News Release: REVIEW NEEDED OF COSTLY BC HYDRO OUTSOURCING DEAL
Secret Deal with Accenture Costing BC Too Much, Damaging Services
July 14, 2008
Burnaby, BC – The union representing workers at BC Hydro and throughout the BC energy sector is calling on the provincial government to facilitate a public review of BC Hydro’s secret outsourcing contract with Accenture Business Services for Utilities(ABSU). This call is coming amid continuing rumors of out-of-control costs and declining levels of service.
“As hydro rates skyrocket across the province and British Columbians are forced to pay the costs of the government’s misguided energy plan, the government is sanctioning BC Hydro’s flittering of millions of dollars on a contract that was supposed to save money,” said Andy Ross, President of the Canadian Office and Professional Employees Union, Local 378 (MoveUP).
MoveUP represents over1,200 workers at ABSU and over 1,550 workers at BC Hydro. The Collective Agreement for ABSU expires on March 31, 2009.
“It is normal to review and evaluate contracts of this magnitude, so why wouldn’t the provincial government want to know if this contract is good value per dollar?” asked Ross.
Accenture is currently at the mid-point of the 10-year $1.45 billion contact contract which outsourced customer services, IT, financial, human resources, building office and purchasing services to ABSU, a global outsourcing firm with a shell-HQ in Bermuda.
While BC Hydro has claimed the Accenture deal has resulted in cost savings, Hydro’s submissions to the BC Utilities Commission that millions of dollars in extra costs have continued to mount, including:
- $19.3 million for a “procurement enhancement initiative”;
- An average of $3 million per year for contract maintenance; and
- A $6 million charge for changes to the agreement.
These fees are not covered by the agreement and have had to be shouldered by the Crown Corporation. In addition, there are millions of dollars in unaccounted expenses that have not been brought to light because of the secrecy of the deal.
Accenture and BC Hydro only include the baseline costs in their regular reporting; this does not include the big-ticket additional expenses which undercut any cost savings.
“This deal was signed in secret, and British Columbians have never been able to scrutinize the sweetheart deal the government signed with this company and the time has come for an independent review to determine how much this contract has actually cost us,” added Ross.
MoveUP recently wrote to the Auditor General of BC, Mr. John Doyle, to request his office conduct an investigation into the Accenture contract. This request noted that the value of the Accenture contract ($1.42 billion) is almost equal to the combined ten government ministry contracts the Auditor General recently reviewed for a separate report into government outsourcing contracts.
The need for a public review is further heightened by the decision of Enmax, the City of Calgary’s utility, to cancel their contract with Accenture under similar circumstances.