Auditors figured the provincial government overpaid private contractors by at least $1 million and as much as $6.5 million during the second phase of the Job Placement Program. The government made the overpayments even after earlier phases of the program had similar problems.
The majority of the overpayment -- at least $627,000 -- went to the JobWave program, whose former lobbyist and spokesperson Robin Adair is a B.C. Liberal Party candidate in the May 12 election.
Adair is running in Saanich South against the New Democratic Party's Lana Popham and the Green Party's Brian Gordon. A recent Victoria Times Colonist article called Adair a "former television anchor," though Adair's campaign website makes it clear he last worked in the media more than nine years ago.
He has since worked as a communications consultant and became the vice president responsible for communications and government relations for WCG International Consultants Ltd., the company that launched JobWave and pioneered private job service provision in the province. A company spokesperson in the past championed JobWave as an example of a public-private partnership.
Adair did not return calls by posting time.
At a time when both the NDP and the Liberals are positioning themselves as best to manage the government in tough economic times, the job program audit makes interesting reading.
Contractors were only supposed to be paid when they helped a welfare recipient find a job, said the report by Finance Ministry auditors written in 2006 and recently released to The Tyee through a freedom of information request. But the government and contractors had no process in place to ensure people got jobs before the contractors were paid.
"Service providers could receive payment for client independence that they may not have contributed towards," the report said. "Payments can be made and were made for reasons other than independence due to employment."
Ministry put tab higher
"Our audit work indicated that two per cent, or approximately $1 million, of the total payments under the initial verification procedures would not qualify," the auditors found.
That was a "very conservative" estimate, the report said. Some 5.5 per cent of the payments they looked at "did not qualify for payment," but because of how they took their samples they could only say for sure that two per cent shouldn't have been paid.
Officials in the ministry responsible, what was then the Ministry of Employment and Income Assistance, thought the problem might be much bigger, the report said. "The ministry estimated that 88 per cent of the initial milestone payments to service providers were valid."
If 88 per cent were valid, that leaves some 12 per cent of payments in question. The auditors wrote, "Combining our data with the ministry's own analysis, the exposure on initial and subsequent payments for independence not due to employment is likely between two per cent and 12 per cent."
By the time of the audit, the program had already seen $54 million paid to the contractors. So using the auditors' figure, the overpayment would have been just over $1 million. Using the ministry's, it would be closer to $6.5 million.
With a legal opinion from the Ministry of Attorney General in hand, the auditors wrote that the government should be able to get the $1 million back from the contractors. It is unclear from the document, which has details of legal opinions severed under FOI act provisions, why the government did not pursue the other $5.5 million ministry officials figured was overpaid.
JobWave had biggest overrun
Nearly all of the overpayment went to the two biggest contractors, according to an appendix to the audit. JobWave, run by WCG International Consultants Ltd. and represented by Adair, owed the government $627,000. Destinations, then run by Grant Thornton LLP, owed $362,000.
The smaller contractors owed significantly less. For Kopar Administration Ltd., it came out to $24,400, and for Aspect: B.C.'s Community Based Trainers, just $868.
The audit report does not say whether the government got any money back from the contractors, though it notes the ministry took the overpayments into consideration when they negotiated ending the job placement program three years ahead of its planned July 2009 finish.
A spokesperson for the Human and Social Development Ministry, now responsible for the job programs, said that $1 million was recovered during those negotiations to end the contracts early.
After an "extensive" request for proposals process, the province launched the B.C. Employment Program in 2006, and awarded contracts to both WCG International Consultants Ltd. and GT Hiring Solutions (2005) Inc., run by the same companies with whom it was already working. WCG's Canadian owners sold the company to Tucson, Arizona based Providence Service Corporation in 2007.
After buying WCG, Providence decided it had little use for Adair's services, he told Public Eye in December.
NDP income assistance critic Jagrup Brar argued in 2008 that the government had given WCG contracts to help prepare it for sale. The well-connected company had donated extensively to the B.C. Liberal Party, he said.
The problems with the second phase of the Job Placement Program are remarkable considering audits of earlier phases of the program had uncovered similar problems.
In 2006, the NDP obtained a copy of a 2005 audit that found as much as $16 million had been overpaid in the first four years of the program. "It is our opinion that there are no effective processes in place to ensure the accuracy and validity of payments to service providers," the auditors wrote in that report.
Interviewed at the time, Adair said WCG had paid back about $50,000. "We try to run a very tight and honest ship and we welcome audits," he said.
It is unclear how well the problems have been fixed in the current BCEP. The Finance Ministry has audited the new program, but repeated attempts to get a copy of that report through FOI requests have been refused as a 2008 change in policy now has all ministry audits going to a cabinet committee for review before they can be released.
The Tyee reported last year that the government cancelled a JobWave contract in the Interior, a decision the company is appealing and which is headed to arbitration.
Ministry staff doing compliance checks raised concerns about contractors billing the government for services it never provided, charging more than once when it did provide services and adding an administration fee of as much as $18 to distribute a $6.40 bus ticket.
Related Tyee stories:
- Brar Targets Job Program Sale
NDP critic raises concerns about timing, client privacy.
- Liberals to JobWave: You're Fired
$8 million job training contract cancelled; work goes to B.C. competitor.
- Job Training: Taxpayers Taken for $24 Bus Ride
How private contracts inflated cost of welfare-to-work programs.
- BC Jobs Firm a Bust for Ontario
Private contractor did no better than public effort it replaced: review.
- Welfare Reform's Public-Private Partnerships
The Fraser Institute says they're a huge advance in social policy. Critics say work placement companies are growing rich but doing little.