What did Riverside County get for $35 million consultant? Not much, [Riverside County Grand Jury] report says

Financially challenged Riverside County appears to have reaped few benefits from paying a consulting firm $35 million to make county government more efficient, a new grand jury report concludes.

The report, released Friday, Aug. 14, found little evidence to back county officials’ claims that KPMG’s work saved the county $100 million. There’s been no follow-up to ensure KPMG’s recommendations are being implemented and the county’s cost-cutting efforts actually wasted $8 million in a canceled contract for a software system that the consultant helped select, the report read.

“While the Grand Jury found some limited evidence of cost savings and other benefits, no evidence was provided that the KPMG County Transformation project came close to paying for itself,” read the report titled “KPMG County Transformation Project: Benefit or Millions Squandered?”

“There still may be considerable savings and other benefits to be derived if the County follows up on recommended initiatives from the Project. However, unless and until new savings and benefits are realized, there is more justification to label the Project wasteful rather than beneficial.”

In an email Tuesday, Aug. 18, county spokeswoman Brooke Federico said the firm looked for ways the county could cut costs, boost efficiency and improve practices and that officials would “continue to evaluate the ways we do business and seek ways to improve.”

Federico did not address the jury’s contention that there’s no evidence the county saved $100 million but the county will do so in its official response due by Nov. 16.

KPMG spokesman Russell Grote declined comment Tuesday.

Civil grand juries are panels of citizens sworn in by a judge that look at the inner workings of public agencies and suggest improvements or reforms.

KPMG, which has offices around the globe, was originally hired in 2015 for $762,000 to study the rate cities pay for the Riverside County Sheriff’s Department to serve as their police force. At the time, cities said they were struggling to pay ever-rising contract rates.

A year later, supervisors gave the firm another $15.7 million to help implement more than 50 of its recommendations to make law enforcement more efficient. Eventually, KPMG got close to $40 million from the county to study and suggest improvements for virtually every area of county government.

Even before the coronavirus pandemic tore a $100 million hole in its budget, the county, which has more than 20,000 employees and a $6.5 billion annual budget, struggled to keep up with costs that outpaced revenue growth. The consultant’s work, which yielded 50,000 pages of analysis, was meant to help the county do more with less and base spending and policy decisions on hard data.

KPMG’s presence and price tag spurred controversy. Critics questioned why the county couldn’t rely on its own employees to do the firm’s work for far cheaper. Then-Supervisors John Tavaglione and Marion Ashley, KPMG’s top backers, said outside eyes were needed to overhaul a government the size of Riverside County’s.

Then-Sheriff Stan Sniff openly clashed with KPMG, rejecting many of its recommendations as impractical or having already been implemented. Sniff, who lost his re-election bid to Chad Bianco in 2018, said a KPMG staffing experiment at the sheriff’s Hemet station worsened response times. The consultant and the county executive office, which oversees county government’s day-to-day affairs, said the opposite.

Did KPMG help county cut costs?

County officials have defended the deal by saying the firm helped the county cut $100 million in costs in a variety of areas — how the county buys goods and services, for example.

But the jury found little evidence to back those claims. “The (executive office) has not substantiated assertions of current and future cost savings, although the Project has provided some limited savings,” in purchasing and fleet services, the report read.

When it came to spending on human resources, the grand jury said county officials used somewhat meaningless”terms like “ability to reduce costs” and “projected spend” to describe savings, the report read.

“What matters is whether the County has actually reduced and will reduce costs,”  the report states.

The county in 2018 canceled a $17 million contract for Workday, a new HR software system intended to boost efficiency and automate business practices, according to the jury. The cancellation cost the county at least $8 million, the report read.

The jury faulted the county for not getting buy-in from departments to change their business practices to accommodate Workday. Federico said KPMG “assisted the county with selecting Workday.”

Consultant’s fees called ‘outrageous’

Since KPMG’s contract with the county ended in June 2019, the Board of Supervisors and county departments have not followed up on the firm’s recommendations, and the County Performance Unit, an office created to foster the data-driven decision-making sought by KPMG, has been disbanded, the jury found.

 The report also criticized the county for not bidding out KPMG’s contract as amendments ballooned it to 54 times its original size. The jury noted that many of the leaders around when KPMG first started its work, including Sniff, Tavaglione, Ashley, and several department heads, are no longer there and their replacements “may not have had the background or made commitments to (KPMG’s) initiatives.”

Going forward, the jury recommends getting buy-in from all parties before embarking on major projects such as Workday. Large amendments to professional services contracts should be competitively bid, the County Performance Unit should be re-formed and an independent agency should track projects similar to what KPMG did, the jury recommended.

Supervisor Kevin Jeffries, an early KPMG skeptic, said he was pleased the jury looked into the firm’s work. The consultant was hired to gauge the effectiveness of county programs and management, Jeffries said in a text message.

“However KPMG’s outrageous charges and overall effectiveness eventually became just as controversial as the subject matters they were evaluating.”

Supervisor V. Manuel Perez said much of the firm’s work came before he was appointed in 2017.

Perez said he’d review the grand jury’s and the firm’s report, which are relevant as the county budget has been hit by the pandemic.

“I think that now more than ever, we as a county need to follow through on the recommendations made by both reports.”

Riverside Press-Enterprise
By JEFF HORSEMAN  jhorseman@scng.com
August 19, 2020