EHealth Ontario awarded a lucrative contract to one of its favoured consultants, even though rival firms offered to do the same work at a fraction of the price, the provincial auditor says in a report to be released tomorrow.
Auditor-General Jim McCarter criticizes the agency for interfering with what was supposed to be a competitive process by asking the consultant to resubmit its bid after its initial proposal came in nearly eight times higher than those submitted by rival firms, according to sources familiar with the report.
"This looks very suspicious," Ontario Progressive Conservative Leader Tim Hudak said yesterday. "A company ... made one bid and then mysteriously put in a lower bid to get the contract."
Health Minister David Caplan declined to comment until the auditor officially releases his report.
A draft of the auditor's report has been submitted to the ministry. It does not name the consulting firm. But documents obtained by the Tories through a freedom-of-information request reveal that it was Anzen Consulting Inc. The firm's managing partner, Miyo Yamashita, is a former colleague of former eHealth chairman Alan Hudson.
Ms. Yamashita worked at University Health Network (UHN), where Dr. Hudson was chief executive officer until 2000. She is also married to Michael Guerriere, managing partner of Courtyard Group, a consulting firm that was also awarded contracts by eHealth. Dr. Guerriere is the former chief operating officer of UHN.
Dr. Hudson and former eHealth chief executive officer Sarah Kramer resigned in June over contracts the agency awarded to consultants without competitive tenders.
Anzen was awarded four separate contracts by eHealth totalling $1.67-million between October, 2008, and June, 2009, documents show. The contract singled out by Mr. McCarter was in fact awarded through a competitive tender, but the auditor accuses the agency of not following a process that would have ensured it got the best value for taxpayers' dollars, according to the sources.
Anzen submitted a proposal on March 23, saying it would cost an estimated $3.1-million to help eHealth create a new privacy office, according to a copy of the bid obtained by the Tories. Anzen said the project would require eight full-time consultants and take until Dec. 31 to complete. But the same day, Anzen submitted a second, scaled-down proposal for the same project, offering to complete the project by July 31 with six consultants at an estimated cost of $737,800, according to documents.
Rival bidders submitted proposals in the $400,000 range, said sources familiar with the matter. EHealth asked Anzen to submit a second bid and reduce the scope of the work, Don MacPherson, a partner at the firm, said yesterday in an e-mail response to The Globe and Mail.
"Anzen complied with all the requirements of eHealth Ontario's tendering process and had no knowledge of or involvement in the agency's internal tendering processes," he said.
EHealth spokeswoman Deanna Allen said executives involved in the contract have since left the agency. "Certainly, what appears to have taken place is inconsistent with the practices that we have been following since June," she said.
Ms. Kramer said in a statement yesterday that she has not yet received a copy of the auditor's report. "It would be inappropriate to speculate on what it may say," she said.
Anzen has been paid or submitted invoices for just over $476,000 for the project to date, Ms. Allen said. Mr. MacPherson said the firm came in under the contract amount, using only 65 per cent of the "allowable budget."
Karen Howlett