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New Brunswick’s auditor general releases damning report on procurement practices

Click to play video: 'NB Auditor General uncovers overspending, lack of organization in Social Development Department' NB Auditor General uncovers overspending, lack of organization in Social Development Department
WATCH ABOVE: The first Auditor General Report of 2017 shows the Department of Social Development missed savings targets by tens of millions and overspent on a consulting firm that under delivered – Jun 20, 2017

A consultant who was paid $13 million to find savings for the New Brunswick government only saved $10 million – or less, the province’s auditor general says.

Kim MacPherson said the consultant also billed $600,000 in travel expenses, but never had to produce any receipts.

“It’s appalling,” Green Leader David Coon said after MacPherson issued her report Tuesday.

The unidentified consultant – the Liberal government said it was Ernst and Young – was hired in 2013 by the previous Progressive Conservative government to help the Department of Social Services identify significant budget savings.

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Only one consultant was considered and the department used an emergency exemption to avoid going to tender, she said.

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“There appears to be a total disregard for the legislative framework, the policies, the regulations that are intended to ensure a fair and transparent procurement process,” MacPherson said. “There were many steps and measures taken that would appear to try to avoid following good practice.”

MacPherson said the contract continued after the Liberals assumed government in 2014.

“If this is a practice, it’s very concerning. What is most concerning is that there appears to be a cultural problem here where there is an intent to disregard the procurement practices,” MacPherson said.

She said the consultant’s performance was self-evaluated and compensated on the basis of anticipated savings and not actual savings, with no set maximum price on the contract.

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Her report shows that as of June 2016, the department had paid the consultant almost $13 million to identify $47 million in anticipated savings, but actual savings were only about $10 million.

Of that $10 million, her staff was only able to confirm $8 million saved.

And, she said Social Services never monitored to determine the impact of the budget cuts on clients.

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“I can’t believe that in a department that doesn’t have a budget to provide people with a level of income assistance to live on, that they’re issuing contracts for millions of dollars without any clear objectives or measurables,” said Coon.

“It is extraordinary that is this happening, and continuing to happen in government.”

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Environment Minister Serge Rousselle said Tuesday while the primary job of the department is to provide services to people, it has to look for ways to do it more efficiently.

“It is always good at the end of the day to look at how we are delivering services, but at the end of the day there were anomalies and that is why the department is working towards all the recommendations of the auditor general,” Rousselle said.

He said that when the consultant’s contract was renewed by the Liberal government it was decided to see if more savings would be found.

Rousselle wouldn’t say if Ernst and Young – now known as EY – is still doing any work under that contract, but said they are doing other work for government.

Rousselle would not say if anyone will be reprimanded. “I will not get into human resources issues,” he said.

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He also couldn’t say if there may be other similar contracts where procurement rules were ignored, but said the government would be looking into it.

Ernie Steeves, the Tory Opposition critic for Social Development, said he wasn’t in government when the contract was awarded, but governments make right decisions and wrong decisions.

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He said it’s important to follow the recommendations of the auditor general, which include following set procurement rules, and contracts that compensate performance only on actual, measurable results.

Rousselle said all recommendations will be implemented.

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