Consultant’s role under scrutiny
In three years, the company has charged tens of millions of euro for its services to what is now the Health Service Executive (HSE). Though it is hard to quantify exactly how much, Fine Gael has estimated the cost at around €50 million.
It may be less, but Fine Gael seems to be in the right parish in relation to its costs. In June, the Department of Finance noted that consultancy/contracting management services to date had come to €41m. The bulk of that went to Deloitte. Finance’s minute of a meeting it held with the Dept of Health and with the HSE also stated that the company “costs for 2005 include Deloitte, €13.5m.”
And yesterday, Taoiseach Bertie Ahern said PPARS would cost another €56m up to March 2006 to complete the system. “Some €20m of that cost comprises payroll costs, with the rest being consultancy fees to Deloitte & Touche and others,” he said.
That’s between €30-€36 million. It’s conceivable that Deloitte and Touche would be some €80m to €85m to the good for its role as implementation partner.
Labour leader Pat Rabbitte yesterday pounced on the Taoiseach’s pronunciation of ‘Deloitte’ to say that the company should properly be called Delighted and Touche with the vast sums it was being paid for its consultancy services.
“They must be delighted because they raked off from the Exchequer in this regard,” he told the Dáil.
Deloitte’s role in the roll-out of PPARS has become the major focus of the controversy and once again highlighted what the opposition portray as the Government’s over-use of outside consultants at huge cost to the taxpayer. There is evidence that the high fees being charged by Deloitte under its contract did raise a few eyebrows within the health services. In a study of what PPARS and other systems should cost in July 2004, consultants Gartner honed in on this issue.
However, Gartner pointed out that the rates being applied by Deloitte were “within industry norms.” However, an earlier report from 2002 from another consultancy company, Hay - which costed the project at €95m - provided a total of €20m for consultancy costs. It was clear last year that the main driver of rising costs were the outside consultancy services.
But later last year, others were beginning to take notice of the escalating costs and asking questions about the appropriateness of Deloitte’s fee structure. In his report for last year, Comptroller and Auditor General John Purcell referred to the fact that PPARS would cost €100m more than estimated and signalled his intention to begin an audit of the project.
It was not until the Department of Finance became involved early this year that hard questions started to be asked about the role of Deloitte and whether or not its services represented value-for-money.
The relatively late involvement of Finance, almost six years into the project, came about because until January this year, the HSE was not included in Finance’s budgetary vote. But once it was, the CMOP division within Finance (which has expertise in information technology) began to take a closer look at the PPARS project.
The examination culminated in a meeting in June 2001 between Finance, Health and the HSE in which Finance put searching questions about the system.
The Finance minute of the meeting notes: “Deloitte and Touche supply 25-30 personnel (3-4 per implementation) ... Deloitte specialise in project management, change management, stakeholder engagement and communications.”
But it went on say that Deloitte were “mirroring” existing HSE teams. For its part, the HSE said it could not use in-house staff as “they are already stretched.”
Finance wanted HSE to “explain/justify the amount paid to Deloitte and the internal staff costs for change teams.” Repeating this a couple of lines on, it said there needed to be a “focus on the Deloitte spend and overall, VFM (value-for-money) in that regard.”
In a follow-up letter to Health from Finance’s CMOD division, a senior official stated that “we also have serious concerns at the nature and cost of the support service being provided by Deloitte.
This was followed by a couple of hard-hitting statements that fully explained the level of concern.
“We could not determine from the meeting what the nature of the value added being provided by Deloitte was.
“It seemed to us that this support is mainly focused on implementation and configuration issues rather than planning and shaping significant organisational change.”
The more serious point that was being made came in the next sentence.
“The very large amount of funding devoted to Deloitte services would indicate that their focus has to be at the detail level rather than at the level of planning and achieving value from organisation change. If their focus is at the detail level, the average day-rate is inappropriate.”
