This was one of those weeks where cynicism hovered over the Legislative committee room threatening to soak my sense of hope that politicians can do better. Auditor General Kim McPherson presented the first volume of her work for the year to our Public Accounts Committee. Our job is to ensure that Departments spend the budgets approved by the Legislative Assembly effectively and efficiently, and to ensure that Auditor General’s recommendations are implemented.
The AG had uncovered a series of contracts awarded to the multi-national consulting firm EY (formerly Ernst and Young) in 2013 by the Department of Social Development to recommend how it could cut its budget.
In January 2013, the Department of Social Development asked Service New Brunswick to be exempted from the requirement to seek competitive bids for a consulting contract invoking the emergency clause, claiming the need to find budget savings was urgent. Even before Service New Brunswick replied, the Department entered into a $100,000 agreement with EY. In May of the same year, the Department requested another emergency exemption from the tendering requirements for a second contract for $112,000 with EY. This time, Service New Brunswick suggested this was a bad idea and raised concerns over potential bias, but went ahead anyways, giving its blessing to the emergency exemption on the condition that the Department invite bids for the work the next time.
That they did. Six consultants were invited to bid on a $12.25 million contract, including EY on a tender that the AG says EY helped prepare. They had 12 business days to respond, and EY won the bid. The Auditor General says that Social Development “highly and inappropriately favoured the consultant (EY) throughout the process.” It gets worse.
The AG found that the Department of Social Development had signed the $12.25 million contract which appeared to have been prepared by EY on its letterhead. She discovered the contract did not contain objectives or detailed targets, nor did it contain clearly defined deliverables, and it lacked a maximum cost clause.
Social Development also agreed to pay performance fees based on anticipated savings regardless if actual savings were achieved or not. The consultant was paid 15% of the savings it projected would result if the Department implemented all its recommendations, whether they did or not, and whether the actual savings were anything like what was projected. This amounted to a total payment of $5.8 million in performance fees for a projected savings of $45 million, which according to the Department, actually amounted to $10 million in the end.
So, $5.8 million in performance fees were paid, along with $6.6 million in professional fees, a contract overrun of $700,000, plus $646,000 in travel expenses that did not require receipts. Social Development, which cares for the most vulnerable in our society, paid out $272,000 in airfare, $179,000 in accommodations, $148,000 in mileage, rentals, taxis, etc., and $47,000 for meals for the consultants as they travelled to and from New Brunswick.
To cap it all off, after the Liberals were elected, the contract with EY was extended for one more year with no performance evaluation, no negotiations, and no changes.
Every week in my constituency office I have constituents who have had their power disconnected because they can’t afford to pay the bill, or are facing eviction because they can’t afford their rent, or have lost their income assistance and health card because the Department of Social Development has determined they broke the rules. There no words for what I am feeling as I write this.
The Auditor General maintained the Department of Social Development remains accountable through the Legislature to the public, so I tabled a motion at Public Accounts Committee to call the Department of Social Development to appear before us within the month to account for this boondoggle of a contract. It’s what the Auditor General told our committee would typically happen in other provinces. The Liberal members refused to support my motion. The spokesperson for the Tories told the media, “those people made decisions they thought were the best for New Brunswick at the time.” Why am I the only elected politician speaking out on this?
This is a good illustration that it matters how you vote. Voting for the old parties perpetuates the old ways. As a Green MLA, I continue to push forward, knowing we can do far better than this, but I could use some help after the next election, should the people of Fredericton South put their faith in me for 2018.
David Coon is the MLA for Fredericton South and the Leader of the Green Party of New Brunswick.