization analysis before making the decisions. Third, decisionmakers need accurate cost data, both on in-house costs and on the costs of contracting. Fourth, privatization needs to be properly monitored to ensure the ongoing quality of services.

In our review, we found many commonalties in how states make these decisions, and we have merged them into nine principles. The Wyoming privatization committee mentioned earlier included a similar list in its report. Our list involves both quantitative and qualitative issues. Quantitative elements have to do with matters such as cost and timeliness, and data may be available. Qualitative elements, on the other hand, can call for public or governmental policy decisions by decisionmakers. We applied these principles in our analyses of privatizing lab services in the following chapters.

It is important to note that these principles represent idealized standards for setting up a privatization process. Wyoming policymakers may choose to use others in considering whether or not to privatize services. Nevertheless, these principles provide a context for understanding how complex making such decisions, and evaluating the results, can be.

There are numerous possibilities for providing lab services, depending upon the judgments and assumptions policymakers embrace. In order to develop our analyses, we had to make some judgments ourselves, and we have acknowledged them. A judgment we made that significantly affected the scope of our work was to consider only privatization options available within the state. With respect to consolidation, we made judgments to look at a few specific areas of duplication or similar services that we believed might be most practically combined. Because the Legislature may choose to make different judgments and assumptions, this report presents data, analysis, and a selection of options, not recommendations for action.

Each of the following five chapters looks at one of the labs we were asked to consider for the review. Each generally describes purposes and operations, and goes on to describe work already being outsourced, as well as what other opportunities might exist for providing lab services. Following this are three chapters that explore cross-agency options for consolidation and privatization, and a final chapter directed at legislative decisionmaking.

The Legislature authorized the Public Health Lab (PHL) within the Department of Health (DOH) through W.S. 35-1-240(a)(ix). The statute generally provides for the establishment and maintenance of a chemical, bacteriological, and biological laboratory to conduct investigations and examinations for the protection of public health. The statute further authorizes the DOH to investigate diseases, exercise sanitary control over water supplied to the public or used in the irrigation of edible crops, and enforce the quality of effluent for the protection of public health. DOH has statutory authority over the chemical testing of blood, breath, and urine under the Implied Consent Statute (W.S. 31-6-105), which can require drivers to submit to chemical tests. Finally, the DOH has a statutory role in testing water systems.

The primary function of the PHL is to protect the health of the citizens of Wyoming. Department literature states this is accomplished by:

• providing epidemiological support for analysis of disease outbreaks
• testing for communicable diseases
• microbiological testing of public and private water supplies used for culinary or recreational purposes
• establishing baseline data for disease surveillance
• providing tests which are not economically feasible through the private sector
• testing for alcohol, controlled and non-controlled substances, carbon monoxide and other volatiles affecting human behavior

Housed on the fifth floor of the Hathaway Building in Cheyenne, the PHL is divided into two sections: chemistry and microbiology. The chemistry section provides toxicology testing of blood and urine. It serves all state, county, and municipal law enforcement agencies, state agencies such as the Departments of Corrections and Family Services, county coroners, treatment centers, and private individuals submitting samples under the Implied Consent Statute.

The microbiology section primarily conducts testing in the areas of bacteriology, parasitology, and serology. Much of the testing serves the laboratory needs of state health programs, but the section also serves hospitals, physicians, public health nursing services, state institutions, and other laboratories. In FY98, the microbiology section accounted for 10 of the PHL’s 17 FTEs.

The PHL is primarily funded through the General Fund, and statutes do not authorize it to charge for laboratory testing. However, the PHL assesses a minimal charge for collection supplies used in strep and sexually transmitted disease (STD) testing. Federal funds support salaries of lab technicians and offset laboratory supply costs for several state health programs, such as AIDS/HIV and STD. Also, the Centers for Disease Control (CDC) and some pharmaceutical companies have loaned the PHL equipment for research and advanced testing.

We estimate that the PHL completed more than 309,000 determinations, or tests, on 65,279 samples received in FY97. The microbiology section has experienced a 49 percent decline in samples over the past seven years. This decrease is largely due to a dramatic decline in the number of strep tests, which the PHL no longer accepts from private physicians. In contrast, the chemistry section’s blood and urine sample load rose from 6,848 to 11,179, a 63 percent increase. Lab officials indicated the increase is largely due to more aggressive monitoring within the Department of Corrections’ (DOC) probation and parole program.

Looking toward the future of PHL testing, department officials expressed interest in genetically identifying viruses using advanced DNA technology. To conduct this testing, the microbiology section would require two additional dedicated rooms to prevent contamination. Evidence suggests the chemistry section’s future workload will likely decrease as DOC field agents make more use of on-site kits to screen for controlled substances. These kits identify the presence or absence of one or more drugs in a human specimen, often through a color indicator.

The PHL has established informal arrangements with 11 different laboratories including the CDC lab, other state health labs, and private and public hospitals and laboratories. These various labs perform a range of testing for Wyoming including newborn screening, specialized microbiological testing, mycological testing, and quantitative drug testing. The primary reasons cited for these outsourcing arrangements include PHL’s low volume in certain areas of testing and the occasional need to use expensive, specialized technology.

The DOH coordinates with the WSVL, the ASL, and the Crime Lab. To avoid duplication, the WSVL conducts rabies testing in Wyoming and reports the results to the DOH. There is also a memorandum of understanding in place between the DOH and the Department of Agriculture concerning microbiological testing of food during a disease outbreak. Finally, the PHL tests all "liquid" biological samples for the Crime Lab to identify the presence of drugs and alcohol.

An area where coordination has not developed is in the microbiological testing of water. The PHL, DEQ and ASL all conduct this type of bacteriological testing. The PHL currently tests over 9,000 samples of water, primarily for municipalities under the SDWA. DEQ performs microbiological testing on waste water, while the ASL tests both drinking water and waste water.

Since the purposes of testing performed at the PHL vary, so do the options and considerations for privatization. To carry out an analysis, we grouped a number of PHL tests in categories. The categories we chose are: investigation and reference; surveillance and service; and enforcement. While we recognize these may not be universally accepted groupings, they offer a starting point for policy discussions.

Due to the differences in their intrinsic purposes, these categories yielded different results when we examined them in light of our privatization criteria. Also, throughout this analysis, we attempt to set legislative policy and philosophical decisions aside and focus on the more value-free aspects of laboratory testing.

However, making these judgments is not a purely objective process. For example, many might define public health labs as a "core government responsibility." In that vein, the American Public Health Association maintains that a private laboratory is not prepared to provide either the rapid response to epidemics or the laboratory research needed to discover and identify new agents. They add, "The state’s responsibility for the health of its citizens cannot be delegated."

Nevertheless, Wyoming, along with other states and government agencies, has contracted with the private sector to obtain certain laboratory services traditionally provided by public health laboratories. This suggests determining which tests qualify as a "core government responsibility" may depend on individual judgment.

PHL officials indicated that any testing currently performed by the PHL could be outsourced. However, DOH officials stated some testing, such as for the hantavirus, would have to be sent to other state public health labs. In addition, the state would risk losing control over the outsourced testing. The American Public Health Association maintains that without such control, false negatives could go undetected and cause unwarranted spread of disease. Our expert lab consultant added a caution about outsourcing work that involves laboratory problem solving or method development.

These considerations appear to be particularly relevant to PHL’s investigative and reference testing. Due to them, we decided not to survey the private sector to determine costs, timeliness, and market strength for investigative and reference testing.

For our purposes, this type of testing includes STD testing for gonorrhea, chlamydia, syphilis, and HIV; strep testing; rubella testing; and bacteriologic testing of water. Depending on interpretation, these tests could be classified as either service, surveillance, or both. For purposes of our analysis, we assume that the state would continue to pay for these tests, even if they were privatized, in order to obtain public health data. Therefore, our analysis considers outsourcing this testing, not shedding this service.

Surveillance and service testing differs from the previous category (investigative) in that for this group, the testing procedures are routine and well established. According to our expert laboratory consultant, "Standardized procedures are the easiest to outsource." For these tests, the result, not the testing process, may be more important.

We surveyed 65 Wyoming clinical labs to gather information on costs and timeliness related to surveillance and service testing. Just two to five labs, depending on the test, indicated an interest in performing these tests for the state. This response suggests limited availability of private providers for this category, at least within Wyoming. It should be noted that the responses we received are not binding bids; nevertheless, they provide useful information about Wyoming’s private sector laboratory environment.

Using data gathered from PHL and from our survey, we considered the issue of timeliness. With the exception of the bacteriological testing of water by some responding labs, the private sector could deliver test results in about the same amount of time as the PHL. On the other hand, it appears that outsourcing this testing would be more expensive for the state. See Appendix A for the methodology used to determine both the costs of the PHL and the private sector. Figure 2 summarizes the results of our analysis.

First, to cover state administrative and quality control costs, our figures include contract monitoring charges. A privatization report from Kansas suggests charges of 10 to 20 percent of the contract costs. We used 15 percent.

Second, the costs listed for the PHL are "total costs." In addition to personnel and supplies, we accounted for administrative costs, existing facility costs, and equipment. Should these tests be outsourced, many of these costs may be unavoidable, thus offsetting any anticipated cost savings. Unavoidable costs include costs that will likely continue to be incurred, even if the service is outsourced. Examples include facility and administrative overhead.

Explanation of Cost Comparison. The survey results suggest that all but two of these tests, syphilis and strep, can be provided at a lower cost to the state by the PHL than they might be by the private sector. For syphilis testing, three respondents indicated 24 percent lower costs than the PHL, even after adding in contract costs. For strep testing, one community hospital responded with an extremely low price, and two private labs responded with prices comparable to those of the PHL. We also found that differences in testing methods, and related accuracy, could impact testing prices.

Based on these responses, it appears the total estimated cost to the state for outsourcing the strep and syphilis tests could be less than the current PHL costs. However, actual state expenditures may increase due to unavoidable PHL costs.

Regardless of the policy decision, the DOH could monitor its own costs, as well as opportunities for outsourcing. If the Legislature believes there are benefits to outsourcing surveillance testing beyond those discussed, it could direct the DOH to modify operations.

We grouped all toxicology testing performed by the PHL under enforcement testing. Most of the chemistry section’s testing falls into three categories:

• Alcohol identification and quantitation (1,600 per year)
• Nine and four panel drug screens (15,500 per year)
• Drug confirmations (800 per year)

From FY95 to FY97, PHL’s yearly average turnaround time on enforcement tests decreased from 55 to 17 days. However, even faster results are available through other means. We learned that using on-site test kits can provide either immediate results or, at most, a 48-hour test response, depending on the type of kit used. Also, we included questions about chemical toxicology testing in our survey to Wyoming clinical labs. The firms responding indicated an expected turnaround time for toxicology testing of one to four days. Improving timeliness of this testing appears to be the chief benefit to outsourcing.

PHL’s lengthy turnaround time has an impact on the programs served. We were told of instances in which the DOC discharged individuals before they could obtain drug test results from PHL, due to laboratory delays. As well, DOC officials stressed the need for immediate sanctions in order to impact behavior.

One purpose of our survey was to gauge whether there is private sector interest in conducting toxicology testing. Not unlike the previous testing (surveillance and service), the responses we received suggest there is minimal private sector interest in conducting enforcement testing. Only one lab of the 65 we surveyed indicated an ability and interest to do all of the toxicology tests currently performed by the PHL. Another lab could perform nearly all of the tests, and two labs could perform small portions of the testing. The two labs responding most completely to the survey indicated they would be performing at least some of the testing out-of-state.

Cost Comparison of Toxicology Testing. Our analysis is based on the assumption that the state would continue to pay for this enforcement testing, whether or not it is conducted in a state lab. Using aggregate cost data from our survey responses, we compared the total costs of all toxicology testing, including related testimonies, with PHL costs.

Based on our calculations of the total costs of testing and court testimony, we estimate it costs the state 50 percent less to obtain toxicology testing from PHL than it would from a private lab in Wyoming. We estimate a total cost of $408,000 for the PHL, compared to $612,000 if this testing were outsourced. This estimate does not include a factor for potential contract monitoring costs.

We identified two primary reasons for the disparity in costs. First, the comparison includes the costs of testifying in approximately 75 court cases per year. Responses to our survey indicate that outsourcing this associated testimony, which includes witness fees and travel expenses, would be extremely expensive. Second, some of the low-volume specialized drug tests, such as those for LSD, are much more expensive in the private sector.

Comparing the chemistry section’s costs with those of the private sector is not a straightforward process. The total costs of outsourcing all toxicology testing appear to be much higher than current PHL costs. We make this assertion even though our survey responses show that some high-volume, routine drug screens and confirmations can be obtained faster and cheaper from the private sector. The difference is that those individual prices do not include court testimony. Once the private sector prices for court testimony are factored in, PHL is significantly cheaper.

Finally, savings from outsourcing may not be realized unless large portions of the chemistry testing could be privatized completely, in order to fully free up equipment and personnel.

Test Kits. Informally, we reviewed the prices of test kits for drug screens from selected firms. We found the cost of these kits ranged from $2 for one drug to $10.50 for four drugs. In addition, we identified one company that provided a nine-panel drug screen and confirmation of all positive results for less than $10 to qualifying entities under a Federal Bureau of Prisons contract. These costs appear lower than our estimated cost of $14.67 for PHL drug screens.

The DOC accounted for nearly 60 percent of all testing performed by PHL’s chemistry section in FY97. Based primarily on concerns about timeliness, the DOC has already taken steps to increase use of on-site kits. In the 1998 Budget Session, the DOC requested and obtained $170,000 for testing through private vendors and on-site test kits. Although DOC will continue to use PHL’s services, information we gathered suggests this new appropriation will substantially reduce the volume of samples sent to the PHL.

Additional legislative policy options for toxicology testing are included in Chapter 9.

The DEQ operates two laboratories located on the fifth floor of the Hathaway Building in Cheyenne. The laboratories have been housed in this facility since 1974 when the state constructed the building. The labs help fulfill the analytical needs of the DEQ, whose mission is, in part, to prevent, reduce, and eliminate pollution and to preserve and enhance the air and water of the state.

DEQ’s laboratories are not specifically authorized in statute. The agency derives authority to operate laboratories through the director’s general powers and duties established in W.S. 35-11-108 and 109. Statutes empower the agency to conduct investigations, research, and experiments by contract, grant, or otherwise as is deemed reasonable and necessary for the proper enforcement of the Environmental Quality Act.

The director has authority to designate department representatives to monitor the air, water, and land quality, and solid waste operations of all facilities that have been permitted, to assure continuing compliance and to discover noncompliance. The agency also has authority in W.S. 35-11-110 to determine the degrees of air, water, or land pollution throughout the state.

The DEQ maintains a Water Quality Lab (WQL), which is part of the Department’s Water Quality Division, and an Air Quality Lab (AQL), which is part of the DEQ Air Quality Division. These labs provide testing for their respective divisions, as well as for other divisions in the agency.

Lab testing fulfills regulatory obligations and agreements with the U.S. Environmental Protection Agency (EPA). The labs conduct special projects for the Department, as authorized by agency officials. The WQL also provides a minimal amount of courtesy testing of soil for the Wyoming Game and Fish Department and hazardous waste testing for the Wyoming Department of Transportation.

While three individuals work in the WQL, only one is a full-time laboratorian. Another employee splits time between the lab and field sampling. The WQL manager spends approximately half-time on lab work and half-time on non-laboratory responsibilities within the Water Quality Division. Similarly, the two individuals working in the AQL have non-laboratory responsibilities within the Air Quality Division. They spend only 40 percent of their total time, or .8 FTE, on lab operations.

DEQ does not budget for its laboratories separately from the divisions in which they are housed. Laboratory operations are funded through a federal/state match. Federal funding for the match ranges from 60 to 64 percent. DEQ has also occasionally leveraged one-time federal monies from EPA to purchase equipment.

Historically, about half of the samples the WQL receives are for testing under the National Pollutant Discharge Elimination System (NPDES). Under this EPA program, which is administered by DEQ, every entity that discharges into the state’s waters must have an NPDES permit. Discharge permits set effluent limits and self-monitoring requirements, and DEQ renews the permits at various intervals. The WQL tests the waste water of a permittee prior to renewal to compare its results to the self-reported testing results provided by the permittee. WQL’s testing verifies compliance with permit limitations. DEQ officials indicated that samples will be increasing for this program, because DEQ is issuing more permits.

The WQL manager estimates that another 25 percent of the samples are for an Office of Surface Mining program and the Underground Injection Control program. Special projects account for the remaining 25 percent of samples.

AQL’s current monitoring program accounts for approximately 2,500 samples per year, or 96 percent of the sample load. The lab primarily weighs the filters and does not identify the compounds in the filters, unless requested by DEQ. Special projects, such as filter analysis, represent the remainder of the samples. The AQL’s sample load has not varied significantly in the last ten years.

DEQ will also be involved in an additional ambient air monitoring program, in response to new National Ambient Air Quality Standards for fine particulate. The AQL is currently not equipped to conduct the analyses for the program, so officials in the Air Quality Division are considering initially outsourcing the analyses.

The DEQ labs have outsourced tests based on informal costs-benefit considerations. Managers noted that DEQ only outsources testing that they cannot readily perform in-house.

The WQL manager has outsourced testing when the volume of samples is too low to justify the expense of maintaining a capability in-house. These tests include radium, pesticides, and acrylamides. Radium testing is conducted by a private lab in-state, while WQL sends pesticide tests either to a private laboratory in Colorado or to ASL in Laramie. ASL also conducts the acrylamide testing for DEQ. Testing conducted at Analytical Services is done as a courtesy for DEQ.

The AQL has outsourced testing on a project-by-project basis. The lab recently outsourced analysis of non-polar toxic organics for a special project. This testing was outsourced because the AQL manager indicated the volume of samples was minimal; the testing was outsourced to a California firm.

However, the WQL has not developed cooperative arrangements with other labs that are conducting water testing in the state. As noted in the previous chapter, we found duplication of the microbiological water capabilities in the WQL, the PHL, and the ASL. Also, both the WQL and the ASL have capabilities to conduct the chemical testing of water.

When we applied the privatization criteria found in other states to the services provided in the DEQ labs, we identified a number of policy decisions that DEQ officials and the Legislature may wish to consider when determining where these services are best provided. For example, in water testing, it appears that it may be less expensive for the state to outsource NPDES testing. However, policymakers need to determine if they believe this testing is a core government function, more appropriately conducted in-house.

Policymakers also need to determine if the state should maintain in-house capability for special projects and investigative water testing. If the state wishes to maintain this capability, that decision likely negates any savings that might be achieved by outsourcing other water tests. This is because the lab would still need to be staffed and equipped at a certain level to perform investigative work. Furthermore, the WQL has recently purchased equipment and the state may not want to dismantle this investment.

For air testing, our analysis indicates it may be more expensive to outsource ambient air monitoring analyses, primarily because this testing did not require DEQ to make a large investment in equipment. However, only about 40 percent of the laboratory staff’s time is spent conducting the air filter analyses. The rest of the time in the AQL is spent on special projects. Much of the equipment used to conduct the special projects in the AQL is aging. Policymakers need to determine if they want to make an investment in new equipment to maintain in-house capability for investigative air testing, or outsource the work.

In our analysis of privatization options, we assume that DEQ would still pay for the lab services and retain control of data derived from those services, either through in-house provision or through outsourcing lab testing. We did not review the option of shedding this service altogether.

We sent surveys to 39 private sector environmental labs in Wyoming to determine costs and to gauge the strength of the private sector to provide air and water testing. We surveyed the private sector for testing prices on both the NPDES program and the ambient air monitoring program. The analysis in these programs is fairly routine and there appeared to be a private sector in Wyoming capable of doing the work.

We calculated DEQ’s costs to provide this testing in-house, and compared them to the costs of outsourcing to the private sector. Because DEQ does not have a cost accounting system, in-house costs represent our estimates to provide the services. The surveys sent to the private sector do not represent a formal bid, and respondents’ prices may not be indicative of actual bids. See Appendix A for more details about this methodology.

However, actual savings to the state may be lower than the above analysis portrays. Many of the in-house costs, such as administrative costs, facilities, and supplies, may be unavoidable. A portion of personnel costs would likely still be incurred even if this testing were outsourced, since the WQL manager has non-laboratory responsibilities within the Water Quality Division.

Furthermore, depending on DEQ’s and legislative decisions regarding water testing within the agency, equipment may also represent an unavoidable cost. If the state wants to maintain the capability to conduct emergency water quality testing in-house, significant cost savings may not be realized from outsourcing NPDES testing. The WQL’s equipment is used for all testing, so outsourcing NPDES would not reduce the agency’s need for its equipment.

This is the minimum amount it could cost the state to outsource this testing. Again, many costs we accounted for in our analysis of in-house costs may be unavoidable, including administrative costs, facilities, and supplies. A portion of personnel costs would likely still be incurred even if this testing were outsourced, since the staff have non-laboratory responsibilities within their division.

Also, based on the survey results, it appears that DEQ may receive less timely information from the private sector than it does from the AQL. The AQL manager reports that the lab can provide results for these analyses in three days. Only one private lab reported that it would turnaround the analyses that quickly. The median turnaround time was ten days.

DEQ has chosen to develop in-house capability, when possible, to conduct the air and water analyses related to its monitoring and enforcement role. DEQ officials have stated that because they use the data generated in the labs to make enforcement decisions, they need to rely heavily on the accuracy of the data. As a result, they have expressed a greater comfort level with in-house testing.

All seven of the private labs that responded to our water survey currently conduct NPDES testing for dischargers, although their purpose for testing differs from DEQ’s purpose. Private labs perform NPDES tests as a service to dischargers, who are required to monitor and report effluent levels. DEQ independently obtains its own sample and the WQL analyzes the effluent of dischargers to verify the quality of the self-monitoring data. DEQ can take enforcement action against a discharger based on the data. DEQ has raised concerns that the private labs conducting commercial testing for dischargers would have a conflict if they conducted DEQ’s monitoring test for the same permittees.

DEQ has an obligation to EPA to ensure the quality of the data, regardless of where testing is performed. At the same time, according to EPA officials in Denver, the state has broad latitude in structuring its quality assurance program for waste water testing. EPA officials we interviewed said the state would not be precluded from using a private laboratory to conduct both regulatory and commercial testing. EPA notes that the state could require a sample control program as part of any contract, using a numbered sampling system, which would not denote the source of the sample.

DEQ could take another approach to ensure the quality of the self-monitoring data dischargers submit. It could end its regulatory sampling and testing program for NPDES and begin a certification program of laboratories that conduct commercial NPDES testing. According to DEQ officials, Utah assures quality of commercial NPDES testing in this manner.

DEQ officials prefer the current check sampling program, because the agency obtains an independent sample and maintains custody of that sample from collection through analysis. While certifying labs would help ensure the accuracy of analysis, DEQ would no longer have an independent source for sample collection. DEQ officials also believe certifying labs would be more expensive than in-house testing because it would require an additional employee, as well as increased travel time for lab staff. However, any savings that DEQ would achieve by eliminating its NPDES testing program could offset the costs of lab certification.

DEQ officials believe that having internal laboratories helps the agency meet its obligation to the public to investigate complaints regarding air and water quality in the state. Much of the special project work is conducted in response to complaints. DEQ administrators believe that this work requires special method development that may be difficult to outsource. They question if the private sector would respond to emergency testing needs. The lab managers also assist the agency in interpreting the results of non-routine projects.

In determining whether DEQ’s need for lab services is better provided in-house or by the private sector, policymakers may want to consider the importance of DEQ’s role in providing investigative testing services, and whether emergency testing needs can be met by the private sector.

Given WQL’s relatively low volume of samples and the level at which it must be equipped, as well as the pending equipment needs in the AQL, DEQ may wish to monitor its own internal costs and opportunities for outsourcing, even as the sample loads increase.

Additional options and considerations for water testing, including consolidation, are discussed in Chapter 8.

The mission of the Wyoming Department of Agriculture (WDA) is broad, "to assist the citizens of Wyoming to live safe and healthy lives, promote and preserve our agricultural community, be responsible stewards of our natural resources, and achieve integrity in the market place." As part of WDA, the Analytical Services Lab (ASL) supports WDA’s mission by providing scientific analyses and information to WDA inspectors and officials, as well as other customers. ASL is sometimes referred to as the "Ag Lab."

Some of the many statutes which relate to WDA, typically the ones that regulate commodities, involve ASL. The Wyoming Food, Drug, and Cosmetics Act empowers WDA to:

• Enter into agreements with the federal government to operate a state meat inspection program in accordance with US Department of Agriculture (USDA) requirements.
• Regulate milk and milk products in accordance with FDA requirements.
• Sample pesticides for label guarantee purposes.
• Inspect and take samples from food, drug, or cosmetics manufacturing establishments.

These programs utilize the services of ASL. WDA can, for example, close down a dairy producer based on ASL’s test results.

Other statutes also affect ASL. State commercial feed laws (W.S. 11-13-106), fertilizer laws (W.S. 11-14-107), and livestock remedy laws (W.S. 11-17-106) allow WDA to sample and test these products used by agricultural producers to ensure compliance with legal standards. WDA can stop the sale of these products based on the test results.

W.S. 40-7-107 directs the state chemist to test petroleum and antifreeze products for compliance with American Society for Testing and Materials standards. W.S. 40-9-103 requires the state chemist to test natural gas at the request of the Public Service Commission (PSC) or the mayor of a community. WDA has enforcement authority for petroleum and antifreeze, while PSC has enforcement authority for natural gas.

The Food, Drug, and Cosmetics Act, enacted in 1911, is somewhat dated. For example, although the substance is not commonly used today, the statute still references the testing of "illuminating oils." The Governor’s Food Safety Task Force is working to update Chapter 7 of Title 35, and other statutes that relate to ASL may also be in need of updating.

As evidenced by the various statutes, ASL performs a broad range of testing. ASL tests approximately 13 different types of substances, or matrices, although water is by far its largest matrix. In FY97, water represented 64 percent of total samples submitted to ASL and 61 percent of total tests. A proportional breakout of the rest of ASL’s work follows:

• Dairy was 22 percent of samples and 16 percent of tests.
• Feed, forage, and fertilizers were 5 percent of samples and 13 percent of tests.
• Veterinary was 3 percent of samples and under 1 percent of tests.
• Meat was 3 percent of samples and 3 percent of tests.
• Food, drugs, natural gas, pesticides, petroleum fuels, industrial chemical residues, soil, and other substances made up the remaining 3 percent of samples and 6 percent of tests.

WDA downsized ASL during the early 1990s. Samples declined from 10,657 in FY88 to 6,383 in FY97, and staff numbers dropped from 14 FTE to 10.8 FTE. A major factor in ASL’s decreased sample load and staffing was a 1994 decision by the director of WDA to discontinue the chemical testing program for potability of private well water.

Thus, most of ASL’s samples, 58 percent, are neither WDA regulatory work nor work for state government. They can be considered "service testing" for public or private sector customers in matters where WDA has no regulatory or enforcement authority.

Source: ASL Annual Reports.

In FY97, ASL collected a total of $25,480 in fees, although its fee revenue has declined 75 percent since the chemical testing of well water was discontinued in 1994. ASL does not charge fees to General Fund state government agencies, or subdivisions of state and local government, and all fees collected from private individuals or businesses are remitted to the General Fund. ASL could not provide a cross tabulation of fee revenue by customer or analysis type.

ASL has a microbiology lab, plus a chemistry lab with an inorganic section and an organic section. As of FY95, the Seed Laboratory, which had been part of ASL, was moved to the Technical Services Section of WDA and is now located in Cheyenne.

Prior to FY98, the microbiology lab had a small role in the meat inspection program, but it has recently become more involved. The microbiological testing of meat for organisms, such as e-coli or lysteria, is a program that is increasing due to USDA requirements being phased-in. State law obligates Wyoming to comply with these requirements.

WDA’s meat inspection program requires regulatory testing of samples from slaughter houses and processing plants. The specifics of this testing are stipulated by USDA, which requires the microbiological testing of meat plant water by an EPA certified lab. ASL also tests samples of feed, forage, and fertilizers with methods similar to meat testing.

The chemistry lab tests water for both organic and inorganic substances. ASL is certified to do a broad range of chemical testing for SDWA requirements, and also tests waste water for businesses or municipalities for NPDES self-monitoring purposes.

The organic chemistry section has capabilities to test pesticides and other compounds. It can test pesticide formulations to guarantee that a label is accurate and can also test for pesticide residues in any matrix. ASL staff stated they currently do no label guarantee work because in recent years, they have not found problems with pesticide formulations. Hence, these capabilities are used for pesticide residue testing. For example, once a year the organic chemistry section screens raw milk produced in Wyoming for pesticide residues. Soil testing is done with methods similar to pesticide residue testing.

Finally, the organic chemistry section tests natural gas samples submitted by the PSC. This is a regulatory function for the PSC, and ASL is obligated by statute to do the testing.

ASL has chosen to outsource petroleum testing to a public lab in North Carolina because ASL lacks the specialized equipment to do this testing, which involves very few samples each year. ASL also outsources the few samples it receives for species identification to the Game and Fish lab.

Other than the previously mentioned memorandum of understanding with DOH, ASL has no formal agreements with other state labs. However, it does coordinate with other state laboratories on a casual basis. For some areas of organic chemistry, primarily dealing with pesticides, ASL does the testing for DEQ because they have such a limited number of samples. Until recently, ASL had been routinely doing toxicology work for the WSVL, but ASL is currently phasing out this testing as the WSVL develops in-house ability.

The testing ASL does varies widely in terms of analytical discipline, as well as customers served. For example, a water sample could be submitted by a WDA inspector who has visited a dairy plant, a city monitoring its water supply, or by a private well owner.

Since its testing is so varied, we grouped ASL’s different programs by purpose to aid in analysis. Specifically, the groups we created are: regulatory testing for WDA, and service testing for customers who would otherwise need to use a private lab. We also examined water testing which we treated as a subset of service testing.

We applied the privatization criteria discussed in Chapter 1 to these groups. However, we concluded that the main policy issue regarding ASL is service shedding. A governmental decision to shed services is a policy decision, not a cost or quality of service decision. Thus, we did not conduct a survey of private labs to obtain cost and timeliness information.

ASL will use any of the capabilities it has for regulatory work to provide testing to customers outside of WDA. For example, ASL has taken on additional testing, such as for forage and food, which is not for WDA regulatory purposes. It appears ASL did so because the testing methods are similar to those used for regulatory programs and this additional testing evens out the workload and makes fuller use of lab equipment. This testing is done mainly as fee-for-service work.

Market strength is a consideration in making outsourcing decisions. The meat and dairy programs require a lab to have certain USDA and FDA certifications respectively, and ASL is the only lab in Wyoming that has these certifications. Feed and fertilizer testing does not require laboratory certification, but it does not appear there are private labs in Wyoming performing this type of testing.

Our criteria state that legal issues should be reviewed as part of outsourcing decisions. WDA officials believe the agreements they have with the federal government would not preclude outsourcing lab services. However, WDA would still have an obligation to assure federal requirements were met. The director of WDA stated that if WDA’s regulatory work were outsourced, WDA would conduct inspections of private labs doing this work.

Due to these considerations, we did not survey the private sector to determine costs, timeliness, and market strength for regulatory testing.

What has developed, as a result, is a blurring of the boundary between government services and private sector services. Testing done by ASL is a mixture of non-fee-service work for government entities, fee-for-service work for private customers, and regulatory testing done for WDA. The state chemist stated ASL will do fee-for-service work in any analytical program.

By statute, the state chemist can charge fees, but the fees must be "reasonable and comparable to that charged for the same service by commercial laboratories operating within the state." WDA has no formal procedure to ensure fees are comparable and ASL has not adjusted its fees since 1992. In addition, we compared ASL fees for four tests with the results of our private sector surveys. We found that ASL’s fees were between 20 and 60 percent below the median private sector prices. For these reasons, we concluded ASL is not currently charging fees comparable to the private sector.

If policymakers do not want state agencies to perform activities that are not a core government responsibilities, WDA or the Legislature may wish to direct ASL to shed service testing or to otherwise limit the service work it performs. This would mean a majority of samples currently sent to ASL would be left to the private sector.

The following section is a subset of shedding all service testing.

WDA has no statutory or regulatory directive to test water, other than the microbiological testing of dairy, meat, and food plant water. ASL received fewer than 300 of these samples in FY97.

An analysis of submittors shows that in FY97, 29 percent of samples were submitted by municipalities, and most of these were water samples. Of these samples, 47 percent were from municipalities in Albany County, 12 percent were from Laramie County municipalities, and 11 percent were from Carbon County municipalities. In all, municipalities from these three counties submitted 70 percent of these samples.

The remaining 30 percent of samples were submitted by municipalities from 15 counties. There were five counties from which no municipalities submitted samples.

EPA sets short holding times for some water samples, and these holding times help to explain the concentration of samples coming from nearby municipalities. EPA’s short holding times for microbiological SDWA and NPDES testing may make it inconvenient for communities outside of the southeastern part of the state to use ASL for this testing.

However, the holding times for chemical SDWA testing are much longer and ASL could conceivably be used by all Wyoming municipalities, regardless of location, for this testing. Even so, many municipalities throughout the state do not use ASL for chemical SDWA testing, and appear to have it performed in the private sector.

The pragmatic result of all these circumstances is that ASL acts as a regional lab for nearby municipalities. Hence, ASL is providing a financial benefit to municipalities concentrated in the southeastern part of the state. We could not definitively quantify the amount of this benefit, as the specific tests mandated by SDWA and NPDES vary according to population, water source, or permit type. However, we estimated drinking and waste water testing would cost the city of Laramie $27,000 annually.

According to the state chemist, ASL does not have the personnel to provide all required water testing for all municipalities. If ASL’s workload becomes too high, the state chemist refuses samples. This would happen if all municipalities began using ASL for water testing.

Market Strength. A weak private sector may be justification for government services. However, Wyoming has private sector labs that do NPDES and SDWA testing. Waste water testing for NPDES compliance is done by approximately 14 private labs in Wyoming, and there are 13 private sector or county health labs with EPA certification for microbiological SDWA testing. In addition, PHL is EPA certified and performs this testing for municipalities at no charge. PHL’s objective is to have as much surveillance information as possible about public water supplies in Wyoming.

At present, there are at most four labs in Wyoming certified to do parts of the chemical SDWA testing. No lab in Wyoming is certified to do all the components of chemical testing for SDWA, and no other Wyoming lab appears to have the range of certification for chemical SDWA testing that ASL does. In spite of this, many municipalities get their testing done without using ASL.

Additionally, DEQ’s Water Quality Lab has the capability to perform the full range of microbiological and chemical water testing. However, DEQ has chosen to outsource some chemical testing of water to ASL because it is not cost effective to keep supplies and equipment ready for the limited number of samples that require this testing.

Impact on ASL. If ASL were to shed the service testing of water, it would significantly change the operations of the lab. Its sample load for all analytical programs would decrease substantially, to roughly 2,500 samples per year, which would be a 60 percent decrease. Personnel and equipment needs would be reduced, although not necessarily by a proportional amount. Since the state chemist stated that ASL currently has 30 to 40 percent excess capacity in terms of space and equipment usage time, such a reduction in samples would call into question ASL’s current structure and staffing.

Shedding service testing of water would have little impact on the overall efficiency and capability of the microbiology lab, as it has no equipment or staff dedicated to water. The regulatory water testing it performs for dairy, meat, and food plant water requires little in terms of equipment and staff. The supervisor of the microbiology lab estimated water testing involves three people, part-time, for .7 FTE.

However, shedding service testing of water would have an impact on the chemistry lab. Some staff and equipment in the chemistry lab are dedicated to water, while some would still be necessary for other programs but would be used less. There are two FTE dedicated to inorganic water testing, plus two chemists who have other duties but combined spend 40 percent of time on organic water testing.

We determined that there are at least 12 instruments in the chemistry lab either dedicated to water testing or used primarily for water testing. The purchase prices of these instruments ranged from about $5,000 to $75,000. Some, but not all, of this instrumentation would not be necessary if ASL were to shed service testing for water. In that case, it would be WDA’s discretion to determine how best to realign equipment and duties. As well, some unavoidable costs are likely to be involved.

If policymakers believe providing water testing to government subdivisions is an efficient use of government resources, they may wish to consider increasing staff and equipment at ASL. This would create the capability for ASL to do all routine water testing for all government subdivisions.

Additional considerations for water testing are discussed in Chapter 8.

The Crime Laboratory is one of three sections in the Division of Criminal Investigation (DCI) within the Office of the Attorney General. The lab shares the Rogers Building in Cheyenne with the other DCI sections. The facility was remodeled in 1987 specifically to accommodate laboratory functions.

Although the lab is not specifically mentioned in statute, the DCI director has implicit authority to establish a laboratory through statutory discretion to employ persons with specific skills in the area of forensic science (W.S. 9-1-613 (c)). Additional implicit authority for the lab exists in legislation passed in 1997 that calls upon the division to perform or contract for tests on DNA samples from convicted felons to implement the state DNA database (W.S. 7-19-401 - 405).

Statute does not require DCI to provide forensic services to law enforcement authorities within the state. It does, however, require that the division cooperate with them for the efficient investigation of criminal activity. The pragmatic consequence appears to be that through the Crime Lab, the division provides forensic lab services to local authorities without charge. In FY97, local law enforcement agencies, either police or sheriffs’ departments, submitted 74 percent of the cases from which the Crime Lab processed evidence. The lab also provides forensic analyses for public defenders, state and federal agencies, county coroners, and DCI itself.

The DCI Crime Laboratory is a full-service forensic laboratory that provides examinations by court-certified personnel in four functional areas: chemistry, biology or serology, fingerprints and questioned documents, and firearms and toolmarks. Functional areas are major areas of casework for which crime laboratories may seek accreditation from the American Society of Crime Laboratory Directors. The Crime Lab is not yet accredited, but has begun the process. Accreditation is a voluntary program for labs to demonstrate that their procedures and physical plant meet established standards.

Crime Lab examiners specialize in one of these functional units and do not cross-train. The lab supervisor is also a division deputy director with other administrative duties. To be court certified, examiners must be able to articulate concepts and provide testimony as expert witnesses relevant to their work. Although they are not designated as law enforcement officers, Crime Lab personnel must undergo the same background investigation procedures. Examiners work a normal working day, but must be available during other hours when circumstances demand. In addition, all examiners must rotate on-call, making themselves available within one hour to travel throughout the state to process crime scenes.

Over recent years, the unit has assembled the equipment to conduct Polymerase Chain Reaction (PCR) DNA analyses. This is a gene amplification technique that makes it possible to analyze biological substances from very small samples. Although it is not yet operational, lab officials expect this technology to be on-line for state casework later this year. Now, the lab sends DNA analyses on major cases to the FBI lab, which has a lengthy turnaround time, or to out-of-state private labs at local expense. Both state and local law enforcement officials expect to see this analysis applied to more cases when the Crime Lab begins to offer it.

In addition to the four functional areas, the Crime Lab also analyzes trace evidence from crime scenes through analytical procedures using either chemical or instrumental techniques. The lab also includes an evidence section, where all evidence coming into the lab is tracked, secured, and eventually returned to the submitting agency.

However, legislators may not have been able to see the extent to which federal funds have supported the Crime Lab. Until the most recent biennium, DCI presented the Crime Lab’s budget request as part of the larger criminal investigation budget, and that request has not included a line item for laboratory equipment. This contrasts with the labs that rely upon General Fund appropriations for equipment, and over which the Legislature can more directly exercise its oversight.

The Crime Lab has an average turnaround time of 100 days to complete examinations of evidence submitted from a crime. The lab’s priority is to work evidence on a "first in-first out" basis, with exceptions made to expedite no-suspect homicides, crimes involving children, and shootings involving law officers. However, the lab’s general priorities change constantly as examiners must move some analyses ahead of others to ensure they are completed in time for court dates. Lab officials noted that despite the lengthy average turnaround time, examiners always meet court deadlines.

Crime Lab officials note that the lab faces a backlog of casework. We determined from case information that lab examiners mostly work on evidence from previous years’ cases. For example, in FY97, 84 percent of lab personnel time was spent analyzing evidence from cases from previous fiscal years. The remaining time was applied to current cases, presumably following the priorities described above.

Evaluating specific lab procedures was outside the scope of this report. Therefore, we did not determine whether this backlog and turnaround time are excessive or problematic, or what might cause them. Lab officials say the lab’s increasing caseload and the number of items submitted for each case affect its turnaround time. They also note that an increase in awareness of forensic science has created expectations for more examinations. Further, the lab works evidence submitted by local authorities from misdemeanor as well as felony crimes, and does not distinguish between the two.