Riverside County says $35 million on consultant was well spent

Contrary to a Riverside County grand jury report, the county’s $35 million investment in outside consulting firm KPMG yielded substantial savings and improvements in county government operations, according to a formal response to the jury’s findings.

The response, which the Board of Supervisors unanimously approved Tuesday, Nov. 17, takes issue with the jury’s report, “KPMG County Transformation Project: Benefit or Millions Squandered?”

The jury is a group of citizens empaneled by a judge to scrutinize public agencies and recommend improvements, though the subjects of jury reports are not obligated to follow the recommendations. The jury’s August report questioned the county’s spending on KPMG and cast doubt on county assertions that the firm’s work saved $100 million.

“Many (of KPMG’s) recommendations were process-driven, those results are qualitative in nature and not quantitative,” officials wrote in the county’s 11-page response. “Additionally, there still may be considerable savings and other benefits to be derived as the county continues to follow up on recommended initiatives from (KPMG).”

The Riverside County Sheriff’s Department — its spending was the original focus of the consultant’s work — filed its own response. Sheriff Chad Bianco, who was a lieutenant when KPMG started working with the county, wrote that his department “is actively implementing” the firm’s recommendations.

While he doesn’t disagree with KPMG’s findings or recommendations, “most, if not all … are already ‘common sense’ and ‘best practices’ within the law enforcement profession,” wrote Bianco, who became sheriff in 2019.

The county first hired KPMG, an international consulting firm, in 2015 for $762,000 to study what cities pay to have the sheriff as their police force.

A year later, supervisors gave KPMG another $15.7 million to help implement more than 50 of its recommendations centered on protecting the public more efficiently. Eventually, KPMG got close to $40 million from the county to suggest improvements for virtually every area of county government.

Even before the coronavirus pandemic disrupted county finances, Riverside County, which has more than 20,000 employees and a $6.5 billion annual budget, struggled to make ends meet without dipping into savings. KPMG, which produced 50,000 pages of analysis of county government’s inner workings, was meant to help the county do more with less and foster a culture that values hard numbers in decision-making.

In its report, the jury found the county had little evidence that the consultant’s work saved $100 million. But county officials said such evidence was provided “on multiple occasions” by the county and the firm.

“The Grand Jury appears to have compared overall budgets to determine if actual savings occurred in some instances, but such comparisons are invalid since they assume the department budget is not impacted by unrelated increases to costs outside of the department’s control,” the response read.

Two of the consultant’s reports had 209 recommendations, 108 of which have been put in place, the response added.

The jury also faulted the county for, with KPMG’s help, approving a $17 million contract for a new human resources software system that was later canceled. The Workday cancellation, which cost the county $8 million, stemmed from a lack of buy-in from county departments to change their business practices to accommodate the new system, the jury found.

In their response, officials wrote “a reasonable change in business practices … was not a viable solution” to the new system’s problems.

The jury also criticized the Board of Supervisors and department heads for a lack of follow-up on the consultant’s recommendations. The County Performance Unit, an office created to guide the data-driven decision-making sought by KPMG, was disbanded, the jury found.

Forming such a unit, officials wrote, would be “cost-prohibitive and logistically challenging.” The county explored other ways to share performance data, the response read.

The jury also criticized the county for not bidding out the consultant’s contract as amendments ballooned the pact to 54 times its original size.

Since KPMG was familiar “with the overall structure of the county” and was asked to put recommendations into place, “there is no requirement for the county to seek additional bids in those circumstances,” the response stated.

Riverside Press-Enterprise
By JEFF HORSEMAN | jhorseman@scng.com
November 18, 2020