The Board of Supervisors Tuesday postponed approving 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, with one board member objecting to some of the language in the response.
“I’d feel a lot better putting my name on this after we clean it up,” Supervisor Jeff Hewitt said. “There are some issues with the findings. We need to clean it up a little bit.”
Hewitt and Supervisor Kevin Jeffries served on an ad-hoc committee that reviewed the 19-member civil grand jury’s roughly 30-page analysis of the county’s contract with KPMG, a Netherlands-based professional services firm initially hired in the fall of 2015.
Hewitt said he agreed with the bulk of the Executive Office’s response to the jury, but he took issue with at least two findings, mainly related to reasons for the lack of utilization of the “County Performance Unit,” which the grand jury found was a key part of KPMG’s work.
Hewitt indicated that he sided with jurors and found the Executive Office’s reasons for not fully implementing the CPU unsatisfactory. He said he would spend the next week applying editorial changes to the county response. The board will reconsider the matter on Nov. 17.
KPMG’s 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.
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, 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, with an emphasis on the CPU 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 efforts in the various agencies.
“There is no single countywide software system that stores all data from all departments,” according to the response.
The EO pointed out that the restructured annual budgets now reflect cost adjustments tied to the KPMG work, 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” to measure to what extent agencies are following through with reforms and what the county is gaining.
The EO agreed with the concept, saying the concept will be introduced to the board for further consideration during the 2021-22 fiscal year budget hearings in June.