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Summary of Findings

Government of Ontario Business Transformation Project

WHAT IS IT ABOUT?

The Ministry of Ontario entered into a public private partnership with Andersen Consulting to develop and implement a social assistance service delivery system through the Business Transformation Project in keeping with the objectives of the Social Assistance Reform Act.

WHAT KIND OF PPP?

This agreement has the basic characteristics of an ‘Advise on Operations and Maintenance for a Fee’ PPP. Andersen is paid a fee in exchange for developing a cost-effective welfare system and receives a share of cost savings achieved.

THE CLAIMS:

The province claims that:

MCSS and Andersen will work together to realize a cost-effective delivery system that contributes to achieving the reform of Social Assistance in the context of the government of Ontario’s vision for social and community health services.”

The province maintains that the new model will:

  • reduce welfare fraud and abuse of the social assistance system

  • improve efficiency and better value for taxpayers

  • provide better service for clients, consistent service delivery and promotion of self-reliance through employment.

THE REALITY

The Province of Ontario paid Andersen Consulting $15.5 million for costs up to March 1998. This was $13.1 million more than savings that were clearly attributable to Andersen.

Paid Andersen approximately $1.4 million ($26,000 per full time equivalent position) in out of pocket expenses without requiring receipts.

Agreed to pay Andersen up to $180 million out of future savings. This exceeds preliminary cost estimates of $50-70 million.

The Province pays Andersen rates which are up to eight times higher than the rates charged by the Ministry for comparable staff.

Andersen Consulting has a history of not meeting contractual obligations and overestimating savings.

Service delivery agents have decreased from 300 to 47 with substantial increases in caseloads.

Service restructuring can lead to parts of the service being privatized, such as call centres.

An independent review states that “The current agreement, being performance or value-based, is quite weak in terms of the clear specification of the expected outcomes of the BTP”. This reflects the conclusion of the Auditor that the lack of clearly established desired business results “could not ensure that such results would be sufficiently measurable.”

In reference to a similar Andersen project in Nebraska, a state audit called the project “The most wasteful I have ever heard of. It’s like pouring money down a deep dark hole.”