High priced consultants fail to deliver

The Ontario government’s much-criticized welfare reform contract with multinational Andersen Consulting was dealt another blow last December.

The province’s auditor, who exposed vast cost overruns and phantom savings in a damning 1998 report, has found the government failed to act on his warnings. Instead of cancelling the deal, Andersen has been paid more than $55 million for work that should have been completed long ago.

The deal, called the Business Transformation Project, is feared to be the first step in privatizing the administration and delivery of social assistance.

The auditor’s latest review of the project found "significant payments already made to Andersen Consulting at rates which the ministry cannot control." Despite the flaws exposed in last year’s review, the government has extended Andersen’s timeline for overhauling the welfare system by a year and paid the company more than $55 million for the unfinished work.

"Despite the project’s failure to adhere to either the original or revised project timelines, costs incurred and payments made to Andersen Consulting to July 31 1999 have been substantial," the auditor reported.

The Andersen contract does nothing to prevent the company from raising its fees, which are already astronomical. An Andersen data entry clerk costs the province $85 an hour, while provincial clerks could do the work for $28. Andersen’s project director costs $575 an hour. The government director supervising the project is paid about $70 an hour.

The 1997 deal stipulates Andersen be paid out of savings from updating the province’s computer system and changing welfare delivery. Andersen’s strategy for achieving those savings is to design new systems that limit people’s access to social assistance. That reduces the welfare rolls, while at the same time replacing welfare workers with new technology.

Limiting contact with a caseworker and making the application process more difficult — particularly for those confounded by multimedia access kiosks or endless voice mail — will reduce the numbers applying for assistance. Since reducing welfare access from 167 locations to 47 last year, the government now plans to go further, with those in need channelled through nine regional call centres covering the province. This could well pave the way for the privatization of this aspect of social assistance.

The province has already contracted with a private firm to do credit checks on all welfare applicants. And in the Peel region, control clerk work has been contracted out to Great West Life, allowing a private insurance company to administer public funds for welfare recipients’ eyeglasses, dental work and prescription drugs.