Ontario's Health Ministry has for years been awarding contracts to consultants without seeking competitive bids, the provincial auditor says in a critical report to be released on Wednesday.
Auditor General Jim McCarter also accuses the ministry of allowing many of these unnamed consultants to hand out work to members of their own firms, according to sources familiar with the report.
Not only is such favouritism a conflict of interest, the report says, the government may not have received the best value for taxpayers' dollars.
What becomes clear in the Auditor General's report is that the practices that embroiled eHealth Ontario in scandal this summer were widespread within the ministry.
A draft version has been delivered to the ministry and to eHealth.
Spending on the eHealth program ramped up in 2006, when the government made the creation of a digital record of every Ontario resident's medical history by 2015 a priority.
The Health Ministry turned to high-priced consultants to do the job, the report says. One source said 295 consultants and only five full-time government employees were working in the eHealth program office at one point.
Deanna Allen, a spokeswoman for eHealth Ontario, confirmed that the ministry transferred 280 to 300 consultants' contracts to the agency last April 1, when it assumed full responsibility for creating the digital medical records.
The agency is in the process of evaluating the consulting contracts to determine whether some should be converted to staff positions to reduce costs and whether others are needed at all, she said.
Sources also said the ministry recruited many of the consultants from eHealth Ontario's predecessor, Smart Systems for Health Agency (SSHA). In one example, the former director of privacy at SSHA quit on a Friday and started working the following Monday as a consultant for the ministry.
The practice became so rampant that former SSHA president William Albino wrote to the ministry asking it to stop recruiting his key employees, the sources said. Mr. Albino did not return telephone messages.
Mr. McCarter criticizes the ministry for its lack of oversight over the eHealth initiative, which he says has little to show for the $1-billion that has been spent since 2000, according to a source who has read the draft version of the report.
Consultants are usually hired short-term for specific projects. But many consultants remained on the payroll for several years as the ministry renewed their contracts at up to three times what an employee would earn, sources close to the situation said. "The contracts just seemed to go on forever," said one source who asked not to be named.
A program manager working full-time for the government typically earns $120,000 a year, the sources said. But a consultant on the file could earn up to $1,200 to $1,500 a day, the going daily rate.
Sarah Kramer and Alan Hudson resigned as chief executive officer and chairman, respectively, of eHealth Ontario in June over lucrative contracts awarded without competitive tenders and nickel-and-dime spending by consultants.
Long before the government created the agency in September, 2008, to assume responsibility for modernizing the province's medical records, the ministry itself was awarding contracts to consultants without seeking competitive bids. While Ms. Kramer and Dr. Hudson do not emerge unscathed from the 50-page draft report, the sources said the auditor devotes three-quarters of it to failings within the ministry, reserving his harshest criticisms for it.
"It's the ministry stuff that's going to be a surprise to the public," a source said.
David Jensen, a spokesman in the Health Ministry, said the ministry does not plan on commenting until the auditor's report is officially released.
The ministry did not follow its own guidelines at the time governing sole-sourced contracts, said a source familiar with them. The guidelines stipulated that sole sourcing should only be done in rare instances and when a strict process was followed.
"You had to create a business case for the sole sourcing," he said.
Premier Dalton McGuinty has since banned government ministries and agencies from awarding sole-sourced contracts.
Karen Howlett