1998 ANNUAL REPORT, PROVINCIAL AUDITOR: MINISTRY OF COMMUNITY AND SOCIAL SERVICES

CONTENTS

Thursday 17 December 1998

1998 Annual Report, Provincial Auditor:

Section 3.01, business transformation project/common purpose procurement

Ministry of Community and Social Services

Ms Suzanne Herbert, deputy minister

Ms Bonnie Ewart, ADM, social assistance and employment opportunities division

Ms Ann Szyptur, acting director, business technology and technology integration branch

STANDING COMMITTEE ON PUBLIC ACCOUNTS

Chair / Président

Mr Bernard Grandmaître (Ottawa East / -Est L)

Vice-Chair / Vice-Président

Mr Richard Patten (Ottawa Centre / -Centre L)

Mr Marcel Beaubien (Lambton PC)

Mr Bernard Grandmaître (Ottawa East / -Est L)

Mr Bill Grimmett (Muskoka-Georgian Bay /

Muskoka-Baie-Georgienne PC)

Mr Jean-Marc Lalonde (Prescott and Russell / Prescott et Russell L)

Ms Shelley Martel (Sudbury East / -Est ND)

Mr Richard Patten (Ottawa Centre / -Centre L)

Mr Peter L. Preston (Brant-Haldimand PC)

Mr Joseph N. Tascona (Simcoe Centre / -Centre PC)

Mr Terence H. Young (Halton Centre / -Centre PC)

Substitutions / Membres remplaçants

Mr Dave Boushy (Sarnia PC)

Mr Jack Carroll (Chatham-Kent PC)

Mr Doug Galt (Northumberland PC)

Mrs Sandra Pupatello (Windsor-Sandwich L)

Also taking part / Autres participants et participantes

Mr Erik Peters, Provincial Auditor

Clerk / Greffière

Ms Donna Bryce

Staff / Personnel

MR RAY MCLELLAN; MR LARRY JOHNSTON,

RESEARCH OFFICERS, LEGISLATIVE RESEARCH SERVICE

1998 ANNUAL REPORT, PROVINCIAL AUDITOR: MINISTRY OF COMMUNITY AND SOCIAL SERVICES

Consideration of section 3.01, business transformation project/common purpose procurement.

The Chair (Bernard Grandmaître): Good morning, members, and good morning, Madam Deputy Minister and your staff. Welcome to the public accounts committee. We will continue our debate, if I can use the word debate -- questions and comments.

Mrs Sandra Pupatello (Windsor-Sandwich): Mr Chair, could you have the deputy minister introduce her staff, please?

The Chair: Yes, would the deputy minister introduce her staff, please.

Ms Suzanne Herbert: I'd be glad to. Debbie Moretta is my executive assistant, Ann Szyptur is the acting project director for the BTP and Bonnie Ewart is the assistant deputy minister for social assistance and employment.

The Chair: Thank you. I'll give every caucus ten minutes to start with and then we'll simply rotate. We'll start with the opposition.

Mr Richard Patten (Ottawa Centre): Welcome back. Deputy, you had made a comment the other day -- this is a little bit off, but I did want to deal with it -- on the organization of the disability support program. What's your assessment of how that's working out? This is a program that you said Andersen was helping or working with you on to redesign.

Ms Herbert: I would say that we're still in transition. This is a piece of legislation that was introduced late last spring, a massive overhaul of what used to be part of welfare and family benefits, a really significant shift both in the legislation and the intent of the program, which is to take people who are disabled right out of welfare and put them on a totally different program -- a significant change agenda. My guess is that we're about 18 months through transition, and while I think we've started off fairly well, it would also be fair to say that when you undertake a program as large as this one, there are bound to be some wrinkles as you get the program up and running. Right now we're managing the old legislation, because we have to grandfather some cases, and we've got new legislation as we move from one to the other. It's quite complex. The intent of the program has been well received by the disability community, but we probably still have some procedural and what I would call operational implementation glitches going on.

Mr Patten: From my experience in my constituency office, the program is not working well. This is to be kind about it. It is a program that is totally centralized. It's taken the responsibility away from the social worker locally; they have no role in this. The assumptions of the program are totally based on somebody who is literate, English-speaking, maybe French-speaking -- that's it. In other words, it leaves out the role of the local social worker. The person who is, let's say, a Greek immigrant working in construction is screwed, and this is a live example I'm talking about. It's totally based out of Toronto. The persons themselves have to apply in writing to a program in Toronto, send something to Toronto. The social workers are told that they're not needed in this program, and yet they must be part of the program; and they are part of the program, at their own peril. We get calls from staff on this.

I want to point that out. That program is not working well. It is very harmful and hurtful to a lot of people who are not qualifying in some of those mechanisms, like the health review etc. People are not being accepted on the program because they're told their file is not up to date, and the file they're talking about is that of the social worker who is initially dealing with the person. I don't want to take up too much time on this now because we're dealing with another -- but if you want some feedback, that program is not achieving its objectives.

Ms Herbert: We've had some of that feedback from local offices. I'll just say that the process you're talking about is the adjudication process. People, once they're on the program, have a caseworker locally, and for entry to the program they have an OW caseworker. So there are local case workers. But what I might do is ask Bonnie to talk about what that process is. I know that we have some transition issues that we need to be watching very carefully.

Ms Bonnie Ewart: When you're referring to the social worker, I'm assuming that you're talking about the municipal worker. The majority of applicants to the disability program usually come through the Ontario Works entry first, in which case they are on Ontario Works if they're financially eligible. Then the process of medical adjudication is, as you've described, a centrally driven process, whereby a package of medical and other layman's type of forms are sent to the applicant, who then gets them filled in through whatever resources they have available to them to do that in the community. It could be the social worker, their doctor, and it could be other individuals who can help them with these forms. The package is then sent to Toronto, as you're suggesting, and the medical adjudication aspect is determined. The client is then notified if they are or are not medically eligible, in which case the file gets transferred, for the financial side, from the Ontario Works program to the provincial office, the disability allowance. Then the person is assigned a provincial case worker for ongoing programming.

Ms Herbert: We had many, many complaints that the adjudication in the old disability system was inconsistent. Depending on which doctor you talked to and what worker you had, decisions were made that were not consistent and, individuals felt, not fair as a result of what they perceived to be the inconsistency of the local decision-making. So there is a balance there we need to achieve.

Mrs Pupatello: I wanted to turn back to the Andersen contract. I wanted to ask at what ministry level was there a decision to put the project team on a separate floor with a separate security code, which in the end resulted in the Provincial Auditor not having access. Who would have made that decision?

Ms Herbert: I'm not aware of the Provincial Auditor not having access to staff they wanted to see, so --

Mrs Pupatello: I understand that several requests were made of the ministry to access information. In fact, what we learned was that this was very unprecedented in terms of lack of access for the auditor.

Ms Ann Szyptur: Just in terms of general processes around security, if I can talk generally about that, all of the government building floors, both at Queen's Park and at 880 Bay, have security codes or card codes. This is not unusual in terms of where the business and technology integration --

Mrs Pupatello: Except that the Provincial Auditor has "unfettered access" to basically whatever they choose to review, so why would this have been different from any other ministry that also has security codes etc?

Ms Herbert: I would have to ask the Provincial Auditor -- I don't know what the protocol is here -- to explain the issue to me. As Ann has said, all of our floors for the entire ministry are coded for security purposes, either with a pass card or with a number punch. That's standard procedure for all of our corporate offices.

Mrs Pupatello: I understand that the standard procedure has never disallowed the Provincial Auditor to have access, because that is the case with all ministries as well, and lots of files have been updated.

In any event, I wanted to ask about the Coopers contract, which would have been the additional consulting that you would have hired. There were several revisions to the original contract of $165,000. You would have accessed this contract to give you the expertise to write the business deal, because it's such a new process to get involved in, this business procurement, whatever it's called. What did they give you in the end that ultimately was invoiced at $285,000? Was there a report that was tabled from them? Was there a sort of side-by-side working through meetings with the eventual contract winner?

Ms Herbert: I'll ask Ann to talk about that contract and the process and the products from that.

Ms Szyptur: In terms of the products that we had produced, Coopers and Lybrand did not produce one report, and I think the Provincial Auditor had mentioned that. What they did produce was a full range of documents for the ministry to support the process, including evaluation criteria, negotiation positions etc. Additionally, the work that Coopers and Lybrand did with us included oral advice and participating in negotiation sessions with Andersen Consulting.

Mrs Pupatello: Is there a reason --

The Chair: I must move on, Mrs Pupatello. Ms Martel.

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Ms Shelley Martel (Sudbury East): Was Andersen Consulting required to provide references as part of being selected for this process?

Ms Herbert: Yes.

Ms Martel: Did they provide references?

Ms Herbert: Yes.

Ms Martel: Can you tell us who Andersen provided as references either in terms of governments in other jurisdictions or individual companies?

Ms Herbert: Yes, if you give us just a minute, because I don't have them right on the top of my head. My list: the New Brunswick human resources department, the New Zealand Department of Revenue, the Massachusetts Department of Social Services, the Montana Department of Social Services and the United Kingdom Department of Social Security.

Ms Martel: Did the ministry check these references?

Ms Herbert: Yes, we did.

Ms Martel: Can you tell me who in the ministry did that?

Ms Herbert: We have a procurement officer and I would assume that that person and the senior team would have checked the references.

Ms Martel: Did you check any other jurisdictions where Andersen had had projects but didn't provide those as references?

Ms Herbert: I don't believe so. The requirement is that one confirms the references that any group which bids provides.

Ms Martel: What happened to the references when the auditor asked for them?

Ms Herbert: The references were lost.

Ms Martel: Do you know who would have been responsible for the references being lost or getting lost?

Ms Herbert: I would tell you that the references were lost in the process of the project. I had my own audit and investigation team go in to do a thorough search just to make sure that we couldn't find them. From my perspective, this is not good management and I was very concerned when it came to my attention. My audit and investigation branch told me that they could not find them. We did reconstruct them and reconfirm the references for the Provincial Auditor, but what we did not have and what we should have had were the original reference-checking documents.

Ms Martel: When did you become aware of problems with other Andersen projects in other jurisdictions?

Ms Herbert: One reads the press. One also knows that there are always problems with large technology programs. When we look at the breadth and scope of some of the activities that Andersen and other partners have undertaken, there are always delays in timing, new issues coming up. One expects to manage in a four-year project, or any other project of this size, rough spots.

Ms Martel: Deputy, we listed at least four serious problems with Andersen: one in Fairfax, Virginia, in 1996, the cost overrun was 150%; in Texas, in 1997, the cost overrun was 600%; in Nebraska, in 1997, a $24-million cost overrun; in the UK, which I understand was one of the references that Andersen provided, last year the same computer that is being implemented here actually crashed. Do you have any concerns about your continuing relationship with Andersen given its track record in these other jurisdictions?

Ms Herbert: I can't speak to their track record in other jurisdictions. What I can speak to is the references that we checked and I can speak to our own experience. As I said in my opening remarks, the project has created $30 million in savings and has produced products for the ministry that we're now using and are valuable to us.

Ms Martel: Deputy, the project is probably a year behind at this point. Does that concern you?

Ms Herbert: Clearly, we want the project to move on the timelines that it needs to. One of the aspects of a CPP, though, is that as you do the project you're developing new timelines and new risk management strategies all the time. So as you move through a CPP, it's my understanding that one can fully expect to have changes occur. As you move component parts of the project forward, you discover elements that you didn't think of at the beginning and you drop some other elements as you learn more. Part of the process of a CPP is an engagement over a period of time where you will see shifts in what the original plan at a high level might have indicated. Having said that, clearly we want to move forward with this project as quickly as we can.

Ms Martel: Can you tell me on what basis the ministry entered into a contract where the maximum payable amount of money is $180 million? What are the grounds for agreeing to $180 million when the vendor's original estimate was between $50 million and $70 million?

Ms Herbert: The CPP guidelines in 1995 clearly say that at the beginning of a CPP contract one cannot expect, as you enter into negotiations, to know what the fixed value of the contract will be. The guidelines quite acknowledge that and the Provincial Auditor did in his report as well. What Andersen looked at was to provide in the discussions some sense of what large projects may cost. It was not an estimate of cost as we would know it in a fixed-price contract. As the negotiations took place and the scope of the project became clearer, the ministry negotiated a cap on the project that is only attainable if the project is successful in reaching those benefits.

Ms Martel: Isn't it true that the auditor, in his review after this was signed, said that he could find no basis whatsoever for the ministry arriving at a $180-million maximum? Wasn't that what he said in the audit?

Ms Herbert: The Provincial Auditor indicated that we did not demonstrate to his satisfaction a business case, and in fact I said that in my speech on Tuesday.

Ms Martel: But we're still in the position of the ministry having negotiated a $180-million figure. How could you have gotten there without any reasonable basis whatsoever? It's $100 million more than the vendor itself came forward with at the time of the CPP being signed.

Ms Herbert: It was based on the scope of the project and estimated components of the project and the size of the benefits we hoped to obtain. As I said Tuesday, because of the concern about not being able to demonstrate this adequately from the Provincial Auditor's perspective, we have a third-party review looking at the structure and nature of the contract now.

Ms Martel: Isn't it true that the third-party review isn't due until February?

Ms Herbert: Yes, I expect to see it hopefully in February.

Ms Martel: Isn't it also true that if Andersen is going to work for you for year 5, a contract has to be renegotiated with them or signed by them or dealt with by them by the end of the second year, which would be January? In fact, the results of your review are going to come in after you renegotiate something with Andersen, is that correct?

Ms Herbert: During the period of the review, we have agreed that we will not make any decisions on the contract -- that's both in terms of timing or any other changes -- because we need the results of the third-party review before we decide what our next steps are.

Ms Martel: Are you telling this committee, then, that the $180-million maximum payable may change and in fact be reduced?

Ms Herbert: I don't want to prejudice the outcome of the third-party review.

Ms Martel: What about the third-party review is different from what the ministry should have been doing all along in terms of managing this contract?

Ms Herbert: I think the obvious difference is that the auditor has indicated we couldn't demonstrate a business case. He didn't say there wasn't one there; he said we couldn't demonstrate it. Obviously, what the minister wants and what I would want as well is to have a third-party review tell us whether this contract can demonstrate value or not.

Ms Martel: What are you basing your $30-million savings on that you say Andersen has so far saved the taxpayers?

Ms Herbert: Ann, can you talk a little bit about, first of all, how the benefit pool is created and then a little bit about what the --

Ms Szyptur: I think we talked a little bit about it on Monday. We have both a benefit pool and a cost pool in terms of the business arrangements. The benefit pool is created using metrics or using measures that would look at savings that have been achieved to date. There have been two areas where savings have been achieved: change reporting and CPP. Let me talk a little bit about --

Ms Martel: Are those not the two areas that the auditor said the ministry was already undertaking that could not be attributable to Andersen directly?

Ms Szyptur: No. A CPP was just in the pilot stage during the period of the audit.

Mrs Pupatello: What was the first one? I couldn't hear it.

Ms Szyptur: Change reporting.

Ms Martel: The CPP and -- sorry?

Ms Szyptur: And change reporting.

Ms Martel: -- are two initiatives that are directly attributable to Andersen?

Ms Szyptur: The savings that have been saved to date are attributable to both the ministry and to Andersen Consulting.

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Ms Martel: But if the total cost pool is still higher than the total benefits pool, why was Andersen paid anything at all to date?

Ms Szyptur: The financial arrangements allow us to pay both the ministry and Andersen Consulting when benefits have been achieved in the benefit pool.

Ms Martel: That's not from the original contract, is it? The contracts says clearly that payments are only supposed to be made when the benefit pool is higher.

Ms Szyptur: I think there are actually two sections in the contract: section 5.4, which talks about benefits to be achieved; and section 5.5, which says that benefits may be paid out when there are benefits in the benefit pool.

Mr Jack Carroll (Chatham-Kent): There's some speculation about what is under the $180-million cap and what's outside the $180-million cap. A scenario was painted this morning about software. A question was asked, and I'm going to ask it to you. If Andersen designed their own software for this project, based on the agreement, that would fall within the $180-million cap. If Andersen made a decision to purchase that software, based on the terms of the agreement, that would be beyond the $180-million cap. I need an explanation of that. Also, does the ministry have any input as to what Andersen does in-house, contracts out and so on?

Ms Herbert: I'm going to ask Ann to talk about what's in and out of the contract, Mr Carroll.

Ms Szyptur: In terms of what's in and out of the contract, production support, help desk services and application maintenance over $3 million a year are outside of the cap for Andersen Consulting. That also includes hardware and software purchases. In terms of the input of the ministry into this process, the ministry is a key partner in terms of the work we do. Andersen Consulting would have to demonstrate that the costs, their capacity to purchase the hardware and software, would be lower than ours. That would be demonstrated through the normal procurement processes that any ministry would be going through.

Mr Carroll: If they could demonstrate that their costs would be higher or lower than yours, I still don't understand whether or not the purchase of the software would be under or over the cap.

Ms Szyptur: If the costs were lower for us, for example, if it would be more expedient for the ministry to purchase that hardware, or less expensive, then it would form part of our cost pool rather than part of Andersen Consulting's cost pool.

Mr Carroll: So, either way, whether that particular issue was designed by Andersen or purchased outside, it would fall under the $180-million cap?

Ms Szyptur: If it's development work, it would fall under the $180-million cap. If it was developed by Andersen, absolutely it would be under the cap.

Mr Carroll: OK, if it was developed by Andersen, it's under the cap. If it's purchased by Andersen or by us, where does it fall?

Ms Szyptur: If it's purchased by Andersen, it falls outside of the cap for Andersen Consulting.

Mr Carroll: What input does the ministry have, then, to insist that a particular item be designed by Andersen rather than just becoming an additional cost to the ministry?

Ms Szyptur: That's an excellent question. Thank you for clarifying for me. The ministry is a key decision-maker in this process. We would look at several components in making those kinds of decisions as to whether it is overall less expensive or more expensive to have the project develop that software or have us purchase the software. In some cases, it might be faster and the product is already available, so we can get the product off the shelf rather than developing it ourselves. Those are the decisions we would have to make, understanding the timing and the costs around that development.

Mr Carroll: I'm still a little confused. If Andersen comes to us and says, "We're going to purchase this software," it then goes beyond the cap. That's a direct financial benefit to them, I would assume, rather than them designing their own software and it being under the cap. They can still bill up to the cap of $180 million based on savings, but then they can take this hardware, which if they designed it themselves would be included in the $180 million, and bill us extra for that. Where do we come in protecting the taxpayers on that particular issue?

Ms Szyptur: We are the decision-makers on that process. It wouldn't be a process whereby Andersen Consulting made these decisions on their own, without the ministry agreeing to it.

Mr Carroll: The theory was put forward this morning that if Andersen put that proposition to us, we would have no alternative other than to agree to it. Would you subscribe to that?

Ms Szyptur: No, not at all.

Mr Carroll: We could force them to design this software rather than purchase it beyond the cap?

Ms Szyptur: Absolutely.

Ms Herbert: Mr Carroll, I'll just clarify the difference between hardware and software, just to draw the distinction, because in your question you used both those words.

Mr Carroll: I meant software.

Ms Herbert: OK. That's the distinction I was going to draw.

Mr Carroll: We've had a lot of discussion about the early initiatives agreement because the overall agreement on this dealt with no payments being made to Andersen until the savings demonstrated exceeded the cost pool. Am I correct in that interpretation? There was to be no money paid out to Andersen until the savings identified exceeded the cost pool.

Ms Szyptur: The contract allows for both, for benefits to be paid as they accrue, rather than waiting till the benefits outweigh the costs.

Mr Carroll: So the contract did not say that it would require mutual agreement for benefits to be paid at some time before the benefits exceeded the cost pool?

Ms Herbert: It was always part of the agreement that as benefits accrued, both parties could draw on the benefits to offset their costs. You have to have benefits accrue first. Then you could begin to draw on them, as they accrued, on a proportional basis.

Mr Carroll: But they don't have to exceed the cost pool?

Ms Herbert: No, they don't. For example, I think we've spent about $55 million, the two partners on this project, and the savings have been about $30 million. That money goes back to the two partners on a proportional basis. But because the benefits are not greater than $55 million, Andersen and the ministry, to a lesser degree, are carrying those payments. So, for example, to make a payment of $180 million to Andersen, we would have to have incurred savings beyond $180 million, because the ministry also draws from the benefit pool.

Mr Carroll: Where does the risk, then, come for Andersen in the CPP arrangement if, as benefits are identified, they don't have to exceed their cost pool to get their money back?

Ms Herbert: First of all, they have contractual obligations about the product they have to develop, whether there are benefits or not. In theory, they could create the products the contract calls for, the replacement of CIMS-MAIN, the list of business process reengineering, but the benefit pool might only reach -- these are theoretical figures -- $100 million when they may have expended more money than that in order to meet their contractual obligations under the agreement. There is risk there that we may all have been wrong -- I hope not -- in assessing what the benefits would be from this project. They won't get paid unless those benefits occur.

Mr Erik Peters: They're already being paid, all along.

Ms Herbert: They're being paid from savings, from the savings pool.

Mr Peters: I don't understand that story.

Ms Martel: But we don't even know if the technology is working yet, and they're being paid, right?

The Chair: Mr Carroll, you still have two minutes.

Mr Carroll: Obviously there's a basic point of confusion here. Our understanding as a group here was that the agreement called for no payments to be made out of the benefit pool until it exceeded the cost pool. Is that a misinterpretation of this agreement on our part?

Ms Szyptur: There are two options within the contract. One clause in the contract talks about benefits exceeding cost. There's another clause in the contract that allows benefits to be paid and distributed once they have occurred rather than waiting until the benefits have exceeded the cost.

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Mr Carroll: Does that require mutual agreement?

Ms Szyptur: I don't have a copy of the contract in front of me.

Mr Carroll: Let's assume it does. Why would the ministry sign a contract, the basic tenet of which is that there would be no costs paid until the benefits exceeded the costs, and then in actual fact agree to do something totally different? What was the rationale that went into that decision to start paying out costs at a time when the costs exceeded the benefits? How did that discussion take place, and why would we do that?

Ms Szyptur: In terms of the cost pool and the benefit pool, costs that are included in the cost pool include things like interest costs, as well as the billings and our salaries etc. Those interest costs build up. So if we can accumulate benefits and help reduce some of the costs in the cost pool, there's in fact a benefit to the ministry in that it reduces the costs and the interest costs that are building up.

The Chair: I think the auditor would like to clarify what was just said.

Mr Peters: If I may help, it is in the agreement, and I'm quoting from page 41 of our report, which was agreed to by the ministry: "Unless otherwise agreed to, no distribution of savings is to occur until total amounts in the benefit pool exceed the total amounts in the cost pool. At such time, distributions to the parties will occur on a monthly basis."

So your question is quite correct, as to why the ministry agreed to earlier distribution. The answer I just heard is to save 5% interest on $20 million. I am concerned about that, and I should mention that here, because you're paying $20 million to save a little bit of money. Could you answer that?

Ms Herbert: With all due respect, I don't think that was the only reason. It was an attempt to share the costs and share the benefits. I believe it is quite in keeping with the CPP approach and the CPP guidelines. It is an attempt to recognize that a benefits pool was being created and costs were being incurred and a way of recognizing that a task the project had undertaken had been successful in creating savings for the government. It seemed to us a reasonable approach to share those benefits as they were accruing.

The Chair: Now that we all agree, we will carry on with another 10-minute round.

Mrs Pupatello: I wanted to go back to the aspect of the contract that involved the reimbursement costs which are outside the $180 million. We asked specifically about this because, from what we see in terms of how it's worded in the contract, you will eventually pay up to $180 million, based on savings to be achieved over the next four or five years etc up to $180 million.

In addition, in the contract are external costs to be reimbursed, which include quite a lengthy list. The other day we asked, "What's not in the list?" I'm not certain what's not on it, because there are many things that are considered outside, to be reimbursed: hardware, software etc. The concern is especially in the area of software, which is much more difficult to put a value on.

My read of all of those things is that Andersen has no incentive to use internal resources from Andersen to provide you with the expertise required for the contract, because of that clause. The external reimbursable costs tell me that Andersen is better off, from a business perspective, to go outside and outsource software development. Even though you'll only pay the cost of the invoice for that item, you're still giving them no incentive but to go outside and purchase it and then hand it over to you, so Andersen essentially has no costs for development etc. Andersen essentially has an open door to outsource every aspect of what they provide to the government, because that will be 100% reimbursable according to the invoice they provide you. They achieve $180 million just in the savings. So if over five years there is $180 million worth of savings to the system, they'll get their full $180 million, plus, potentially, if they are at a margin of, say, 40% cost to their markup, double or triple the amount, in terms of how this was written.

Ms Herbert: I'd just say a couple of things. One, I'm not prepared to speculate on costs or what may happen in the future.

Mrs Pupatello: There's no incentive for Andersen to develop anything in-house, because they're fully reimbursable to outsource every aspect.

Ms Herbert: I think we've answered the question. That's a ministry decision that would have to be made in the future. What the cap includes now are the essentials that are needed to change the social assistance delivery system and replace the mainframe system, the CIMS and MAIN system. In the future, if the government were to make a decision that it wanted to have one integrated system that included child care and social housing, those kinds of development costs would be outside of the present contract. So if the government made a decision that it wanted to use this new, reformed social assistance technology as a platform for building other technology systems, those kinds of costs would be outside the $180-million cap.

Mrs Pupatello: So you acknowledge that the way this contract was written, which was signed by the ministry, you could value it at literally $1 billion that Andersen could make, because the software costs are virtually unknown and all of those things would simply be invoiced.

What you said earlier -- I'm sorry, it was Ann, I believe -- was that you still get to sign off on all of those decisions, but you're assuming the ministry has the expertise to make that decision. You hired a consultant to assist you in the development of a contract with Andersen, which began at a value of $165,000, which had to be rewritten several times. Eventually you paid a consultant $285,000 to write the deal and walk with you in the development of the Andersen deal.

The Provincial Auditor confirmed that they asked for months and months regarding the report from that outside consultant who helped to write the deal and they were given "not one piece of paper" about that outside consultant that would give them some sense if there was a value for the $285,000 spent. They asked for months and months for proof of what that contract was for, and they received "not one piece of paper" so that they could see there was some adequate documentation to support the hours spent by the consultant, which is what is written in the auditor's report.

Second, you mentioned that you have all the expertise somehow to determine -- that if Andersen came to you and said, "We have to develop this piece of software," there's someone in the ministry who's going to know that that's not the case, that Andersen can do it in-house, and therefore don't go purchase it outside. The truth is, that's the whole point of hiring Andersen in the first place: The ministry does not have the expertise to know that. The ministry didn't have the expertise to write the contract, so you hired a consultant to do that.

In fact, in the group that was in the ministry that dealt with Andersen initially, all of the staff who knew the deal left. The Provincial Auditor reported that to us and also said that the new staff that's left within the ministry has much less knowledge about the contract. So, we have ministry staff who have left the government. Even if they did have the expertise to determine that Andersen was making appropriate outside purchases, those people are gone.

Ms Herbert: You asked a lot of things there, so let me just see if I can sort them through. The answer to your first question is no.

The answer to the question that the auditor -- assuming you're quoting him correctly -- did not have access to anything the Coopers project developed: My understanding is that the auditor did see the evaluation criteria and looked at what was available; again, it wasn't a written report.

The question of the expertise in the ministry, if indeed the auditor has made a judgment call about the expertise in the ministry, I would have to disagree with. However, I would say that clearly one of the reasons we've engaged a third-party reviewer is to give me, as the deputy head, an assessment of what we might need to do to better manage this contract. In hiring the third-party reviewer, in asking him to do the review, that is one of the outcomes we're looking for: to have advice about how we can better manage. In bringing that person in, we acknowledge that we should have managed this contract better.

Mrs Pupatello: Not just managing --

The Chair: I'm sorry, we must move on. Ms Martel, please.

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Ms Martel: I want to go back to the contract. Clearly it says, that unless otherwise agreed to, there will be no distribution of savings. So I would like to know, did Andersen request payment in advance? Is that why we're making a payment to Andersen?

Ms Herbert: The early opportunities initiative was an attempt to, as I said earlier, share the benefits and share the project costs. So when we began to look at achieving some of the benefits early in the project, which is what happened, it was an agreement that we would begin to draw from the cost pool, both the ministry and Andersen.

Ms Martel: How much have we drawn as a benefit, the ministry?

Ms Herbert: As I understand my notes, it's $5.5 million.

Ms Martel: How much has Andersen received?

Ms Herbert: As of October, $24.2 million.

Ms Martel: Andersen, $24.2 million. That's a great sharing arrangement. We've got $5.5 million, they've got $22 million, and yet we have no idea whether their technology is going to work, correct?

Ms Herbert: What we have is $30 million worth of savings based on business processes that they helped us put together.

Ms Martel: I would make an argument, I would even question whether those savings are directly attributable to Andersen or whether some of that had to do with what the ministry was already doing and a benefit the ministry would have already accrued. The auditor made that point in his report as well.

Interjection.

Ms Martel: Why don't I ask the auditor, because the ministry and the minister, in the House, have suggested that there is $30 million worth of savings directly attributable to Andersen Consulting. Can you comment on that?

Mr Peters: I can comment on what we said in our report, that in the early opportunities initiative we could not find evidence that there was a benchmarking that clearly said, "This is attributable to initiatives that the ministry had already taken and this is attributable to initiatives or suggestions that the consultant had made to us." We could not find that benchmarking when we looked at this early initiatives opportunity under which these saved benefits are being paid to Andersen Consulting.

Ms Martel: So you would have no confidence, in essence, that a statement that $30 million has been saved actually has any basis in any kind of documentation, proof etc.

Mr Peters: We found insufficient evidence that this is directly attributable to Andersen, yes.

Ms Martel: So I continue to say that we have a problem around accepting that $30 million has really been saved. Put that aside. Andersen has benefited to the tune of $22 million so far and Comsoc has benefited to the tune of $5.5, when in fact Andersen didn't have to be paid at all. I want to ask again, did Andersen come to the ministry and say, "As a sign of you showing us good faith, we would like to receive payments now, even though the contract says we shouldn't until the benefit pool exceeds the cost pool and even though we have no idea whether this technology is ever going to work"?

Ms Herbert: The contract allows for us to do -- we called it early opportunity cost payment as the benefits were accrued. I just want to be clear about that. The contract allows us to do this.

Ms Martel: Did you have a business plan for the early opportunities project?

Ms Herbert: Yes, task orders were laid out. For every task that is undertaken there are assigned task orders that indicate what the requirements are, what the products are and what the benefit arrangements are estimated to be. Ann, do you want to talk about task orders, generally?

Ms Szyptur: Yes, task orders are described in the contract in terms of the work that needs to be done. It's laid out, all of the pieces of the task order, including things like what staff will be on the task order, how many days of work we think it's going to take, what are the outputs, the activities and the deliverables as well as the sign-offs. So it's very clear in terms of ministry responsibility for specific sign-offs.

Ms Martel: The auditor reviewed the task orders, correct?

Ms Szyptur: The ones that were signed I think at that point, yes.

Ms Martel: And even in spite of doing that, the auditor said he could find no basis to pay Andersen what the ministry had paid because they didn't believe that was the work that was done. Is that correct?

Ms Herbert: You might want to address your question to the auditor. We clearly have a difference of opinion on the change reporting task order, where the auditor in his report feels that this was work that the ministry should have demonstrated could have been done differently, felt that the ministry could have done this work without Andersen's assistance, while also acknowledging that the ministry had been trying to do this work since about 1994 without success. My own view of the change reporting is that in fact Andersen's technical expertise in change reporting was what got us to finally implement a program that, while we knew we had to do it, we had been unsuccessful at doing for several years.

Ms Martel: Do you have any intention of continuing to pay Andersen even though the costs still exceed the benefit pool? Are you just going to continue to pay Andersen?

Ms Herbert: As benefits are accrued from the joint work between the ministry and Andersen, we will continue to share in the benefit pool.

Ms Martel: The problem I have, Deputy, is that the auditor just made it clear to the committee that they could find no basis for why some of these payments were being made. Yet you're telling us that the ministry is going to continue to make payments when documentation to show that Andersen actually did the work and payment should be made really doesn't exist. Don't you think that's a problem?

Ms Herbert: Again, I will go back to the fact that we have a third-party reviewer in looking at the business case and the value for taxpayers in this contract.

Ms Martel: You said that you thought the third-party reviewer was going to advise the ministry on how to better manage the contract. What about looking at what should be changed in the contract?

Ms Herbert: I believe the terms of reference, which I think we shared with the committee, talk about three basic products that we're asking for: advice on how to ensure and measure the value of the service to the taxpayer; review the auditor's findings and provide advice on additional action needed; and to assess the ministry's strategies to manage the CPP arrangement with Andersen Consulting and provide advice on additional actions needed.

Ms Martel: Is Andersen still continuing to bill the cost pool the hourly rates that were in place that were criticized by the auditor?

Ms Herbert: You will remember, I'm sure, that the minister talked about the issue of the rates and negotiating the rates. While the third-party reviewer is in we are not changing any of the present arrangements. We have a process for --

Ms Martel: So, if I might --

Ms Herbert: No, let me finish. We have a process for continually reviewing both the metrics in the project and the costs, and then we make adjustments on a regular basis.

Ms Martel: So is it clear to say that Andersen continues to bill you at 63% above the rates that were first published and first signed in the original contract? Is that correct?

Ms Herbert: Sorry, Ms Martel. Can you --

Ms Martel: Is it true to say that Andersen continues then to bill the cost pool hourly rates that are 63% above what was first established in the original contract? Is that correct?

Ms Herbert: Yes, that's correct.

Ms Martel: You're allowing that to continue. Even now, Andersen can continue to bill $575 an hour for work that would have cost maybe 30% of that? Is that correct?

Ms Herbert: First of all, the third-party reviewer will advise us on the rates. That's part of what he's looking at, as he looks at the contract structure. In the meantime we have agreed that while the review is under way we should not alter any of the present arrangements, but we will make adjustments that are required when the review is complete.

Ms Martel: Can you tell me why then the minister said on November 4, "I had...given directions that the rates be renegotiated, because they are too high and we want to change that, and we are indeed doing that"?

Ms Herbert: We were in negotiations with Andersen Consulting around the rates prior to the release of the Provincial Auditor's report. However, when the decision was made to bring in the third-party reviewer, at that point we felt that to alter without the benefit of a third-party reviewer's advice any elements of the contract would be to negate the purpose of the third-party reviewer.

Ms Martel: So what the minister said in the House was incorrect. Is that true?

The Chair: I'm sorry, I must move on. Mr Carroll, please.

Mr Carroll: Deputy, the contract stipulates that no costs will be paid until the benefit pool exceeds the cost pool, unless it's agreed to?

Ms Herbert: Yes.

Mr Carroll: So we now obviously have agreed to do it a different way than that.

Ms Herbert: Yes, which is allowable under the contract.

Mr Carroll: OK, and your indication to Ms Martel is that you're going to continue to do that, you're going to continue to pay.

The original flavour of the contract obviously was covered by, "No costs will be paid until the benefits exceed the cost pool." That was obviously the original intent of the contract. Have we signed a second agreement now that says we will now pay all costs up to the benefits, regardless? Have we made another deal somewhere?

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Ms Herbert: No, Mr Carroll. The clause in the contract which allowed us to do that was always there. Unfortunately, we don't have the contract specifics, so I can't quote you the section in the contract.

Mr Carroll: I guess what we're struggling with is why, as a ministry, right from the beginning we would override a basic tenet of the agreement, which is that no costs will be paid until the benefits exceed the cost, why we would override that right kind of out of the barrel and say we're going to continue to override that. We're struggling with that decision.

Ms Herbert: Yes. I can only presume here, but in the negotiations it was always foreseen that this would be an option. So it wasn't an override. There are both elements in the contract. It wasn't as if somehow we ignored a section of the contract. There was always an understanding that if there was an ability for a task to be performed more quickly in the life of the project that would ensure benefits, one could begin to draw on those benefits.

Mr Carroll: Does the option exist for the ministry to revert back to the original intent and to cease paying out any more costs until such time as the benefit pool exceeds the costs?

Ms Herbert: Yes, there is. On each task order there's that ability, on each separate task that the project performs. Just in response to your first comment, it's one of the issues that we've asked the third-party reviewer to look at. In the meantime, we are continuing to pay those costs because we've agreed not to alter anything until the report is ready.

Mr Carroll: OK. So that option exists for us, is what you're saying?

Ms Herbert: Yes.

Mr Carroll: The second thing: There's been a lot of question around identifying savings that we can attribute to Andersen. Is it your opinion that those savings attributable to Andersen can be specifically identified?

Ms Herbert: I think the auditor raised some good issues in terms of our metrics development and brought to our attention a couple of areas where overpayments had been made, and in fact we immediately adjusted those. We've now put a regular review mechanism in place to make sure that we're reviewing what we call the metrics decisions around how the benefits are accrued and how they can be charged to the pool. So we've done some further work as a result of the Provincial Auditor's report.

Mr Carroll: OK. We've heard some talk about the project being behind schedule. Obviously that's a concern, I'm sure mostly to you. Can we get it up to speed, do you think? Is it your opinion that the initial part was the toughest part and in actual fact we can now accelerate the process and get up to the original four-year agreement, or is that totally beyond the realm of possibility now?

Ms Herbert: Two comments I would make: Yes, it is a concern to me that we move very quickly. We are now at a vital point in the project in terms of developing the detailed business process and design. We have put the project on very tight time frames in order to make up for some delays. I would say that some of those delays were not anticipated at the beginning of the contract: the massive amount of change in social assistance, new legislation. The moving of part of the provincial caseload to the municipal government was not foreseen at the beginning of this contract. So there have been a number of decisions taken by the government that the contract and the staff then had to adjust to, which did create some legitimate rethinking and redesign work as a result of the size and scale of the reform. Having said that, though, it's important that we move quickly. Now that the high-level design is done, we now need to move very quickly through the detail design, and that's the work that's underway right now.

The Chair: Mr Young, two minutes.

Mr Terence H. Young (Halton Centre): My understanding from the auditor is that he was unable to find any evidence or any provision in the contract to make any payments prior to the benefits exceeding the costs. But it sounds to me like what you're saying is that there were in fact provisions to do that, that the contract left that open. Is that right?

Ms Herbert: I think Mr Peters has the contract with him.

Mr Peters: We read from our report. Just to clarify our comment, we said "unless agreed to."

Mr Young: So "unless agreed to" would leave it relatively open. I presume that was put in the contract to deal with situations that might come up, for instance, major changes that you just mentioned: the number of new jobs created in Ontario so the caseload went down; the provincial cases going to municipal; and other things that happened in the economy. I don't know if they could foresee the changes we made to take people who in some cases were in prison, still receiving welfare, which was an abuse of the system -- and other changes as well.

Those were the changes that happened that made it necessary, I suppose, to review the contract on an ongoing basis. But on what basis did you start to pay money out? Was it for costs that Andersen could show they had paid out themselves or was it costs that could be considered profit on the contract? Did you have anything that identified that or broke it down?

Ms Herbert: A couple of comments and then I'll ask Ann to talk a little bit more about the details. The management of the CPP contract is ongoing review. It's very different than --

Mr Young: It's a partnership, it's a process.

Ms Herbert: It's a partnership and it's a process. That's exactly right. You can see by the new guidelines that Management Board have just approved that they acknowledge the importance of good contract management, continual negotiation and review, because the world changes in such a lengthy partnership process. The scenario that you portrayed is quite correct, that you're continually reshaping as the world you're working in is changing around you in that partnership relationship.

In answer to your more detailed question, I'm going to ask Ann to spend a few minutes.

Ms Szyptur: I apologize, but I've lost track of the question.

Mr Young: What I'm trying to understand is, what was the money paid to them for? I'm well aware that a contract like this is a process -- all contracts, in fact. It's a relationship. There's the distinct possibility the relationship can break down. Then nobody wins.

Ms Szyptur: Right.

Mr Young: But what I'm wondering is, would it be fair for one of the partners to say, "We did have all these benefits and our costs did go down, but it wasn't due to what you did, therefore we're not paying you anything"? Or was there this ongoing conversation where they said: "We understand that. We're not trying to get out of the deal. We want to work with you, but we have put out $20 million in costs that we can itemize." Did they do that and is that why they were given those costs? I'm trying to understand that.

Ms Szyptur: Yes. Those items were listed in the cost pool both for the ministry and for Andersen Consulting. Those expenses were in the cost pool and the benefits were paid out based on metrics that had been developed. We had a methodology in place that would look at, for example, in change reporting, the number of terminations that had occurred to date and the savings related to those terminations. We would calculate then the total amount. Those are the benefits that would go in the benefit pool and we would pay out against the costs in the cost pool.

The Chair: Members, we have two motions to deal with. The initial motion which was moved by Ms Martel has been changed. Would you like to withdraw your motion and reintroduce the new one?

Ms Martel: I'd like to raise a point of order, Mr Chair: Is there some reason we can't continue with the questioning?

The Chair: Deal with the motion and then, if there's time left, we can continue with our questioning.

Ms Martel: I'm going to withdraw the whole thing because, based on what I've heard here this morning, I don't think this contract should continue in its current form and what the auditor proposes probably won't fix it, in spite of his best effort to.

The Chair: So you're simply withdrawing.

Ms Martel: Yes, I'll take it right off.

The Chair: Withdrawn.

Mr Carroll: Mr Chair, is it possible for somebody else to make that motion?

The Chair: That's up to the members. You can move it.

Mrs Pupatello: You're welcome to move it.

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Mr Carroll: I move that the ministry take the necessary corrective actions to ensure that:

No benefits are paid to Andersen Consulting unless total benefits exceed total costs for the entire project as stipulated in the common purpose procurement agreement;

Only incremental benefits clearly attributable to the business transformation project are credited to the benefits pool;

All applicable ministry costs are charged to the cost pool. In addition, every effort should be made by the ministry so that ministry costs are charged to the cost pool on a comparable basis of Andersen's published rates;

Steps are taken to bring the project back on schedule;

All contract provisions are enforced.

The Chair: Comments and debate?

Mrs Pupatello: Just one quick question. "Comparable basis of Andersen's published rates" indicates that the rates would remain as Andersen's published rates and that's how they would be paid. Is that what the auditor intended with the rewrite of the motion?

Mr Peters: Whatever is negotiated, that the two rates be comparable. In other words, if Andersen is negotiated down, then the ministry on a comparable basis would go down, as long as the elements are in. The point is really, for example, "including direct costs, allocations of overhead and profit margin." That remains in, so the elements remain the same. The rates may differ.

Mr Carroll: They remain comparable.

Mr Peters: So they remain comparable, that's right.

Mrs Pupatello: I just wanted to be clear that the members of the government would be voting in favour of all contract positions being enforced given what we now know after this discussion, the wide-open door to items like "external costs" with no caps etc. Is that what the government would be enforcing? Is that what you would agree with? Given our concerns about a whole myriad of issues in terms of having a consultant paid to have struck the deal in the first place, with so many open doors, I don't know how the members are going to be in a position to approve this motion today.

Ms Martel: I want to say to the auditor that I appreciate what you're trying to do with respect to the motion that's put forward, which is to, as much as possible, deal with what is a bad situation and make it a little bit better by at least trying to tighten up the administration of the contract. However, I've listened clearly to some of the answers that I've received from the ministry today and I am not at all confident that that will go any way at all towards resolving the problem here. We didn't get to the question of the management team and who is on it and what they will actually achieve. It's one question I would have liked to have gotten to because it's not clear to me that the current management team will be capable of managing this project either.

I continue to have some very serious concerns with the actual stipulations and provisions in the contract itself, not just the management of this. I am extremely concerned that, as far as I can tell, there still continues to be no documentation, no basis to support the $180-million maximum fee payable, no information to support that there are actual cost savings and those savings are directly attributable to what Andersen has done versus to what the ministry might have been doing. You said that yourself in your report.

I continue to be very concerned that the minister, on the one hand, in the House said that the outrageous hourly rates were being renegotiated as we spoke in the House on November 4. We discover today that all of the provisions of the current contract remain in effect until a third-party review is done. So they continue to bill the pool outrageous rates that you yourself said are 63% higher than the rates that were first agreed to in the original contract.

I am extremely concerned that we are having a third-party review at all. You made your report in May. The ministry had the benefit of seeing it. The ministry agreed with what you had to say. The ministry itself put down in the report a number of things that it was going to do. As far as I can tell, if the ministry even started to do what it agreed and said it would do in May, we wouldn't even need a third-party review. I am very concerned about the reasoning behind the third-party review, why it's necessary. It seems to me that it expresses a lack of confidence in what you've found and what your recommendations were, and I don't like that tone of it.

As far as I can see, during the whole course of this third-party review, all we do is let Andersen milk the taxpayers even more, for goodness' sake. They continue to bill at outrageous rates and we continue to let this happen.

I am withdrawing the motion because I am not satisfied with anything I heard today. If anything, I am more concerned than ever about the details, about what has happened, about whether or not the ministry can manage this, about the basis upon which decisions are being made, and the lack of documentation and supporting evidence to show why those decisions are being made.

At the end of the day a third-party review, which I think is completely unnecessary, may result in some changes to the contract and may not. I just think the whole thing is a complete mess; it has been from the beginning. It's not just the management that's been a problem, it's been the details. Unfortunately, the motion as it stands cannot get at the real issue, to my mind, which is some of the outrageous details of this contract and how the taxpayers are not getting any value for money for this whole thing.

Mr Bill Grimmett (Muskoka-Georgian Bay): I have some concerns as well similar to those that have been raised, although perhaps from a slightly different perspective.

I think we're conducting a bit of a third-party review here. I see some merit in there being a third-party review to look into some of the concerns that have been raised here. Given that there is a third-party review going on, I'm a little concerned about the motion because I too am concerned that the contract would just continue to carry on the way it has been carrying on in the interim until either something changes or until perhaps the auditor reports back to us again in June.

I'm at a bit of a loss on what to do with the motion. I think we should be taking into account that there is a review going on. I wish the ministry was getting a report back sooner on that third-party review. I certainly think there's a need for a third-party review. Who knows, maybe the third-party review will be even stronger in its recommendations than the auditor has been or than we are feeling today.

I don't think I can support the motion that my colleague has put forward, but I'm looking for suggestions from other people on what we do in the meantime with some of these concerns that have been raised today.

The Chair: Further debate or comments?

Mr Grimmett: Could I ask the auditor to try to give us some direction?

The Chair: By all means.

Mr Peters: The Chair has given me permission to speak to that. In dealing with the motion, yes, indeed, there were details. If I really had an option, I would say that the first part of the motion is the one that is closer, that "no benefits are paid to Andersen Consulting unless total benefits exceed total costs for the entire project as stipulated in the common purpose procurement" potentially remains. The other ones are getting a little bit more into the detail management and there may be comments on that.

The reason I'm making that motion is because there's another theoretical possibility here. At the end of the contract, at the end of the project, what happens if the benefits do not exceed the costs? Can we then get all the money back that we paid to the consulting firm? That's theoretical. So they receive really what one would call a contingency fee. This is an area of concern to me. Out of the motion, the other ones hopefully will get fixed.

If I could make another comment, because of the timing of the issue, I would urge you to really consider the second motion, that is, an early report on corrective action at some later stage. I would be quite prepared to say let's not get into an attempt by this committee of micro-managing this contract beyond that one thing, to stop paying these guys until you resolve the issue, but that is the second motion, that we will have access or a requirement to report earlier than we normally do on the corrective action. Our normal time frame would be by the summer of 2000 to follow up on this. That's my comment. I think we're running out of time.

The Chair: On your motion, Mr Carroll.

Mr Carroll: Mr Chair, in view of the comments just made by the Provincial Auditor, which I respect, and in view of the reminder that there is an ongoing third-party evaluation, I withdraw the motion

The Chair: Thank you. We can deal with motion number 2. I need a mover.

Ms Martel: I move for the committee that the Provincial Auditor report by June or July 1999 on the corrective action taken by the ministry on the administration of the Andersen agreement.

The Chair: If I may ask, that the Provincial Auditor report by June or July 1999 to whom?

Mr Peters: To the committee.

Ms Martel: To the public accounts committee.

The Chair: Comments?

Mrs Pupatello: I am supposing that we will support this motion. My quick question is, how much sooner is that than typical?

Mr Peters: More than a year. We would report normally in a two-year cycle and that would mean we would normally report on the action taken on this in the fall of 2000.

Mrs Pupatello: Also, by having withdrawn the first motion, the government is then consenting to continue to pay as they are currently paying, because instead of the motion being rewritten to make any kind of change to that, you simply withdrew it. So the continual benefits will be paid. There will be no change to what's happened since the beginning of the year in terms of the payment schedule etc. The government is now acquiescing to just continue the payments by simply withdrawing the motion as opposed to rewriting?

The Chair: That's right.

Mr Grimmett: I just had a comment about the June-July thing. We've been pretty specific on this committee about dates. I would say the end of June, because we're going to be breaking for the summer in July.

Mr Peters: It was offered as an option.

Mr Grimmett: Does the mover accept that as a friendly amendment?

Ms Martel: Mid-June. That way we can get a chance to see it before we actually recess, if that's when we're sitting.

The Chair: Did you say mid-June?

Ms Martel: Yes.

The Chair: Is mid-June agreeable?

Ms Martel: Can I say why I've suggested that? Maybe it will help. If the House is sitting, we would normally be sitting in this committee until the end of June and we would be making decisions at the end of June about possible summer sessions. So I am suggesting that we ask for a date in mid-June so that if we actually are here, the committee or the subcommittee can have a chance to review it and then set some date, if we need to have the ministry back, for July.

The Chair: We need to vote on motion number 2, with the addition. Would you read your motion, Ms Martel.

Ms Martel: I move that the Provincial Auditor report to the public accounts committee by mid-June 1999.

Mr Carroll: Mr Chair, may I make one more comment? My concern with this time frame is the fact that the ongoing review the ministry has committed to, a report which is not expected -- the end of February I believe is the deadline. By the current statement they've made, part of the condition of that third-party review is that no changes would be made to what's happening now. I'm not so sure what the auditor would find. He won't find any change in February, I would assume, and that only allows March, April and May. Do the time frames make any sense in view of the third-party review which is ongoing and is not scheduled to be completed until the end of February? I'm concerned about that time frame. Are we just setting ourselves up for failure?

Mr Peters: I certainly thought it would be worthwhile for the committee to hear back as to what was being found and what was being done about it at that particular stage. It does give four months. It would be an interim report.

Mrs Pupatello: Chair, may I ask if we're going to vote?

The Chair: Yes. Let's deal with this motion. No further comments? Let's take a vote, ayes and nays. All in favour? Against? I declare the motion passed.

We will adjourn. I am told that no time has been allocated for us to sit in January or February, so I want to wish you well and thank the ministry.

The committee adjourned at 1205.