The Board of Supervisors is slated Tuesday to approve a formal response to a Riverside County Grand Jury report criticizing how a $36 million contract with a firm tasked with finding cost efficiencies in county government was handled, answering questions regarding how or if operations will change.
In August, the 19-member civil grand jury returned with a roughly 30-page report listing a bevy of issues stemming from the work of KPMG, a Netherlands-based professional services firm initially hired in the fall of 2015.
Its original assignment was to examine operations within public safety departments, notably the Sheriff’s Department and the Office of the District Attorney, to determine what changes might be necessary to make them more efficient and less costly. The original contract cost was $761,600.
In March 2016, the Executive Office recommended, and the board agreed, to retain KPMG under a long-term compact to help public safety agencies implement modifications aimed at enhancing efficiency.
The agreement was amended several times — without competitive bidding — to include evaluations and revisions to practices and procedures in general government agencies, including the Animal Services, Human Resources and Information Technology departments.
The total cost of KPMG’s work eventually ballooned 54 times the original contract expenditure, according to the grand jury.
Jurors were dubious about claims that the contract had resulted in $100 million in savings from workflow changes, mainly in public safety, over a two-year period.
However, in its response, which was approved by an ad-hoc committee comprised of Supervisors Jeff Hewitt and Kevin Jeffries, the Executive Office countered that the savings had been realized in the last two budget cycles by “reduced projected spending” thanks to the 209 recommendations from KPMG, about half of which have been implemented.
When KPMG executives concluded their work, they said it was incumbent on the county to see that reforms were enacted. There was particular emphasis on the proposed County Performance Unit, and the need to monitor progress within each department, using “key performance indicators.” But jurors determined that, by the time of their investigation, the CPU had “been largely abandoned.”
The EO objected to the finding, saying the CPU was a work-in-progress and not a simple matter of creating a real-time “central hub,” or dashboard, that captures cost-reduction modifications in the various agencies.
“There is no single countywide software system that stores all data from all departments,” according to the response.
However, the EO pointed out that the restructured annual budgets now reflect cost adjustments tied to the KPMG efforts, and key performance indicators are specifically utilized for that purpose.
Jurors considered KPMG’s vows that transformative tools were in place to reorient and right-size county government “dubious (and) misleading” because of a lack of information to substantiate the claims.
The EO disagreed, saying “different departments are in different states of implementation,” and time will tell how well strategies are put into effect to improve operations across the board.
According to the jury report, there seemed to be a lack of recognition of the benefits of competitive bidding, and jurors believed for the sake of fairness and transparency that all contracts over $500,000 should be subject to bidding, pointing out that KPMG’s agreements were repeatedly amended without the county giving any thought to inviting competitors.
But county officials replied that an ordinance, No. 459, specifically permits agencies to waive the competitive bidding process as long as they clear it with the Department of Purchasing and can justify to the Board of Supervisors in documents the rationale for single-source selection of services.
In their analysis, jurors lastly said the board should re-examine, in total, the initiatives put in place under the KPMG work to “achieve benefits and cost savings,” and that the board consider establishing a new “independent department,” similar to the Office of the Auditor-Controller, to measure to what extent agencies are following through with reforms and what the county is gaining.
The EO agreed with the concept of an “independent review agency,” saying the concept will be introduced to the board for further consideration during the 2021-22 fiscal year budget hearings in June.
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