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Info Picket - May 23rd from 4-7 pm - Target Andersen Consulting
There is an information picket this evening between 4 and 7 pm at the Westin
Hotel, on Sussex Dr. near Rideau St. - behind the Rideau Centre.
This year, as was the case last year, Andersen Consulting is sponsoring the
United Ways annual Spirit Awards Dinner. Last year members of the trade
union and anti-poverty movements complained that Andersen Consulting, as
consultants to the Mike Harris government had created much of the hardship
the United Way is supposed to address. It was a surprise to both the board
of directors and the labour movement when Andersen was back again as
sponsors of the dinner.
The Ottawa District Labour Council urges people to continue showing support
for the United Way but to protest the pandering to Andersen Consulting.
Andersen Consulting is living high on the hog
at the expense of Ontario's poor
Who is the US multinational that's taking money
from Ontario's poor?
Andersen Consulting is a huge US-based job-slasher and consultant on
privatization. Their revenues in 1999 were $16.3 billion, much of it earned
at the expense of public servants and the poor around the world.
Andersen has made its biggest bucks by providing "professional services",
which means helping governments privatize and contract out and helping
corporate clients slash jobs, replace staff with automated phone systems and
Andersen is especially excited about its Orwellian vision of the future,
something they call "self-service government". Using multi-media kiosks,
fingerprint "smart cards" and call centre techniques, Andersen envisions a
day when government will employ very few people, relying instead on
computerized service and decision-making.
They're doing their best to make that day come soon.
What are Andersen Consulting's favourite ways to profit from welfare reform?
When governments hire Andersen Consulting to help with welfare reform, the
giant company can win in two ways:
1. Caseload reductions. In these cases, Andersen takes its profits directly
out of the services and allotments for the poor. It is no great trick to
achieve effective levels of application reduction by, for example, locating
a welfare office several bus rides out of town and opening it at odd and
2. Firing public sector workers. The other major source of profit is in
firing public sector workers and distributing welfare payments through smart
cards, dispensed at kiosks similar to bank machines - a self-serve kiosk
system where computers make the decisions and human discretion is lost.
What is at stake?
1. Your social programs. Andersen Consulting has one motive - to make the
maximum amount of profit possible, not assist poor people.
2. Your information. How confidential will personal health and financial
information be in the hands of a Chicago-based multinational?
3. Your money. Private companies like Andersen Consulting charge millions
of dollars for their profits, high salaries, and fees. Andersen Consulting,
has a history of huge cost overruns and delays and has been sued for "fraud,
ineptitude, and gross negligence."
4. Good Canadian jobs. Social service privateers like Andersen Consulting
have four approaches: (A) cutting thousands of people off programs they are
entitled to; (B) slashing benefit levels; (C) eliminating jobs of trained
providers; and, (D) replacing them with low-wage people with no training.
5. Accountability. When the public is in charge of social programs, we have
a say. There is accountability. With Andersen in charge, there are only
questions: What about rights to appeal arbitrary decisions? Or the right to
gain access to services? What about open reporting of expenditures, profits,
and practices? Andersen sets itself up to decide who gets what help and
under what circumstances.
Ontario Government deal with Andersen:
The Mother of all Sweetheart Deals
In 1997, the Ontario Ministry of Community and Social Services entered into
an agreement with Andersen Consulting for the development and implementation
of new processes for delivering social assistance in Ontario.
This deal, according to the government's own auditor, allows Andersen
Consulting - the world's largest consulting firm - to pocket $13.1 million
that it may not have earned, bill Ontario taxpayers for wages that are
almost six times the going rates and ultimately walk away with as much as
$180 million - more than twice the amount it had originally asked for.
The millions to pay Andersen Consulting come from the province's community
and social services ministry budget, the same ministry which slashed welfare
payments to the poor because the government believed they were living too
high on the hog. Who's living high on the hog now?
Andersen Deal slammed by A-G
In a blistering report, the government's own Auditor-General slammed the
deal with Andersen Consulting. The report states: "we continue to question
the achievement of value for money for taxpayers from this agreement."
He added: "This project is failing to deliver the replacement technology
and functionality required for administering the Income Support and Ontario
Works programs economically and efficiently within the timetable planned....
We consider this failure ominous because the Ministry of Social Services and
Andersen Consulting have agreed on the need to extend the contract from four
to five years to complete the project. This extension threatens to diminish
the benefit to the taxpayer from this project."
Among the A-G's findings:
* The $180 million to be paid to Andersen Consulting more than doubles the
original estimate of $50 - $70 million - while the Tory government screams
about the need to cut off pregnant mothers' allowances to save money.
* A project manager at Andersen Consulting is charging taxpayers $575 per
hour - while people on welfare are forced to live on less than $520 per
* Andersen employees have billed taxpayers $26,000 in unreceipted
out-of-pocket expenses - while homeless people are forced to produce
* Andersen is billing the taxpayers six times what government workers are
paid for similar work. The Auditor's Report shows that the wage rates of
Andersen employees have increased 63% since the initial contract was signed.
Andersen Consulting rates range from $85 to $575 per hour compared to $28 to
$70 per hour for comparable public sector staff - while the Tory government
repeatedly tells taxpayers that civil servants are overpaid.
* The Quality Council, which oversees the project, does not have a
government representative, yet an Andersen representative sits on the
Quality Council. As well, big businesses such as Loblaws and The Royal Bank
sit on the Quality Council. The Auditor General has stated that "this could
be a conflict of interest because it may affect the independence and
objectivity of the Quality Council".
They've done this all before: Andersen's
Top 10 Major Screw-ups
1. Nebraska: 1996/97 $24 million cost overruns. State Auditor John Breslow,
stated, "I've been auditor for six years now and this is the most wasteful
project I have ever heard of. It's like pouring money down a deep, dark
hole." Omaha World Herald, 11/21/96; Dallas Morning News, 5/17/97
2. Texas: 1997 $63.7 million cost overrun, 4 years behind schedule on a
child support enforcement tracking system. The cost ballooned 600% from its
original $11.4 million price tag. The state auditor's report found that
Andersen underestimated the complexity of the tasks involved. San Antonio
Express-News , 1/23/97
3. Virginia: 1996 150% cost overrun. Andersen Consulting's contract to
re-design computer systems for the county's social service programs came in
150% above the initial contract cost. County staff had to amend the original
contract eleven times. Washington Post, 10/29/96
4. US Energy Company: 1996 Sued for $100 million. Andersen Consulting was
sued for $100 million by the Des Plaines Energy Company for allegedly
failing to deliver on two new systems development projects.
5. UK National Insurance Project: 1996 UK fines Andersen $40 million for
being inept. The UK government knew how to deal with Andersen. When the
company failed to deliver the new UK National Insurance system on time, they
were hit with severe financial penalties. Andersen was unable to deliver the
system on time and were forced to pay $24 million compensation, and had to
undertake extra work costing the company a further $20 million.
6. Yorkshire, UK: 1995 We're only here for the money. Andersen gave less
than a month's notice that it was walking out on health service computer
contracts in Yorkshire, UK because they were no longer sufficiently
7. Canadian Department of Public Works and Government Services 1995.
Failure to live up to contract. The Canadian government cancelled a $44.5
million contract with Andersen Consulting in May 1995 after the firm failed
to meet its contractual obligations and had the nerve to demand that the
contract price be doubled. Computing Canada, 5/10/96
8. New Brunswick, Canada: 1995/96 Auditor General finds "irregularities".
In 1995 and 1996, New Brunswick's auditor issued two consecutive reports
criticizing an Andersen contract. In one case, the auditor said the
government had paid the firm almost $1 million than it had not earned.
Recently, citing ballooning costs, New Brunswick cancelled another contract
with Andersen Consulting, this one to reorganize the province's justice
system. According to the Telegraph Journal, the project to re-engineer the
New Brunswick justice system was to have cost $60 million and save the
government $7 million per year. As many as 15% of jobs in the public system
were also to be cut. Andersen stood to make $9.2 million, but the project
cost ballooned to $144 million. The New Brunswick government had to pay $2
million just to get out of the deal.
9. Irish Government: 1994/96 63 million Irish pounds in taxpayers money was
paid out to consultants by Irish government departments between 1994 and
1996 after an examination by the country's Auditor General. The biggest
single beneficiary was Andersen Consulting which received 26.7 million
pounds for 12 consultancy contracts. In 1997, Ireland's public auditor raked
the Irish government's contract to reorganize that country's social services
department, saying that it had failed to do a proper cost-benefit analysis
before granting a 5.8 million-pound contract to Andersen.
10. Alabama: Paid by number of jobs killed. Slash-happy Andersen Consulting
entered into an agreement with the O'Neal Steel Co. in Alabama to slash
jobs. If Andersen failed to cut any jobs, it would pay a penalty of
$550,000. If it could slash only 100 jobs, Andersen would only break even.
The following fee schedule for Andersen was applied:
Jobs Cut Andersen's Bonus
325 and up $709,000
Andersen Consulting -- Living High on the Hog
and not even doing a good job.
Andersen Consulting's record is pretty clear. They're slashers. Hired
guns. They get paid by the number of people they fire and the number of
programs they slash. They feed off of the money set aside for social
That's despicable enough, but what's shocking is that they're not even good
at it. Everywhere they appear, it seems, there are cost overruns, problems
and concerned auditors.
Ontario's deal with Andersen stands to cost Ontario taxpayers hundreds of
millions of dollars andžaccording to Andersen's track recordžwill not
improve the delivery of social programs.
This deal must be stopped.
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