As Bluestem noted yesterday, the budget figures brought to the table by the Senate Majority Caucus were supplied by private firms suchs as Accenture, IBM and Deloitte (h/t to PIM Weekly Report).
The Star Tribune reported in Dayton: GOP plan comes up $1.2B short:
Republicans say that administration analysts — many of whom served in the previous Republican administration — are so deeply tied to traditional assessments that they cannot accurately calculate savings on innovative programs. Instead, Republicans are relying on analysis from companies that say they have helped other states save money.
What cost savings have these companies brought to the table? And in which states?
A brief skimming of reputable sources suggests that perhaps PIM and the Strib shouldn’t leave this question up to a little blog on the prairie. Let’s look that Little Budget pony in the mouth.
Take Accenture, for example. Its track record seems less than sterling. In The Public Interest, a site that scrutinizes privatization, notes that Accenture is:
[f]ormerly the consulting division of Arthur Andersen, which dissolved due to its role in the Enron scandal. Accenture was spun off before the scandal following an acrimonious falling out and protracted legal dispute with Andersen. Accenture went public in an IPO in July 2001 in which Goldman Sachs and Morgan Stanley were its lead underwriters. It had over $25 billion in revenue in 2008. Domiciled in Bermuda but headquartered in New York, Accenture has 170,000 employees and offices in 200 locations in 50 countries, including in over 30 cities in 23 states in the U.S. . . .
Its work in the public sector is a bit checkered:
Over the years it has been involved in a number of controversies and scandals in its public sector consulting. The Canadian Union of Public Employees (CUPE) denounced the company (then Andersen Consulting) in 1999 for a litany of poor outcomes, including intense scrutiny in Ontario, where the provincial auditor concluded the consulting firm’s $180 million contract to reform the welfare system was “riddled with loopholes, unaccounted for costs, and inflated fees.” The company was also involved in contracts with New Brunswick to reform their social assistance program and justice system. The social assistance reform required workers to spend no more than 4.5 minutes per month with each client. Persistent delays and escalating costs were associated with the justice system reform. It cost the government $3 million to get out the $60 million contract.
More recently, in 2007 the state of Texas cancelled a five year $889 million contract with Accenture to run call centers for the state’s children’s health insurance program after enrollment plunged, in part due to staffing shortages. Accenture has been the subject of a steady drumbeat allegations of improper billing, cancelled computer services contracts (most notably in Wisconsin, with the failure to get a computer voter tracking system in place in time for the November 2008 elections), overbilling tied to conflicts of interest, data breaches and other contract failures.
That information is a bit dated, but should give Minnesotans pause. The Progressive States Network takes note of the costs in Accenture and the Billion-Dollar Texas Boondoggle:
How bad is the Texas social services deal? Republican State Comptroller Carole Keeton Strayhorn began investigating the deal and declared, “The Accenture contract appears to be the perfect storm of wasted tax dollars, reduced access to services for our most vulnerable Texans, and profiteering at the expense of our Texas taxpayers.”
Faced with massive backlogs and endless waits for people needing help, state Health and Human Service Commissioner Albert Hawkins had to tell Accenture to reverse gears and return to older procedures for approving social service benefits. 1,000 state workers slated to be laid off were held onto to help clean up the mess.
And the root of the problem is that corruption flowed from the top.
. . . When public officials know that favors for private contractors means a sweatheart job when they leave government service, it’s hardly surprising that privatization is often a ripoff for taxpayers.
Go read the details.
More recently, Texas’ experience with IBM should raise questions about the Senate Majority’s trafficking with the firm, with the company anticipating contracts to come, as PIM’s Weekly Report noted. In Shrinking the budget easier said than done, the Austin American reported in May 2010:
Consider, for example, the 2005 legislation that mandated the consolidation of 27 agency data centers that house mainframes and servers. The data center consolidation was sold as a money-saver – $178 million over seven years – that would also improve operations and security.
The project, which is being run by IBM Corp. under an $863 million contract, has been mired by delays, equipment failures and service complaints. The contract is being amended, and IBM is said to have asked for as much as another $500 million to complete the task. . . .
In The pitfalls of out-sourcing IT, a commentator at the Raliegh News Observer summed up the consequences of the problems (which were widely reported in Texas):
IT privatization in Texas led to a loss of taxpayer information due to “chronic failures” in data backup and recovery, security, disaster recovery, systems monitoring and management, and staffing and service levels. This was reported by Texas’ chief information officer in a seven-page letter last July to IT contractor IBM, detailing the failures of the 2006 privatization contract. That contract is now being rebid.
Texas taxpayers could not get basic public services, such as car registration renewals, unemployment checks and Medicaid benefits. IBM, on the other hand, collected on the $863 million contract for services promised but not delivered. The clear winner? IBM.
Nor was Texas’s experience isolated. Indiana also had problems:
Indiana Family and Social Services Administration’s 10-year, $1.6 billion privatization contract with IBM has gone so foul that both parties decided to sue each other last May. The deal was to have overhauled Indiana’s social services system. Instead, not only does Indiana lack a viable computer system, it is also paying more than $5.25 million in legal fees to sue IBM. Whose pocket will this come out of? What do taxpayers have for this outsourcing deal? A huge bill with no new services.
So why isn’t the capitol press corps asking the most basic questions about the companies helping out the Senate Majority Caucus? After all, the PIM Weekly Report wrote (and I annotated):
. . . The firms approached the Senate caucus, Parry added, and though they are using public data for their work, they have no formal contracts with the state [emphasis added](although some contracts would become available if the proposals they worked on were implemented) [emphasis added].
Given the experience in Texas and Indiana–and in Canada and elsewhere–and the severity of our own fiscal situation–can the press do the slightest bit of due diligence? Look that gift horse in its mouth. please.
Image: The always brilliant and hilarious Phoenix Woman provided My Little Pony and a pot of gold in Minnesota GOP’s Fantasy Budget: Courtesy of Accenture!