News > Local State
Attorney General Report Criticizes Rendell
By Chris Freind, The Bulletin
An audit to be released by state Auditor General Jack Wagner is highly critical of Gov. Ed Rendell’s Administration relating to the way it handled almost $600 million in technology contracts awarded to Deloitte Consulting.
According to the Harrisburg Patriot-News, which obtained a draft audit, the report questions the openness and transparency of the administration’s dealings with Deloitte, and suggested “abuses ranging from vendor favoritism to no-bid contracts,” the paper reported.
Calling the audit “explosive,” the Patriot-News also indicated the administration “stonewalled the Democratic auditor general’s staff in its quest to unravel details that led to contracts with Deloitte Consulting and its affiliates for the years 2004 through 2007.”
Secretive no-bid contracts doled out under the administration of Gov. Rendell, D, have come under intense scrutiny by legislators, grassroots organizations and the media. This is largely due to the frequency and high-dollar amount of these contracts being awarded to the governor’s close friends and political contributors.
The state Senate introduced a 10-bill reform package last month aimed at bringing more transparency to state government, including how no-bid contracts are awarded. The state House of Representatives introduced its reform bills yesterday.
“The revelations today about the method in which Deloitte Touche has insinuated its way into the contracting procedures at Department of Public Welfare leads us to the conclusion we need to end the revolving door atmosphere where lobbyists are hired by state agencies, work in state government for a period to assist their former employer, and then return to the private sector to work on contracts they had a hand in writing while working on the public dollar,” said state Rep. Doug Reichley, R-134th, of Lehigh County.
Gov. Rendell’s campaigns received $21,250 from individuals employed by Deloitt Consulting and $3,000 from employees of Deloitte and Touche. The Deloitte Pennsylvania State Political Action Committee donated $15,000 to the governor.
Deloitte Consulting also contributed $50,000 to Mr. Rendell’s 2007 inauguration festivities, earning it the label “Rendell Patron.”
The report also centers on “possible favoritism shown toward Deloitte” over other information-technology vendors, specifically, questioning “practices that allow Deloitte to have internal knowledge that helps the company get state businesses without having to compete with other firms,” according to the Patriot-News.
Additionally, the paper stated that auditors had “difficulty determining how the state benefited from a state grant awarded to Deloitte for job creation/retention.”
The Patriot-News went on to state, “all of those concerns have been exacerbated by a lack of cooperation from administration officials, especially when it came to sorting allegations of conflicts of interest between high-ranking Rendell administration appointees and Deloitte, the audit draft states.”
The audit findings, according to the paper, include:
• “The Department of Public Welfare had a $23 million contract with Deloitte that had 35 change orders, which added $72.6 million to the contract.”
An outside firm was hired to monitor Deloitte’s work at the Department of Labor and Industry because department officials said state employees there lacked the expertise to do so.
The state pays for training to teach employees how to maintain and upgrade Deloitte systems, called “transfer of knowledge,” once a contract is complete. But that training is not provided.
The preliminary audit also points out if state workers are not trained, that could “result in commonwealth agencies being held hostage by contractors.”
• The Rendell administration gave Deloitte a $750,000 grant to pay for office furnishings in exchange for a commitment to create and retain 2,000 jobs in the state for four years, starting two years before the contract was awarded.
• Sixteen contracts totaling $87.2 million with Deloitte were issued on an emergency no-bid basis. State purchasing rules say this can occur only when a public threat or compelling circumstances exist, according to auditors. Thirteen of the “emergency” contracts were to bridge a gap between an old Deloitte contract and a new one because of ongoing negotiations, delays in getting signatures or funding delays, the preliminary audit states.
The Patriot-News article also stated, “Former Deloitte partner Art Stephens and Deloitte senior manager Kristen Miller both had served as the state’s chief information officer. In 2004, Mr. Rendell empowered their office to review and approve all information technology contracts worth more than $100,000.”
Mr. Stephens held the post from ’03-’05, when he was named Mr. Rendell’s deputy chief of staff. He now works for the state university system.
Ms. Miller, who worked for Deloitte before coming to work for the state, served as chief information officer after Mr. Stephens until fall 2007. She left there to return to work at Deloitte and could not be reached for comment.
General Services Secretary James Creedon said last year neither Mr. Stephens nor Ms. Miller — nor other former Deloitte employees working for the state — were directly involved in contract-proposal evaluations that resulted in Deloitte landing the contract.
But auditors indicated they had not been provided the names of individuals who reviewed contract proposals, “making it difficult to validate Creedon’s assertion.”
Chris Freind can be reached at cf@thebulletin.us
According to the Harrisburg Patriot-News, which obtained a draft audit, the report questions the openness and transparency of the administration’s dealings with Deloitte, and suggested “abuses ranging from vendor favoritism to no-bid contracts,” the paper reported.
Calling the audit “explosive,” the Patriot-News also indicated the administration “stonewalled the Democratic auditor general’s staff in its quest to unravel details that led to contracts with Deloitte Consulting and its affiliates for the years 2004 through 2007.”
Secretive no-bid contracts doled out under the administration of Gov. Rendell, D, have come under intense scrutiny by legislators, grassroots organizations and the media. This is largely due to the frequency and high-dollar amount of these contracts being awarded to the governor’s close friends and political contributors.
The state Senate introduced a 10-bill reform package last month aimed at bringing more transparency to state government, including how no-bid contracts are awarded. The state House of Representatives introduced its reform bills yesterday.
“The revelations today about the method in which Deloitte Touche has insinuated its way into the contracting procedures at Department of Public Welfare leads us to the conclusion we need to end the revolving door atmosphere where lobbyists are hired by state agencies, work in state government for a period to assist their former employer, and then return to the private sector to work on contracts they had a hand in writing while working on the public dollar,” said state Rep. Doug Reichley, R-134th, of Lehigh County.
Gov. Rendell’s campaigns received $21,250 from individuals employed by Deloitt Consulting and $3,000 from employees of Deloitte and Touche. The Deloitte Pennsylvania State Political Action Committee donated $15,000 to the governor.
Deloitte Consulting also contributed $50,000 to Mr. Rendell’s 2007 inauguration festivities, earning it the label “Rendell Patron.”
The report also centers on “possible favoritism shown toward Deloitte” over other information-technology vendors, specifically, questioning “practices that allow Deloitte to have internal knowledge that helps the company get state businesses without having to compete with other firms,” according to the Patriot-News.
Additionally, the paper stated that auditors had “difficulty determining how the state benefited from a state grant awarded to Deloitte for job creation/retention.”
The Patriot-News went on to state, “all of those concerns have been exacerbated by a lack of cooperation from administration officials, especially when it came to sorting allegations of conflicts of interest between high-ranking Rendell administration appointees and Deloitte, the audit draft states.”
The audit findings, according to the paper, include:
• “The Department of Public Welfare had a $23 million contract with Deloitte that had 35 change orders, which added $72.6 million to the contract.”
An outside firm was hired to monitor Deloitte’s work at the Department of Labor and Industry because department officials said state employees there lacked the expertise to do so.
The state pays for training to teach employees how to maintain and upgrade Deloitte systems, called “transfer of knowledge,” once a contract is complete. But that training is not provided.
The preliminary audit also points out if state workers are not trained, that could “result in commonwealth agencies being held hostage by contractors.”
• The Rendell administration gave Deloitte a $750,000 grant to pay for office furnishings in exchange for a commitment to create and retain 2,000 jobs in the state for four years, starting two years before the contract was awarded.
• Sixteen contracts totaling $87.2 million with Deloitte were issued on an emergency no-bid basis. State purchasing rules say this can occur only when a public threat or compelling circumstances exist, according to auditors. Thirteen of the “emergency” contracts were to bridge a gap between an old Deloitte contract and a new one because of ongoing negotiations, delays in getting signatures or funding delays, the preliminary audit states.
The Patriot-News article also stated, “Former Deloitte partner Art Stephens and Deloitte senior manager Kristen Miller both had served as the state’s chief information officer. In 2004, Mr. Rendell empowered their office to review and approve all information technology contracts worth more than $100,000.”
Mr. Stephens held the post from ’03-’05, when he was named Mr. Rendell’s deputy chief of staff. He now works for the state university system.
Ms. Miller, who worked for Deloitte before coming to work for the state, served as chief information officer after Mr. Stephens until fall 2007. She left there to return to work at Deloitte and could not be reached for comment.
General Services Secretary James Creedon said last year neither Mr. Stephens nor Ms. Miller — nor other former Deloitte employees working for the state — were directly involved in contract-proposal evaluations that resulted in Deloitte landing the contract.
But auditors indicated they had not been provided the names of individuals who reviewed contract proposals, “making it difficult to validate Creedon’s assertion.”
Chris Freind can be reached at cf@thebulletin.us
Copyright © 2010 - The Bulletin