Professional Documents
Culture Documents
The Office of Inspector General (OIG), upon receipt of an anonymous letter, initiated this
investigation. The letter alleged that a former director of the Ohio Department of Human
Services (now the Ohio Department of Job & Family Services (ODJFS) steered a
consulting contract for welfare reform implementation to Andersen Consulting, LLP
(now known as Accenture).
Our investigation revealed that, in 1997, former human services director Arnold R.
Tompkins rejected the recommendation of a contract review committee in favor of
awarding the contract to Andersen. Mr. Tompkins continued to direct the approval of
several additional large unbid contracts to Andersen Consulting, against the advice of his
staff.
Upon leaving state service, Mr. Tompkins formed a partnership with Jacqueline Romer-
Sensky to do consulting work. Within months of leaving state government, their firm,
Tompkins & Sensky, Ltd., entered into consulting contracts with both Andersen and
American Management Systems (AMS). This resulted in questions as to whether
Tompkins’ decisions as director could have been influenced by his desire for employment
with Andersen upon leaving the public sector.
In 2000, the Ohio Departme nt of Human Services merged with the Ohio Bureau of
Employment Services to become the Ohio Department of Job & Family Services. After
four months as a partner with Mr. Tompkins, Jacqueline Romer-Sensky left to become
director of ODJFS. As director, Ms. Romer-Sensky approved additional large unbid
contracts for both Andersen and AMS. We find an unavoidable appearance of
impropriety was created when Ms. Romer-Sensky directly participated in the approval
process of large unbid contracts with both AMS and Andersen, after having been under
contract with both companies just prior to becoming director. However, in our view,
neither this appearance nor any other acts by Romer-Sensky rise to the level of
wrongdoing.
However, we did find reasonable cause to believe wrongdoing occurred on the part of
Mr. Tompkins based upon his actions in awarding large unbid contracts to Andersen. In
examining the totality of circumstances surrounding these contracts, we are unable to
conclude that his acts were intended to be in the best interests of the state. Rather, it
seems clear that he was merely attempting to establish goodwill and guarantee future
business with both Andersen and AMS after he left state service.
The role of Donna Givens, an Andersen employee, was pivotal in the relationship
between Andersen, Arnold R. Tompkins, and ODJFS. Ms. Givens was given a
consulting contract by Arnold R. Tompkins to work at ODJFS. She also established a
contract with Andersen at the same time she was under contract with ODJFS. Ms.
Givens participated in a contract presentation by Andersen before ODJFS. This led to
i
Andersen receiving several other contracts, contrary to the advice of a contract selection
committee. We found reasonable cause to believe wrongdoing occurred based upon the
circumstances surrounding her being under contract with ODJFS while she was doing
business with ODJFS as an Andersen employee.
The above findings led us to conduct a review of the contracting process at ODJFS. We
reviewed contracts for the implementation of an Internet-based system to match welfare
recipients to employers (Ohio Works), a state-wide child support computer system
(SETS), and underlying contracts involving Mr. Tompkins, Ms. Romer-Sensky, and Ms.
Givens. Our investigation revealed many problems largely related to the failure of
ODJFS to adequately oversee these projects.
Our investigation also revealed deficiencies on the part of ODJFS’ process of awarding
contracts. These deficiencies consist primarily of situations where policies and
procedures were disregarded in the course of awarding state contracts. However, we did
find other situations where these policies were simply inadequate. We also believe that
ODJFS failed to enforce contractual provisions of Givens’ contract that resulted in loss to
the state. The result of these problems was the waste of millions of dollars spent on large
projects lacking adequate oversight or accountability by the state. As a result, we found
reasonable cause to believe acts of wrongdoing or omission occurred.
A copy of this report has been forwarded to the Office of the Franklin County
Prosecuting Attorney for possible criminal prosecution. A copy has also been forwarded
to the Auditor of the State of Ohio and the Ohio Attorney General for possible audit and
recovery of state monies, as well as to the Ohio Ethics Commission for possible violation
of Ohio Ethics Laws.
ii
TABLE OF CONTENTS
Ethics Violations..........................................................................................................22
Arnold R. Tompkins .....................................................................................22
C. CONCLUSION
(INVESTIGATION OF ALLEGED WRONGDOING) ...........................................23
D. REFERRAL .................................................................................................................25
Unbid Contracts...........................................................................................................31
Analysis of the Andersen Contracts ............................................................32
Contracting Process.....................................................................................................34
Accountability Required of Contractor......................................................................36
Detailed Design and Performance Specifications.......................................37
Acceptance Test............................................................................................37
Warranty........................................................................................................38
Project Management .....................................................................................38
Sole Source Contractors...............................................................................40
Requests for Proposal (RFP) .......................................................................40
Costs of Contracts.........................................................................................41
Invoice Errors................................................................................................43
Vagueness of Contract Provisions ...............................................................44
Determination of Deliverables.....................................................................44
iii
Advice of Counsel ........................................................................................45
Time and Materials .......................................................................................45
C. OHIO WORKS ............................................................................................................46
Background ..................................................................................................................46
JobNet............................................................................................................46
Ohio Works ...................................................................................................47
Issues Associated with Ohio Works ...........................................................................47
Complaints about Ohio Works....................................................................................48
Ohio Works - Systems Operation Service Center .....................................................49
F. FINDINGS ...................................................................................................................84
G. CONCLUSION
(REVIEW OF AGENCY MANAGEMENT AND OPERATIONS) .......................85
H. RECOMMENDATIONS ............................................................................................87
I. REFERRALS ...............................................................................................................91
VI. CONCLUSION...........................................................................................................................91
EXHIBITS
iv
9. E-mail message with attached correspondence for Arnold R. Tompkins regarding Ohio
Works.
10. Chronology of events.
11. Andersen invoices for professional fees.
12. Cochran Public Relations / Andersen Consulting invoice comparison.
13. Andersen Contract C-00-01-230 payment schedule and invoices.
14. Andersen invoices.
15. Battelle Strategic Assessment for the ODJFS Merger.
16. Letter from Ms. Sensky to State Auditor Jim Petro.
17. Chronology of significant dates regarding the Bank One contract.
v
REPORT OF INVESTIGATION FILE ID NO. 2000047, 2000244
I. BASIS OF INVESTIGATION
The Office of Inspector General (OIG) received an anonymous letter alleging that
the former director of the Ohio Department of Human Services1 steered a
consulting contract to a vendor. Specifically, that former director Arnold R.
Tompkins improperly awarded a contract to Andersen Consulting, LLP 2
(Andersen) for a welfare reform project after a selection committee recommended
another vendor. The issues raised in this matter are set forth in Section IV of this
report. In Section V, we review the management and operations of ODJFS as it
relates to the contracting process in general. We also analyze deficiencies in that
process and examples in specific contracts where those deficiencies resulted in
wrongdoing.
II. BACKGROUND
In 1996, ODJFS was given the task of reforming welfare in the State of Ohio
pursuant to a federal mandate. Subsequently, the 122nd Ohio General Assembly
passed legislation in 1997 mirroring federal welfare reform law. Because the
federal mandates restricted the amount of time state governments had to reform
welfare, ODJFS had to act promptly to avoid financial sanctions. The following
information about various ODJFS programs are pertinent to this investigation and
are discussed as background information.
1
On July 1, 2000, the Ohio Department of Human Services (ODHS) and Ohio Bureau of Employment
Services (OBES) merged and became the Ohio Department of Job & Family Services (ODJFS).
Consequently, for purposes of simplicity and consistency, most references to the agency in this report will
be ODJFS.
2
In January 2001, Andersen Consulting, LLP became Accenture. However, all references to the company
in this report will be Andersen.
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REPORT OF INVESTIGATION FILE ID NO. 2000047, 2000244
On June 23, 1997, the State Controlling Board approved a contract renewal for
American Management Systems, Inc. (AMS) to continue working on the Support
Enforcement Tracking System (SETS). However, our investigation revealed that,
due to a clerical error, ODJFS omitted welfare reform language as part of its
Controlling Board request. As a result, ODJFS immediately had AMS
discontinue any welfare reform work until an additional request could be
submitted to cover the cost of such work. On December 15, 1998, Mr. Tompkins
2
REPORT OF INVESTIGATION FILE ID NO. 2000047, 2000244
requested, and the State Controlling Board approved, the additional request to
fund welfare reform initiatives performed by AMS. This request and the
accompanying contract indicate AMS was to work with ODJFS to provide
“technology enablement” services.
Mr. Tompkins’ approval of the initial contract with AMS for welfare reform and
an integrated case management system has led to over $87 million dollars of
unbid contracts with AMS. (See Exhibit 2)
Ohio Works
As part of the welfare reform plan, the Ohio Works project was intended to
develop a website that would link welfare recipients to available jobs. The former
Ohio Bureau of Employment Services had already developed a similar system
called Ohio JobNet. Mr. Tompkins explained that Ohio JobNet was not utilized
for welfare reform because it did not do enough for businesses and was not a fully
interactive system. In addition, he said that the statistics (unemployment rate,
labor market indexes, etc.) reported to the federal government and posted on the
Ohio JobNet were not current and could not be regionalized. On August 11,
1997, Mr. Tompkins requested, and the State Controlling Board approved, a
contract with Andersen for $1,688,000.00 to assist in the design, creation,
implementation, and operation of a workforce development program (Ohio Works
First) to meet the goals of welfare reform. That request also included language
stating Andersen assisted ODJFS in setting its strategy for the welfare reform
plan, and that no other proposals were sought because of time constraints imposed
by the federal government.
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REPORT OF INVESTIGATION FILE ID NO. 2000047, 2000244
We gratefully acknowledge the assistance of the Ohio State Highway Patrol and
the Ohio Department of Administrative Services throughout the course of this
investigation. The cooperation of the Ohio Department of Job & Family Services
has also helped make this report as thorough and timely as possible.
A. DISCUSSION
3
Jacqueline Romer-Sensky was deputy chief of staff for former Governor Voinovich. She served
as a cluster chief over several state agencies including ODHS. In 1993, she was instrumental in
hiring Arnold R. Tompkins as director of ODHS. She resigned as a member of the governor's
staff on September 26, 1998.
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REPORT OF INVESTIGATION FILE ID NO. 2000047, 2000244
Mr. Tompkins explained, when interviewed, that he wanted to select the best
vendor for welfare reform implementation. He recalled that the selection
committee recommended that ODJFS contract with AMS to perform welfare
reform implementation. However, since federal mandates restricted the time state
governments had to implement welfare reform, he said he had always felt strongly
about using multiple vendors to perform different portions of the work. He said
Assistant Director Enloe advised him to have a committee make the decision, but
he personally felt strongly about utilizing each vendor’s strengths to receive the
best work possible.
After Andersen developed the “vision paper,” a committee was formed in April
1997 to develop criteria for the selection of a vendor to perform the next phase of
welfare reform. In order to expedite the contracting process, ODJFS utilized a
selection committee to recommend a consulting vendor. This process was utilized
by the agency instead of the standard Request For Proposal (RFP) method
because of the constraints of time placed on the state by the federal government. 5
Before the selection committee was officially formed, a list of potential vendors
capable of performing the implementation phase of the strategic plan were
contacted by ODJFS and asked to submit proposals for the project. The proposals
submitted by these vendors were reviewed and certain vendors (AMS, Andersen,
4
Ohio Secretary of State records indicate Tompkins & Sensky, Ltd. was officially formed on
October 1, 1998.
5
While this is not the standard practice in selecting a vendor to contract with, the Department of
Administrative Services and the State Controlling Board approved it. The State Controlling Board
provides legislative oversight over certain expenditures by state agencies and has approval
authority over various state fiscal activities.
5
REPORT OF INVESTIGATION FILE ID NO. 2000047, 2000244
Our interviews revealed that some members of the committee did not care for
some individuals associated with Andersen. There was also concern that Robert
Tyre, an Andersen partner, met a number of times with Director Tompkins prior
to, and during, the selection committee process.
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REPORT OF INVESTIGATION FILE ID NO. 2000047, 2000244
Most committee members we interviewed believe assistant director Jim Enloe, the
committee chairperson, gave the rating results to Director Tompkins to review.
They assumed Director Tompkins would approve their recommendation and
award AMS the contract. However, correspondence from Mr. Enloe, dated June
5, 1997, indicate two vendors were still under consideration for a technological
portion of the project. The correspondence was addressed to AMS and Andersen,
and requested each vendor to present a more comprehensive plan regarding this
aspect of the project. Only two members of the committee recalled anything
regarding this second part of this selection process.
Mr. Enloe told us that a second selection committee would not be unusual given
the complexity and capacity of the project. However, he could not recall who
comprised this final selection committee. He said he remembered Director
Tompkins asking other senior level ODJFS personnel for input.
One member of the committee told us he recalled questions about vendors being
able to handle the technological portion of the project. He said he, Assistant
Director Enloe, and Gregory DePorter reviewed some information and possibly
vendor presentations regarding this issue, but he was not certain what impact their
review had. He did not believe Director Tompkins was involved in this part of
the process.
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REPORT OF INVESTIGATION FILE ID NO. 2000047, 2000244
At the onset of our investigation, we requested and received documents from the
vendor selection committee. Initially, ODJFS was only able to supply summary
scoring sheets that were found attached to some purchase orders and contracts.
However, ODJFS was eventually able to supply us with pertinent notes and
documents from the selection committee. We uncovered no additional documents
or materials from either AMS or Andersen Consulting indicating a second
proposal or presentation was ever requested or presented to a final selection
committee. However, former deputy director Loretta Adams did recall a second
meeting that involved Mr. Tompkins. She indicated that sometime after August
1997 she was appointed to a committee of five that included Mr. Tompkins. She
said the committee heard presentations and interviewed representatives from three
vendors, including Andersen Consulting. She said that after the interviews were
completed, Mr. Tompkins took the committee members into the hall and stated
“Hands down, Andersen is the best, and we are going with them.” She further
said they did not vote or have any other input in the selection.
When interviewed, Mr. Tompkins said that AMS did not have the personnel for
the job and would need a couple of months to bring adequate personnel on board.
However, he felt Andersen was capable of doing the work immediately. Mr.
Tompkins did not recall a second selection committee. He did remember that his
8
REPORT OF INVESTIGATION FILE ID NO. 2000047, 2000244
assistant director, Mr. Enloe, compiled additional information about each vendor
and forwarded the information submitted by vendors after their presentations.
Mr. Tompkins said that based on the proposals, the presentations, the committee
recommendation, and this additional information, he and Assistant Director Enloe
made the final decision that AMS and Andersen would perform the bulk of
welfare reform implementation.
When asked why he did not choose Maximus instead of Andersen, contrary to the
rankings of the selection committee, Mr. Tompkins said he did not feel Maximus
had the expertise to carry out what ODJFS needed. Additionally, he said
Maximus never responded to a request for a proposal on some training issues that
was part of the welfare reform implementation project.
9
REPORT OF INVESTIGATION FILE ID NO. 2000047, 2000244
On January 25, 1999, Tompkins & Sensky, Ltd. contracted with Andersen to
conduct training sessions titled “Relationship Selling Workshops.” This contract
specifically identified Arnold R. Tompkins as the participant representing
Tompkins & Sensky, Ltd. at these workshops. Tompkins & Sensky, Ltd. was
paid $1,000.00 per day, not to exceed $5,000.00, for each workshop.
6
Temporary Aid to Needy Families.
10
REPORT OF INVESTIGATION FILE ID NO. 2000047, 2000244
On March 1, 1999, Tompkins & Sensky, Ltd. entered into a verbal contract with
AMS for a $10,000.00 monthly retainer fee to provide consulting services on
human service and labor issues. Similar to the contract with Andersen, this
contract specifically said that Arnold R. Tompkins would provide future
consulting work. One week after the effective date of this contract, Jacqueline
Romer-Sensky was appointed director of the former Ohio Department of Human
Services.7
When interviewed, Director Romer-Sensky explained that when she and Mr.
Tompkins formed the partnership, they agreed that they would have individual
clients and projects as well as joint clients and projects. When asked, she said she
was unaware of any contracts between Andersen Consulting and Tompkins &
Sensky, Ltd. during the time she was a partner. She said if there was a contract
with Andersen Consulting, Mr. Tompkins was exclusively doing the work. Ms.
Romer-Sensky said she was aware of their contract with AMS and that she did
work on the AMS project with Mr. Tompkins, subsequently receiving $10,000.00.
She said that payments from many contracts were only starting to come in when
she quit the partnership to become director of ODJFS. Ms. Romer-Sensky said
that most of the payments from the various contracts were deposited in a joint
business account and divided between her and Mr. Tompkins proportional to the
amount of work each performed on the project. On payments received by the
partnership for some projects that were exclusively hers, she retained the total
amount. In one instance, she received a direct payment into her personal account.
On July 7, 1999, four months after the partnership was terminated, Ms. Romer-
Sensky received a final payment of $46,289.00 from Tompkins Consulting for
work she performed and expenses she incurred while in partnership with Mr.
Tompkins.
7
Ms. Romer-Sensky left the partnership on March 5th and was appointed director on March 8th .
After her appointment, Mr. Tompkins changed the name of the consulting business to Tompkins
Consulting, Ltd..
11
REPORT OF INVESTIGATION FILE ID NO. 2000047, 2000244
On October 10, 1999, exactly one year after leaving state service, Tompkins
Consulting contracted with Andersen for a minimum $10,000.00 monthly retainer
fee to provide consulting services. These services included the promotion of Ohio
Works and related human services work in Ohio. Since October 1999, Tompkins
Consulting has also contracted with Andersen to conduct additional “Relationship
Selling Workshops” at a cost of $3,000.00, plus expenses, for each workshop.
In May 2000, Tompkins Consulting again entered into a verbal contract with
AMS in consideration for a $10,000 monthly retainer fee to provide consulting
services on human services and labor issues. Between April 1999 and December
2000, Tompkins Consulting received a total of $133,000.00 in retainer fees from
AMS. Tompkins Consulting also received $123,344.60, including expenses, from
the Andersen contract during that same time. Andersen ended their contract with
Tompkins Consulting in September 2000. Tompkins Consulting remains under
contract with AMS and continues to earn a $10,000.00 monthly retainer fee. (See
Exhibit 8)
Our investigation revealed that Mr. Tompkins did not officially represent either
Andersen or AMS before ODJFS until exactly one year after he left state service.
However, a review of internal correspondence and communication from Andersen
leads us to believe that Mr. Tompkins was laying the groundwork in the months
before October 1999 to begin representing Andersen before ODJFS.
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REPORT OF INVESTIGATION FILE ID NO. 2000047, 2000244
Mr. Tompkins contends that none of his contracts dealt directly with ODJFS
issues until one year after he left state service. However, on August 18, 1999,
within 10 months of leaving state service, an e-mail message from an Andersen
employee referred to draft correspondence from Mr. Tompkins. We obtained a
copy of the e-mail draft that was directed to Mr. Brian Hicks, Chief of Staff to the
Governor, and deals with the Ohio Works project. Among other things, it
addresses the use of technology for Ohio Works, including the development of the
website (www.OhioWorks.com) coordinated by Andersen. (See Exhibit 9) The
Office of the Governor indicated that it could not confirm whether their office
ever received this correspondence.
Additionally, our review of telephone records from ODJFS revealed that officials
from the agency made 60 phone calls and spent a total of 4 hours, 30 minutes
talking to Mr. Tompkins during the first year after he resigned from the agency.
Former interim director Wayne Sholes recalled speaking to Mr. Tompkins on
several occasions. Mr. Sholes recalled one particular phone call he received from
Mr. Tompkins in May 1999. Mr. Tompkins specifically asked Mr. Sholes about
the status of pending unbid Andersen contracts. The Controlling Board
subsequently approved the unbid Andersen contract Mr. Tompkins inquired about
worth $14,298,500.00, on June 21, 1999.
Our investigation also revealed that Mr. Tompkins continued to try and influence
his former agency regarding Andersen beyond his first year after leaving state
service. Ms. Romer-Sensky said she recalled, during the time she was director,
receiving one call from Mr. Tompkins in January or February of 2000 when she
felt “pushed” to act on behalf of Andersen. Ms. Romer-Sensky said she had been
arguing with Andersen over the cost of their pending contracts. Ms. Romer-
Sensky recalled Mr. Tompkins calling late in the afternoon and asking her “why
are you hassling Andersen?”
13
REPORT OF INVESTIGATION FILE ID NO. 2000047, 2000244
Ms. Romer-Sensky received the call just before the Controlling Board approving
an amendment to the unbid Andersen contracts worth $22,999,287.68 on
February 28, 2000.
The following laws are relevant to the facts uncovered in this case:
It further states:
(D) No public official or employee shall use or authorize the use of
the authority or influence of his office or employment to secure
anything of value or the promise or offer of anything of value that
is of such character as to manifest a substantial and improper
influence upon him with respect to his duties.
14
REPORT OF INVESTIGATION FILE ID NO. 2000047, 2000244
B. FINDINGS
Contract Steering
Arnold R. Tompkins:
There were no explicit agreements discovered between Andersen, AMS, and
Arnold R. Tompkins establishing a documented link between Mr. Tompkins’
approval of large unbid public contracts and his future consulting contracts with
these same companies. However, facts developed during this investigation lead
us to conclude he had improper interest in unbid public contracts. The following
facts illustrate a pattern of questionable decision making by Mr. Tompkins:
15
REPORT OF INVESTIGATION FILE ID NO. 2000047, 2000244
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17
REPORT OF INVESTIGATION FILE ID NO. 2000047, 2000244
Even to the casual observer, the timing of Mr. Tompkins’ consulting contracts
with Andersen and AMS, within weeks of approving large unbid state contracts
with these same companies, establishes a nexus between his decisions as director
and his contracts received after leaving state service. Accordingly, we find
reasonable cause to believe wrongdoing occurred in this instance.
Donna Givens:
Throughout our investigation, Ms. Givens was the common denominator in the
relationship between Andersen, Arnold R. Tompkins, and ODJFS. She
previously worked with Mr. Tompkins at the U.S. Department of Health and
Human Services. In early 1995, while under contract with Andersen, Ms. Givens
traveled to Ohio to explore business opportunities for Andersen. She
subsequently met with Mr. Tompkins and introduced him to Mr. Robert Tyre, an
Andersen partner. Subsequently, Mr. Tompkins awarded Ms. Givens her first
consulting contract with ODJFS, and later awarded Andersen their first unbid
ODJFS contract. Ms. Givens later became a sub-contractor for Andersen to work
on the ODJFS project. She was under contract with both ODJFS and Andersen
during this time. Ms. Givens eventually became a full-time employee of
Andersen in February 1999.
18
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Between August 25, 1997, and September 30, 1997, Ms. Givens
billed ODJFS 112 hours and Andersen 207 hours, earning over
$61,000.00 from her dual contracts.
Jacqueline Romer-Sensky:
Ms. Jacqueline Romer-Sensky began state service as a member of Governor
Voinovich’s staff. She was a cluster chief overseeing several state agencies,
including ODJFS. In 1993, she was instrumental in hiring Arnold R. Tompkins as
director of ODJFS. Ms. Romer-Sensky resigned on September 4, 1998, and
entered into a consulting business partnership with Arnold R. Tompkins, forming
Tompkins & Sensky, Ltd. on October 1, 1998. Ms. Romer-Sensky left the
partnership in March 1999 when Governor Taft appointed her as director of
ODJFS. She resigned as director on March 2, 2001.
The following facts were developed during the course of this investigation:
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21
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Ethics Violations
Arnold R. Tompkins:
Ostensibly, it would appear that Mr. Tompkins complied with the “revolving
door” provision of the ethics law by waiting exactly one full year before signing a
contract with Andersen to represent them before the state agency he formerly
directed. However, the following facts uncovered in our investigation
demonstrate that he continued to influence his former agency well before the end
of his first year after leaving state service.
Between October 1998 and October 1999 there were a total of 62 phone calls
made to Mr. Tompkins’ business and home phone from various ODJFS officials.
The total length of the phone calls was 4 hours and 33 minutes. It is unknown
how many calls Mr. Tompkins may have made to his former agency. However,
several individuals we interviewed said that he called frequently. Some said they
felt Mr. Tompkins was still running the agency, even after he left. Mr. Tompkins
was under contract with both Andersen and AMS during the time these phone
calls were made.
Former interim director Wayne Sholes said he spoke with Mr. Tompkins on
several occasions after Mr. Tompkins left the agency. He recalled Mr. Tompkins
discussing some state projects, and on one occasion Ohio Works.
In May 1999, only seven months after leaving state service, Mr. Tompkins called
the assistant director and inquired about the status of pending Andersen contracts.
The unbid Andersen contract Mr. Tompkins inquired about worth $14,298,500.00
was approved by the Controlling Board on June 21, 1999.
22
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23
REPORT OF INVESTIGATION FILE ID NO. 2000047, 2000244
cause to believe wrongdoing occurred when Mr. Tompkins entered into personal
contracts with AMS and Andersen shortly after leaving state service.
Throughout our investigation, Ms. Donna Givens was the common thread that
linked Andersen, Arnold R. Tompkins, and ODJFS. She previously worked with
Mr. Tompkins prior to his awarding her a consulting contract with ODJFS. Ms.
Givens was also under contract with Andersen to work on their contract with
ODJFS. She subsequently became a full-time employee of Andersen. As a result
of her connection with both Mr. Tompkins and Andersen, she was instrumental in
facilitating the approval of a lucrative unbid contract for Andersen while
simultaneously under contract with ODJFS. Correspondence between Ms. Givens
and other Andersen officials clearly indicated a strategy to utilize Mr. Tompkins
to facilitate additional Andersen contracts, and to position him to promote
Andersen upon leaving state government. Accordingly, we find reasonable cause
to believe that wrongdoing occurred when Ms. Givens facilitated an Andersen
contract while under contract with both ODJFS and Andersen.
24
REPORT OF INVESTIGATION FILE ID NO. 2000047, 2000244
D. REFERRAL
The facts uncovered during this investigation give rise to possible criminal
violations. Accordingly, a copy of this report was forwarded to the Franklin
County Prosecutor’s Office for their review.
The first part of this report dealt mainly with a state official involved in acts of
alleged wrongdoing. In this section, we more fully examine the circumstances —
in terms of the management and operations of ODJFS 8 — that allowed those
problems to occur. This climate led to tax dollars being paid to certain state
contractors for failed projects and improper expenses.
8
As in the last section, because the Ohio Department of Human Services (ODHS) and Ohio
Bureau of Employment Services (OBES) merged and became the Ohio Department of Job &
Family Services (ODJFS) on July 1, 2000, most references to the agency in this report will be
ODJFS for purposes of simplicity and consistency.
9
“State employee” is defined under Ohio Rev. Code Ann. §121.41(E) as “any person who is an
employee of a state agency or any person who does business with the state.” [italics added]
25
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AMS and Andersen were not working within the MIS standards.
26
REPORT OF INVESTIGATION FILE ID NO. 2000047, 2000244
Our purpose is not to conduct an audit of all transactions between all parties to
state contracts. To the extent that such an audit may be necessary, these matters
would be properly referred to the state auditor. Similarly, to the extent that
monies may be deemed recoverable by the state, this matter would properly be
referred to the attorney general. Our review of state contracts was specifically
focused upon whether there exists reasonable cause to believe wrongdoing was
involved in any aspect of the contracting process between ODJFS and certain
state contractors.
A. DISCUSSION
The events that are the subject of this investigation took place in the midst of
sweeping changes in the way the state administers welfare. In August 1996,
Congress passed the Personal Responsibility and Work Opportunity Act. The
Ohio General Assembly, in anticipation of this federal welfare reform, had
already passed House Bill 167. That legislation emphasized self-sufficiency and
gave counties the flexibility to create programs to help welfare participants obtain
and retain paid employment. Governor George Voinovich signed it into law in
1995.
In October 1997, the governor signed into law the state's welfare reform bill.
That bill, HB 408, was intended to fundamentally change Ohio's welfare system.
It replaced the Aid to Dependent Children program with two new programs
27
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Ohio Works First10 (OWF) and Prevention, Retention and Contingency. This was
intended to comply with federal mandates and change the system from one of
entitlement to one focused on employment, personal responsibility, and sustained
self-sufficiency.
OWF was designed to be a cash assistance and work readiness program based on
family need. It delegated significant decision making to the counties giving them
flexibility to create programs to fit the needs of particular communities. The state
was to provide counties with technical assistance and monitor performance
objectives set forth in partnership agreements.
Under OWF, the state, through ODJFS, was to enter into partnership agreements
with counties which would define their respective roles and relationship in
delivering social services. Time limits for compliance began to run when HB 408
took effect in October 1997.
The management changes within ODJFS were not as dramatic as the changes
above. However, they are critical to an understanding of what happened within
ODJFS. In 1993, Arnold R. Tompkins was appointed director of the Ohio
Department of Human Services before it merged with the Ohio Bureau of
Employment Services to become ODJFS. He served in that capacity until his
resignation on October 9, 1998. In September 1998, Jacqueline Romer-Sensky
resigned her position as Deputy Chief of Staff in the governor’s office where she
had also been an agency cluster chief. The Department of Human Services was
10
This program is not to be confused with “Ohio Works” discussed elsewhere in this report.
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one of the agencies she coordinated and she had been instrumental in hiring
Arnold R. Tompkins as director.
This part of the report addresses issues associated with the process of contracting
between ODJFS and certain contractors. It illustrates deficiencies in this process,
as well as certain perceptions; that led to many of the allegations raised in this
investigation.
Professional Fees
One concern expressed by those interviewed was that ODJFS paid too much
money for professional fees — particularly in the area of information technology
(IT). Our purpose is not to address the merits of outsourcing or privatization.
Those issues are policy matters properly within the discretion of management.
Our role is to determine whether the contracting processes associated with these
efforts functioned improperly or were unduly influenced by considerations other
than what was in the best interest of the state.
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11
We reviewed invoices from other contractors for professional fees. However, we particularly
scrutinized these contracts because each of these contractors later entered into private contracts
with Mr. Tompkins.
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In addition to the large amount of such fees, we found many examples where
Andersen fees were incorrectly calculated or there was insufficient documentation
for us to ensure an adequate review. These questionable invoices totaled
$279,000.00. This served as another reason for giving greater scrutiny to these
contracts.
Unbid Contracts
An issue raised by many in the course of this investigation relates to the use of
unbid contracts to obtain goods and services from contractors doing business with
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the state. Our purpose is not to question the use of these contracts generally.
Their propriety is a matter of law based upon the premise that economic as well as
emergency reasons justify waiver of this process. The Controlling Board is
authorized to waive an agency’s obligation to follow competitive selection for the
purchase of supplies or services. Rather, our purpose is to examine specific
circumstances where that process within ODJFS was misused or manipulated and
may not have resulted in a contract that served the best interest of the state.
Many contracts entered into with Andersen illustrate situations in which the state
might have been better served through a competitive selection process.12 The
Andersen contracts referred to throughout this report — including those involving
Donna Givens — identify general areas of concern relating to possible fraud,
waste, or abuse that arose as a result of the decision to not competitively bid these
contracts and to disregard standard policies and procedures in place at ODJFS
which were designed to avoid these problems. The particular contracts
underlying these concerns are analyzed in more detail later in the report. A
summary of those contracts is set forth below:
The first contract between Andersen and ODJFS was for a personal services
contract to provide technical assistance to the Interagency Workforce
Development Reengineering Task Force and consultative services to Mr.
Tompkins and his executive staff. Andersen was to create an interview guide,
12
The competitive selection process is the state's preferred method of purchasing services or
buying technology, that requires a major investment of funds. This process relies on competition
among vendors, which results in lower prices for the state. The competitive process also gives
equal opportunity for all vendors to compete for the contract, thus avoiding the appearance of
improprieties, such as showing favoritism in the contracting business.
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survey, and a written report. The contract period was from June 15, 1996, to
October 31, 1996. Compensation for these services was $49,500.00.
The second contract was for the period of October 14, 1996, through June 30,
1997. This contract was for consulting services to assist the state in developing a
"Master Plan" to describe how human services would be managed and delivered
in Ohio. Compensation for these services was $1,130,000.00.
The next contract involved two large amendments. It was for Ohio Works.
Initially, Ohio Works was intended to be an Internet application to match welfare
recipients with employers. The initial contract was for the period of August 21,
1997, to June 30, 1998. Compensation for these services was $1,688,000.00. The
contract was amended on March 23, 1998, to expand the scope of the work. The
term of the contract was extended to December31, 1998. This amendment
brought the total compensation for these services to $6,655,000.00.
On August 31, 1998, another contract was approved to run through June 30, 1999,
for $16,103,000. It essentially involved work on Ohio Works and included an
option for extension of the contract from July 1, 1999, through September 30,
1999, in the amount of $4,288,000.00.
Finally, a third Ohio Works contract for the period from July 1, 1999, to June 30,
2001, was awarded totaling $14,298,500.00.
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the Ohio JobNet system into Ohio Works, and also bring the system into
compliance with federal mandates.
Contracting Process
The standard or preferred way for procuring large projects of this nature involving
tens of millions of dollars is by competitive selection through the Department of
Administrative Services (DAS). As it is not always possible or advantageous for
the state to enter into competitive selection, DAS often grants purchasing agencies
a “release and permit.” Subject to a waiver of competitive selection from the
Controlling Board, a release and permit allows an agency to conduct its own
vendor selection process and to enter into a contract. While a purchase made with
a release and permit and a waiver of competitive selection is by definition outside
the standard process, the agency’s contracting procedure should include particular
principles to ensure the integrity of the contracting process.
One principle is to provide full, complete, accurate and reliable information to the
Controlling Board. The request for a waiver of competitive selection should
describe the project in its entirety, including the total scope of work, total dollar
amount and the length of time estimated to complete the project.
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While the state has various “boilerplate” contract provisions that are used by most
agencies, it does not have a model scope of work provision. However, there are
some common sense conventions as to what scope of work for a system as
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While the contracts do not expressly define what Andersen was to deliver,
they include a process by which the state and Andersen were to define the
services and deliverables before work began. Such documentation should
be incorporated into the contracts.
Acceptance Test
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However, this type of acceptance process does not protect the state from
accepting a system that materially conforms to the contract specifications
but fails to operate properly.
Warranty
Project Management
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Before February 2000, there were six different ODJFS personnel assigned
this task. However, each lacked experience with state contracts and did
not have the expertise to oversee a major IT project. This resulted in a
failure on the part of ODJFS to hold the contractor accountable. For
example, it was common to receive $1.5 to $2 million dollar monthly
invoices from Andersen for professional fees. Many of these invoices
were submitted and approved on the same day — some within hours of
receiving the invoice. A review of these invoices revealed the following
invoices were approved and paid on the same day:
323 hours for one employee for 1 month’s work at $110.00 = $35,530.00
385 hours for one employee for 1 month’s work at $130.00 = $50,050.00
436 hours for one employee for 1 month’s work at $157.00 = $68,452.00
492 hours for one employee for 1 month’s work at $250.00 = $123,000.00
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the answers to the above questions would have assisted in the determination of
whether or not the Workforce Development Program was such a project.
The foregoing section focused on the four most important tools for managing the
development of an information technology system: detailed design and
performance specifications; a good acceptance test; an adequate warranty; and an
engaged state project manager. The presence of these four things will go a long
way to negate the effect of most contract provisions that attempt to lessen a
contractor’s responsibility. Other observations we made in the course of our
investigation include:
13
This other process would be subject to the review and approval of the Controlling Board.
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In our view, the decision to not issue an RFP was flawed and resulted in a
more costly project. 14 The Ohio Works project was neither mandated to be
created, nor under deadline to be started, on any particular date. This
makes the decision to not issue an RFP for this project questionable.
Absent some compelling reason to forego the competitive selection
process, it is obvious that the issuance of an RFP in this case was
preferable to the manner in which these contracts were handled and would
have avoided many of the problems that were created in this case.
Costs of Contracts
14
An RFP would have included a description of the product or servi ce to be procured, a list of the
minimum requirements for the product or service sought, and a statement of the contract terms. It
might also include a statement of any desirable but non-mandatory characteristics of a proposed
service, product, or vendor and a list of factors other than price that will be used to evaluate the
responses.
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Invoice Errors
15
A review of invoices from one Andersen subcontractor, Cochran Public Relations, revealed
instances where the invoice Andersen submitted to the state was different from the invoice the
sub-contractor submitted to Andersen. This most commonly occurred when Cochran invoiced
Andersen after Andersen had prepared its invoice for ODJFS. When this occurred, Andersen
included the hours on a subsequent invoice. In one case, Cochran invoiced Andersen for four
months of work on two invoices. In turn, Andersen billed ODJFS on one invoice for all of these
hours billed to them by Cochran.
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Beyond the conventional items listed above that were missing from the
Andersen contracts, specific terms related to cost, deliverables,16 time
frames, and the manner in which work was to be performed, etc. were so
vague as to be of little use in measuring performance under the contract.
Determination of Deliverables
16
For example, Contract No. C-98-01-376 contains the following provision, "Deliverables are
expected to be a combination of discrete products and consultative services. The specific
deliverables under this contract will be jointly identified and defined in writing with the ODHS
Contract Manager."
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In our view, this was a crucial step in the management of these contracts.
It would have allowed the state to actually determine the deliverables and
provided both the contractor and the state direction.
Advice of Counsel
Many of the contracts we reviewed were based upon time and materials as
opposed to deliverables. In the contracts we reviewed, this promoted an
inefficient approach to contract management that encouraged contractors
to focus on receivables rather than results.
17
In a 1997 memo to the assistant director, agency counsel wrote they were concerned that the
contract is broadly enough drafted that there could be difficulty with accountability and pinning
down exactly that for which ODJFS would be paying.
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C. OHIO WORKS
Background
JobNet
The system collected federally mandated survey statistics for the Federal
Department of Labor (DOL) and has over 10 years of data on long-range
trend analyses. The DOL also places restrictions on how job placements
are executed.
18
OBES is the former Ohio Bureau of Employment Services. It is one of the two agencies which
merged to become ODJFS.
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Ohio Works
The system collects survey data from employers; however, this function as
is all of Ohio Works is not mandated by any Federal or State mandates.
The private study included a number of suggestions of how best to integrate Ohio
Works and JobNet. 20 Three are particularly relevant in light of some of the issues
that have arisen regarding contracts for the system. They are:
19
Eriss Corporation (Eriss), a California company that specializes in gathering labor market
information, developed the framework for the website.
20
The integration of Ohio Works and Ohio JobNet was not required by any federal or state
mandates.
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In the early stages of any project of this magnitude, problems may arise and
changes have to be developed and implemented. However, if there is a lack of
support personnel and a slow response to complaints, these problems cannot be
properly addressed. These problems are compounded when the user interface is
complicated or unreliable.
We found that the Ohio Works support desk often receives as many as one
hundred complaints a day. Yet, on many occasions, there was only one person to
respond to e-mails received at the Ohio Works support desk. Users have
experienced problems with accessing and using the system. Others, who have
done so, were often disconnected from the system.
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We reviewed costs associated with the Systems Operations Service Center. These
were costs associated with creating a production environment for Ohio Works.
The costs of facilities, telecommunications, and Help Desk support are included
in these costs.
Andersen leased space in the Huntington Building to house the operation of Ohio
Works. While it is not improper for Andersen to have secured facilities to
provide such services, it does illustrate another example of the lack of control
ODJFS exercised over the project. As a result, the facility has been used for
purposes other than Ohio Works.
Beyond site costs, other questions have risen regarding professional fees
associated with the center. A cost chart illustrating this is set forth below.
Professional fees are distinct from System Operations Services. The fees ranging
from $70.00 to $450.00 an hour are for salaries of people actually providing
deliverables (i.e., the designing, building, testing, or implementation of Ohio
Works).
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The contract states that the $3,255,350.00 for System Operations Services is for
third-party hardware and software to support web/application servers, database
servers, firewalls, and maintenance and disaster recovery. 21 In addition, it
represents the cost of facilities, including telecommunication charges, as well as
the cost of production Help Desk support. We asked ODJFS to provide
documentation for the cost associated with the System Operations Service Center.
We found that ODJFS never asked Andersen for invoices or expenses to justify
the price set in the contracts. This may account for the erroneous payment of
$314,000.00 alluded to earlier.
Andersen was asked to provide us with copies of invoices, contracts, copy of the
lease for the 23rd floor of the Huntington Building for the System Operations
Service Center, and payments for the project site expenses from inception to
current date. We issued a subpoena for that information. We encountered some
reluctance on the part of Andersen to provide us with this information, despite the
fact that a specific provision in the contract provides:
21
This includes ERISS's Pathfinder and Skill Match applications licensed by ERISS to ODJFS for
all 88 counties.
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After much negotiation and discussion, we received a partial list of expenses and
invoices from Andersen. Set forth below are some of the expenses Andersen
provided as being billed against the System Operations Service Center:22
22
On June 15, 2001, legal counsel for Accenture provided us a letter stating that certain items
originally provided to us to justify expenses and described as “for items purchased or rented by
Accenture for the Systems Operations Service Center, (‘SOSC’)” were not correct. He advised
that these expenses were indeed incurred in connection with other ODJFS contracts. However, not
all involved SOSC.
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We also noted that contracts we reviewed are unclear as to the issue of ownership
as it relates to equipment purchased for this project.
23
Subsequent to this date, CompuWare will perform the contract.
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Federal law mandated that states create an operational state-wide child support
enforcement system to meet the requirements of the Family Support Act of 1988.
In August 1997, HB 352 placed into law child support provisions of 1996 federal
welfare reform legislation. State and county agencies implemented federal
mandates and worked to develop a Support Enforcement Tracking System
(SETS). The Child Support Performance and Incentive Act provides graduated
financial penalties to meet guidelines of the Family Support Act. 24
In April 1996, Pickaway County became the first county to test the SETS system
as a pilot project. This was the first step in replacing the 88 county run child
support collection and disbursement systems with one automated state-wide
system. All counties were part of this system by October 1999. Other steps came
more slowly and resulted in deadlines not being met by the state and fines being
assessed under the same federal mandate.
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monies by the state. These matters of policy and law are more properly addressed
by ODJFS based upon advice of legal counsel. These matters are best left to the
courts. For purposes of this report, it would appear there is reasonable cause to
believe that state officials committed wrongdoing in withholding certain monies
from these individuals. However, this wrongdoing was a consequence of poor
judgment and a breakdown in communication25 rather than an attempt at personal
enrichment.
25
One example of the breakdown in communication has to deal with an “altered” memorandum to
the governor’s office from Jacqueline Romer-Sensky. The following summary is based on
interviews with Jacqueline Romer-Sensky, Brian Hicks, and Greg Moody:
On February 6, 2001, Governor Taft requested a written explanation from Director Jacqueline
Romer-Sensky explaining the improper withholding of child support payments to welfare
recipients and recommending solutions to the problem. The deadline for the memo was Monday
February 12th . On Saturday, February 10th , Greg Moody, the governor’s executive assistant on
health and human services issues, met wi th Ms. Romer-Sensky. She gave him the memo and, that
evening, Mr. Moody delivered the memo to the governor’s residence.
On Sunday, February 11, 2001, Mr. Moody went to work at the governor’s office. He gave a
copy of the memo to Mr. Brian Hicks to review for its “accuracy, thoroughness, and clarity.”
They wanted to change the last sentence in the second paragraph that stated, “ODJFS will share
this methodology prior to April 1, 2001.” The reason for this was that they felt it was “unclear,”
“sounded bureaucratic,” and “was not pro-active.” They also wanted to change the second to the
last sentence of the memo that stated, “ODJFS apologizes for any confusion we caused in
explaining this complex set of federal requirements or our implementation work plan to the
governor’s office.” The reason for this change was purportedly that they did not feel it was
accurate.
Mr. Moody called Ms. Romer-Sensky and participated in a conference call with her and Mr.
Hicks. Mr. Hicks explained that he wanted to change her memo. She was in agreement with the
first change, but expressed concern about the second change. She stated that she had adequately
explained the relevant federal regulations to the governor’s office in previous memos. Mr. Hicks
disagreed and insisted on the changes.
Based upon his recollection and notes taken during that conversation, Mr. Moody changed the
memo. The last sentence of the second paragraph was changed to, “This process will be underway
prior to April 1, 2001.” The second to the last sentence of the memo was changed to “ODJFS
apologizes for not explaining this complex set of federal requirements or our implementation work
plan to the governor’s office.”
While she was made aware that her memo was to be changed, she did not assent to any specific
language. In fact, she only saw the new language in her memo the following day when her
director of communications, Jon Allen, gave a copy of the revised memo to her. Mr. Allen
received his copy of the revised memo by fax from the Dayton Daily News. The memo was not
on ODJFS letterhead and had neither been signed nor initialed by Ms. Romer-Sensky. It had
apparently been faxed to the news media by the governor’s press secretary in Washington, D.C.,
Kevin Kellems.
A review of the above information led us to conclude there was not reasonable cause to believe
wrongdoing had occurred relative to the above acts.
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In September 1996, the Ohio Department of Job & Family Services (ODJFS)
Bureau of Internal Audits completed a financial audit of the Support Enforcement
Tracking System (SETS) project.
The bureau also offered an opinion outside the normal scope of a financial audit
dealing with the reasons for delay in the project becoming fully operational. This
opinion was based upon observations and interviews with current and former
ODJFS management and non-management personnel, vendors, and federal
contacts.
The audit cited weak management practices as leading to the delay of the project.
Eight of the fourteen findings dealt with management related issues. These
include:
• [The]…project was too large and complex for ODJFS managers to
effectively manage…
• ODFJS management failed to take responsive corrective action
after being alerted to problem areas…
• The complexity of the project was underestimated by ODJFS
management…
• Decisions vital to the completion of SETS were delayed or made in
haste…
• [Vendors] were allowed to work outside the scope of their
contracts…
• The first vendor contract…was based on deliverables; however,
the vendor did not deliver any significant results. Consequently, a
time and material’s approach was used for the majority of the
SETS contracts, placing increased responsibility on ODJFS
management..
• Progress reports were not utilized by ODJFS for the SETS
project…
• Due to changes in management personnel, a lack of continuity was
created leading to project tasks being unsupervised and without
direction…
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In May 1999, the Auditor of State’s Fraud, Waste, and Abuse Prevention Division
issued an operational review of SETS. This review provided a background of the
project and offered several recommendations to ODJFS. It found “control
weaknesses,” as well as a “lack of proper methodologies,” were being used to
modify and enhance the program.
The review concluded that ODJFS was continuing to struggle toward federal
certification for SETS and must face the future hurdle of meeting centralized
collection and disbursement by October 2000. Further, that SETS has not
historically been a model for system development. The reasons for this include
changes in federal legislation that resulted in a need for modifications and often
redevelopment of the program, problems with contractors, miscalculation of
hardware needs, and a lack of involvement by end-users in software development.
In addition, the audit found inherent problems with the fact the SETS program
centralizes a system from the county level to the state level, while welfare reform
legislation empowers counties to make business decisions for public assistance
programs at the local level.
Ms. Romer-Sensky requested an audit of the Ohio Child Support System by the
state auditor on February 16, 2001. (See Exhibit 16)
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One of the federal mandates brought about by welfare reform required the
creation and operation of an automated Centralized Collection and Disbursement
Unit (CC&D) for child support. ODJFS was designated to operate a CC&D
system for Ohio. States were to be sanctioned for failure to meet this deadline.
When Ohio and other states missed the initial deadline of October 1999, new
federal legislation was passed extending this deadline to April 1, 2000, with
enforcement to begin September 1, 2000.
In June 1998, Lockheed Martin IMS (LMIMS) submitted a bid involving eight
subcontracting firms, including Bank One. Their bid totaled $218,142,232.00,
over five years, which was approximately $70 million more than ODJFS had
projected for the project. An ODJFS review committee found 101 instances in
which the proposal did not comply with the terms of the RFP. In February 1999,
ODJFS cancelled the RFP when LMIMS indicated their bid could not be reduced
without substantial revisions to the contract requirements.
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REPORT OF INVESTIGATION FILE ID NO. 2000047, 2000244
In May 1999, ODJFS officials and Deputy State Treasurer James Harper met with
Governor Taft and his chief of staff, Brian Hicks. At the meeting, the Governor
verbally requested that the State Treasurer assist ODJFS with implementation of
the CC&D project.
The Treasurer’s Office and ODJFS decided that Bank One was the bank best
equipped to handle the CC&D project based upon the fact that they were already
familiar with the project. They also felt pressed for time since the state was
facing a federal deadline to have the CC&D project implemented and Bank One
had some familiarity with the project as a sub-contractor under LMIMS.
Additionally, the Treasurer of State already had established a Board of Deposit
Bank Agreement with Bank One as a depository for state funds.27
In June 1999, ODJFS and the State Treasurer’s Office began discussions with
Bank One. The contract in question is not new. Rather, it is an amendment to a
pre-existing contract the Treasurer of State had with Bank One. It was submitted
to the Controlling Board in the amount of $14,695,075.00 for fiscal year 2000 and
$28,679,158.00 for fiscal year 2001. In December 1999, the Controlling Board
approved addendum #11 to the Board of Deposit Bank Agreement, thereby,
26
Prior to the cancellation of the RFP, representatives of ODJFS approached then Treasurer
Kenneth Blackwell for assistance due to their inability to reach an agreement with LMIMS to
lower their cost. ODJFS understood that other states had developed their CC&D programs in
conjunction with their State Treasurer’s Office. Mr. Blackwell deferred the involvement of his
office until after the election, since a new treasurer would be taking office in January 1999.
27
The State Treasurer of Ohio utilizes many different depositories for various public accounts.
The State Board of Deposit, on a biennial basis, designates which banks are state depositories.
The State Board of Deposit is comprised of the Attorney General, the Auditor of State, and
Treasurer of State. The Treasurer of State functions as chair of the board. There are 256
designated depositories. Bank One is one o f those designated as a state repository.
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Our investigation into these events revealed there was no reasonable cause to
believe an an act of wrongdoing or omission occurred in this instance.
Andersen
In May 1996, Arnold R. Tompkins requested the first unbid Andersen contract in
the amount of $49,500.00. The contract was for consulting services in workforce
development. In October 1996, upon the request of Mr. Tompkins, the
Controlling Board approved an additional Andersen contract in the amount of
$1,130,000.00 to assist ODHS in developing a master plan on how human
services would be managed and delivered in Ohio. In August 1997, upon the
request of Mr. Tompkins, 28 the Controlling Board approved another unbid
$1,688,000.00 contract with Andersen Consulting to develop Ohio Works. This
contract was amended to bring the total amount to $6,650,000.00 In August
1998, upon the request of Mr. Tompkins, 29 the Controlling Board approved an
unbid contract in the amount of $16,103,000.00 with Andersen.
28
Mr. Tompkins rejected the vendor selection committee’s recommendation.
29
Mr. Tompkins requested the contract over the objections of a contract review committee and
ODJFS legal staff.
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Contract C-96-01-680
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Based upon Andersen correspondence dated May 30, 1996, we found that this
contract was entered into nine days after Andersen executive, Robert Tyre, met
with Arnold R. Tompkins.
This contract did not go to the Controlling Board because it was just below the
$50,000.00 threshold. However, we noted that no Justification Form was
prepared for this contract. This form is required to be submitted with every
contract. Further, the contract was not presented to the review committee and the
contractor did not undergo evaluation when the contract was completed. Both
these are required pursuant to ODJFS standard policies and procedures. We
found no explanation for this deviation from the norm.
Contract C-97-01-217
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This was not a competitively bid contract in that costs were only requested from
Andersen. However, four contractors were invited to make a presentation for
selection. The firms were Andersen, Macro International, Inc., Maximus, and
Deloitte & Touche. Andersen, the eventual selection, was the only one contractor
with cost figures included on the Controlling Board request. However, no cost
analysis was performed as required by ODJFS standard policies and procedures.
Nonetheless, ODJFS cited one reason for contracting with Andersen Consulting
was the fact that "Andersen had direct and recent experience in helping another
state develop a strategic master plan to position its human services department for
welfare reform and a block grant environment." In fact, this was not the case.
Upon further inquiry by the Legislative Budget Office, the ODJFS representative
responded that the “state” was actually New Brunswick, Canada. The Legislative
Budget Office responded,
If part of the reason for using a consultant to lead the welfare
reform restructuring is to benefit from that firm’s expertise, that
firm’s expertise on the issue becomes an issue in and of itself. It is
necessary to question whether the firm's knowledge of the
Canadian system places them at an advantage relative to Ohio in
terms of restructuring Ohio's system — or will the firm be learning
about welfare reform options (and gaining experience which they
can then apply to other states) at the same time the department
could be learning about welfare reform options and gaining
experience which could be applied to future restructuring effort in
Ohio.
Based upon our investigation, it is clear that the latter was true in this case.
In response to a question on the Justification Form that asked whether the contract
was a one-time project that will end with termination of the contract, ODJFS
responded that there was a possibility that they will contract with Andersen in
FY98 to assist in the implementation of welfare reform.
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A truly competitive process was not followed in this instance. No cost analysis
was performed. Further, the contract was not presented to the review committee
and the contractor did not undergo evaluation when the contract was completed.
Both these are required pursuant to ODJFS standard policies and procedures. We
found no explanation for this deviation from the norm.
Contract C-98-01-376
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This contract was unbid. No cost analysis was performed. A Justification Form
was not prepared for this contract. The form submitted for the amendment states
that this is an amendment to a sole-source contract. However, according to their
October 1996 Controlling Board request, several companies were able to perform
this work. The contractor did not undergo evaluation when the contract was
completed. Both of these are required pursuant to ODJFS standard policies and
procedures. We found no explanation for this deviation from the norm.
This contract came after a presentation by Andersen in May 1997. Mr. Tompkins
entered into a personal services contract with Donna Givens to act as liaison
between Andersen Consulting and ODJFS. During this time, Ms. Givens also
represented Andersen and actively participated in this presentation. Despite the
fact that two other firms scored higher with the selection committee, Mr.
Tompkins gave Andersen a portion of the work in the contract.
The deputy director of MIS for ODJFS and two of his top assistants scheduled a
meeting with Mr. Tompkins before this contract was executed. They expressed
their concern about the lack of MIS participation in the Decision Support System.
The main concern was that this was essentially the same system that the
department had already contracted IBM to develop. They advised that it would
adversely affect available resources, money, time, etc. Reportedly, Mr. Tompkins
told them they did not have to worry because Andersen was going to manage and
maintain the project. After the contract was executed, Andersen requested and
received all the source codes and general systems designs for the data warehouse
being designed by IBM. Ultimately, the Decision Support System was never
used. The costs associated with the system were in excess of $2.4 million.
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Contract C-99-01-128
The competitive process was not followed in this instance. No cost analysis was
performed. The contractor did not undergo evaluation when the contract was
completed. Both are required pursuant to ODJFS standard policies and
procedures. We found no explanation for this deviation from the norm.
The Contract Review Committee did not recommend Andersen for this particular
contract. The reason was that they could not justify the cost of the project and the
use of a sole-source provider. Nonetheless, Mr. Tompkins disregarded this
recommendation based upon what he stated was Andersen’s experience in this
type of work.
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only contractor with expertise on the system. This process did not begin until
June 2001 — well after the initiation of this investigation.
Certain language in this contract apparently paved the way for future contracts.
That language states the following in apparent anticipation that work may not be
complete at the end of the contract:
If future work was foreseeable, then this contract clearly should have been
competitively bid. If future work was not foreseeable, which appears unlikely, we
see no reason why this language has been included.
This contract also furthered the development of the Decision Support System
referenced above.
It is in this contract that the System Operations Service Center was created.
Issues associated with that center are addressed elsewhere in this report.
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This contract represents the third contract, excluding amendments, with Andersen.
Nonetheless, we found no indication that ODJFS officials questioned the lack of
any project manager, project plan, or cost analysis.
The competitive process was not followed in this instance. No cost analysis was
performed. A Justification Form was prepared for this contract and states that this
is an amendment to a sole-source contract. The contractor did not undergo
evaluation when the contract was completed. Both these are required pursuant to
ODJFS standard policies and procedures. We found no explanation for this
deviation from the norm.
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This contract was also for time and materials. It was not based on deliverables.
Further, there has been no reconciliation of Andersen invoices. This is necessary
in time and material contracts to track the rate in which hours are expended in
relation to work involved.
The amendment added the integration of Ohio Works and Ohio JobNet. Given
the increase over the original contract amount, one must question the use of these
amendments that simply raise the cost of foreseeable expenses.
This contract represents the fourth contract, excluding ame ndments, with
Andersen. Again, we found no indication that ODJFS officials initially
questioned the lack of any project manager, project plan, or cost analysis.
Donna Givens
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Arnold R. Tompkins worked with Ms. Givens in the 1980’s at the U.S.
Department of Health and Human Services. In February 1995, while under
contract with Andersen, Ms. Givens traveled to Ohio to explore business
opportunities. About that time, she introduced Robert Tyre, an Andersen partner,
to Arnold R. Tompkins. In July 1995, she entered into the first of her four
consulting contracts with ODJFS at an hourly rate of $125.00. In October 1996,
she became a sub-contractor for Andersen and began working at ODJFS under the
Andersen contract executed by Mr. Tompkins. In May 1997, she participated as a
representative of Andersen in a contract presentation to ODJFS. Ms. Givens was
under contract with both ODJFS and Andersen at the time.
In November 1997, Ms. Givens authored a strategy memo for Andersen. The
memo outlined strategy on how to obtain contract extensions with ODJFS through
Mr. Tompkins and how to “position” Mr. Tompkins upon his departure from state
government.
A summary of the contracts in question between ODJFS and Ms. Givens is set
forth below:
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The original contract provided for a $2,000.00 allowance for travel, food, and
lodging in this contract. This subsequent amendment to the contract increased the
amount by $3,800.00. Reimbursement under the contract was limited to actual
and necessary expenses subject to the limits as established pursuant to Ohio Rev.
Code Ann. §126.31 and §126.32 and Ohio Admin. Code §126-1-02.
Givens billed the state for time and expenses involved in traveling to and from her
place of residence, Washington, D.C., to attend meetings in Columbus required
under the contract.
Chapter 6000 of the ODJFS Standard Operating Procedures outlines the policy
and procedure to be followed in contracting for goods and services. These
procedures make it clear that contractors may not be compensated for time spent
in travel status. (See SOP 6105.5 Travel Expenses) Therefore, in our view, it
was improper for Givens to bill the state for time spent traveling to and from
Washington, D.C. and improper for ODJFS to pay the bill.
Further, the contract stated that the contractor's headquarters 30 shall be Franklin
County, Ohio. Therefore, Ms. Givens should not have even billed for travel
expenses involved traveling to and from Washington, D.C. and it was improper
for ODJFS to pay the bill.
30
Ohio Admin. Code §126-1-02 defines "Headquarters" as the office address at which a state
agent has his/her primary assignments or if a state agent's primary work assignment involves
scheduled travel, the place from which he/she can most effectively carry out his/her assigned
duties.
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Givens continued to bill the state for travel time and expenses, contrary to the
terms of these contracts. In addition, she submitted invoices for hours more than
those allowable under the contract.
This second amendment was dated August 18, 1995. Nonetheless, on August 4,
1995, Ms. Givens submitted an invoice for the month of July 1995. A summary
of that invoice and subsequent billings pursuant to C-96-01-368 are set forth
below:
July Invoice
63 hours @ $125.00 per hour = $7,875.00
Expenses 1,485.11
Total $9,360.11
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Improper amount paid on this invoice = $3,485.11 (16 hours @ $125.00 per hour)
August Invoice
118 hours @ $125.00 per hour = $14,750.00
Expenses 2,199.71
Total $16,949.71
Improper amount paid on this invoice = $4,387.21 (17.5 hours @ 125.00 per hour)
September Invoice
34.5 hours @ $125.00 per hour = $4,312.50
Expenses 644.76
Total $4,957.26
Improper amount paid on this invoice = $1,082.26 (3.5 hours @ $125.00 per hour)
October Invoice
6.5 hours @ $125.00 per hour = $812.50
Total $812.50
No overpayment - all work completed in D.C.
November Invoice
15 hours @ $125.00 per hour = $1,875.50
Expenses 398.76
Total $2,274.26
Improper amount paid this invoice = $ 398.76 (for expenses)
December Invoice
28.5 hours @ $125.00 per hour = $3,562.50
Total $3,562.50
No improper payment was made on this invoice.
Ms. Givens billed $33,188.00 for time and $4,728.34 for travel, food, and
lodging expenses. The amount that appears to have been improperly paid
under this contract is $9,353.34.
We find the same issues regarding excessive travel, food, and lodging expenses
with all the following other contracts entered into with ODJFS by Donna Givens:
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In the course of our review, we learned that this contract was originally for 80
hours. However, because that figure would have placed her compensation for
fiscal year 1996 over $50,000.00, it was changed to avoid the requirement that
this go before the Controlling Board.
A summary of the amounts invoiced pursuant to C-96-01-620 are set forth below:
April Invoice
10 hours @ $125.00per hour = $1,250.00
Expenses -0-
Total $1,250.00
No improper payment was made on this invoice.
May Invoice
40 hours @ $125.00 per hour = $5000.00
Expenses 350.00
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Total $5,350.00
Improper amount paid on this invoice = $787.50
(3.5 hours for flight time and travel expenses to D.C. on May 9, 1996)
June Invoice
25 hours @ $125.00 per hour = $3,561.45
Expenses 436.45
Total $3,997.90
No improper payment was made on this invoice.
The amount that appears to have been improperly paid under this contract is
$1,224.12.
A summary of that amounts invoiced pursuant to C-97-01-071 are set forth below:
July Invoice
129 hours@ $125.00 per hour = $16,125.00
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Expenses 1,526.52
Total $17,651.52
Improperly paid on this invoice = $4,151.52
(21 hours for flight time and travel expenses to D.C.)
August Invoice
123 hours @ $125.00 per hour = $15,315.00
Expenses 966.00
Total $16,281.28
Improperly paid on this invoice = $ 3,653.78
(21.5 hours for flight time and travel expenses to D.C.)
September Invoice:
78.5 hours @ $125.00 per hour = $ 9,812.50
Expenses -0-
Total $9,812.50
Improperly paid on this invoice = $1,312.50
(10.5 hours for flight time and travel expenses to D.C.)
October Invoice:
35 hours @ $125.00 per hour = $4,375.00
Expenses -0-
Total $4,375.00
Over paid this invoice = -0-
June Invoice:
10 hours @ $125.00 per hour = $1,250.00
Expenses -0-
Total $1,250.00
Our review revealed that 163 hours billed were for work in Columbus. Another
159.5 hours were billed for work performed in Washington, D.C. It is worth
noting that there is no documentation to demonstrate what consulting work might
have been done there. The remaining 53 hours were billed for travel, food, and
lodging expenses.
The amount that appears to have been improperly paid under this contract is
$7,805.30.
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A summary of the amounts invoiced pursuant to C-97-01-071, are set forth below:
July Invoice
96 hours @ $125.00 per hour = $12,000.00
Expenses $ 1,530.81
Total $13,530.81
Improperly paid on this invoice = $ 1,530.81
August Invoice
186.50hours @ $125.00 per hour = $23,312.50
Expenses $ 2,336.28
Total $25,648.78
Improperly paid on this invoice = $ 2,336.28
September Invoice
67.5 hours @ $125.00 = $8,437.50
Expenses 448.61
Total 8,886.11
Improperly paid on this invoice = $448.61
The amount that appears to have been improperly paid under this contract is
$4,315.70. This figure is based upon flight time and travel expenses as estimated,
based upon our interview with Ms. Givens. This brings the total amount that
appears to have been improperly paid under the four contracts with ODJFS to
$22,698.46.00. That figure is based upon DAS policies and the relevant contract
language.
In the fall of 1997, Ms. Givens wrote two letters to the legal department of
ODJFS to explain her approach to billing for travel time and expenses in light of
her work on behalf of both ODJFS and Andersen. She indicated that she divided
expenses between the ODJFS and Andersen contracts. She stated she started
work on the other Andersen contract on August 25, 1997, and worked 20 hours
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between that date and August 29th. During the same period of time, she claims
she worked 45 hours for ODJFS.
In addition, she also billed ODJFS for travel time during this period. As a result,
out of the 45 hours she billed, 7 hours were billed for travel time.
Ms. Givens returned to Columbus on September 2, 1997, and billed for work
through September 4th. For this period, she claims to have divided expenses
between ODJFS and Andersen, billing for such things as meals, hotel, and cab
fare. These expenses totaled $238.73. Similar expenses from September 9th
through 11th totaled $209.61. ODHS was billed for travel time during this period.
For the period from August 25, 1997, through September 30, 1997, Andersen
billed ODJFS for 207 hours @ $230.00 per hour totaling $47,610.00 for Ms.
Givens time. During that same period, Ms. Givens billed ODJFS for 96 hours @
$125.00 per hour totaling $12,000.00.
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In June 1998, Ms. Donna Givens’ last consulting contract with ODJFS expired.
In February 1999, she became a full-time employee of Andersen.
In June 1999, upon the request of Ms. Romer-Sensky, the Controlling Board
approved two additional unbid contracts with AMS. The first was in the amount
of $67,292,500.00 and was for the continued development and implementation of
an integrated system for the Temporary Aid for Needy Families (TANF) program.
The second was in the amount of $27,176,250.00 and was the contract renewal for
the SETS program.
31
AMS was already under contract with ODJFS to implement the SETS program.
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Most contracts with AMS dating back to 1995 have been competitively selected.
The only exception was Contract No. 98-261 for work related to welfare reform.
But, although this contract was not awarded through an RFP, it did go through a
competitive selection process where five vendors made presentations to a
selection committee. AMS was rated the highest out of the five vendors.
The AMS contracts have been managed by ODJFS. Although most are for time
and materials, ODJFS has taken the following steps to ensure that deliverables
were met:
• Purchase Orders are verified.
• Contractors’ names are verified to match the name assigned to PO.
• Wage rates are verified for each person listed on invoice.
• Invoices are checked to include contractor’s job description.
• Contractors’ signatures are matched with timesheets.
• State supervisor’s signature is checked on timesheet.
• Rates at which expenses are incurred are checked.
Travel and expenses are detailed and approved.
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We would agree that there are benefits to retaining a contractor throughout the
course of a project. However, as with Andersen, we are concerned where this
relationship is initiated with a small contract that begets another and another.
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F. FINDINGS
In this report, we have examined numerous instances where proper policies and
procedures have been disregarded in the course of awarding state contracts.
Many other incidents illustrate situations where mechanisms established to
provide oversight or guidance in this process were subverted or non-existent.
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Contracts were improperly based upon “time and materials” rather than
specific “deliverables.”
ODJFS failed to follow their own standard operating procedures relating
to the contracting process.
Invoices were not reconciled to ensure proper billing.
Contractor hours were not properly verified.
No contractor evaluations were performed as required after completion of
contracts.
No participation by MIS personnel in outsourced IT projects.
G. CONCLUSION
REVIEW OF AGENCY MANAGEMENT AND OPERATIONS
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The role of Donna Givens, an Andersen employee, was pivotal in the relationship
between Andersen, Arnold R. Tompkins, and ODJFS. We found reasonable
cause to believe wrongdoing occurred based upon the circumstances surrounding
her being under contract with ODJFS while she was doing business with ODJFS
as an Andersen employee.
It is worth noting the efforts of Ms. Romer-Sensky with regard to awarding state
contracts during her tenure as director. While we may question her judgment in
some instances, she did implement positive changes in the administration and
oversight of state contracts. Most notable was the creation of the Bureau of
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Contracts Office in August 1999. This bureau was created to bring more
experience to the process and allow for independent review by the ODJFS legal
department. The decision to rebid all major contracts was made. To ensure better
use of resources, provide management leadership, and to ensure projects are
completed on time and within budget, Ms. Romer-Sensky created the Project
Management Office in December 2000.
H. RECOMMENDATIONS
In the next few weeks, ODJFS will have a new director who will be charged with
restoring faith in this agency. However, it is important to note that since the
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resignation of Ms. Romer-Sensky, the department has been under the direction of
two interim directors and a management review team that has begun this work.
Specifically, they have:
dealt with budget cuts
avoided employee layoffs thru attrition and retirement incentives
dealt with public concerns over the closing of 56 employment offices in
favor of one-stop centers
persuaded Bank One to stop charging a $3 fee to non-customer parents
cashing child support checks
set up an external review of SETS
strengthened ties with county child support enforcement directors
repaid $1.5 million dollars of child support mistakenly withheld
strengthened the office of chief inspector
We recognize the efforts of all those involved in addressing many of the problem
areas discussed in this report and providing the new director with a firm
foundation upon which to build. In continuing the positive changes within
ODJFS, we offer the following administrative recommendations:
All state agencies should have the capacity to conduct internal audits of state
contracts. Larger state agencies should have a more formalized structure for
doing so. Such audits might be conducted periodically, randomly, or as may be
required under the circumstances. However, some system of review is required to
avoid problems revealed in this investigation. We recommend the agency take
steps to ensure they have the capacity to do this.
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We recommend that the agency perform its own audit of contracts with Andersen
and provide the results of their findings within ninety days of the date of this
report.
The investigative arm of the chief inspector must fully investigate complaints of
contract irregularities and have the ability to order audits of questionable
contracts. The chief inspector may also do background checks of private
contractors involved in state contracts to uncover improper relationships in the
selection process.
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that better documentation is available to justify any necessary deviations from that
process.
Minutes of the meetings of the Controlling Board should be recorded. Ohio Rev.
Code Ann. §121.66(C) states “the minutes of a regular or special meeting of any
public body shall be promptly prepared, filed and maintained and shall be open to
public inspection.” Additionally, an understanding of the business discussed
during these meetings would assist this office in investigations, as well as those
offices charged with oversight of state contracts. We recommend that the
Controlling Board begin creating and maintaining these minutes.
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I. REFERRALS
In the course of this investigation, this office has met with representatives from
both the auditor of state and attorney general offices. Based upon the fact we
have found reasonable cause to believe acts of wrongdoing or omission were
committed in the contracting process, we make these referrals for possible audit
and recovery of monies that may be due the state.
A copy of our report will also be forwarded to the Ohio Ethics Commission for
review and such action as they see fit.
VI. CONCLUSION
There is no way to overstate the immensity of the task involved in merging the two social
services agencies that were to become ODJFS. Moreover, it is not the purpose of this
report to opine as to the judgment involved in undertaking such a task. It was clearly
well intentioned and designed to better serve the citizens of Ohio. To be sure, one of the
tasks was to deal with the clash of cultures between the former agencies brought together
in this regard. These differences posed unique management challenges that needed to be
addressed by decision makers from the management level to the director’s office.
Similarly, our role is not to second-guess each of these determinations in hindsight.
However, regardless of the particular challenges faced by an agency, a certain level of
administrative acumen is required and is subject to our review and public scrutiny. It is
that type of decision making that we have reviewed in this report.
In examining the quality of management that existed at ODJFS during our period of
review, we are dealing with two administrations and two directors — Arnold R.
Tompkins and Jacqueline Romer-Sensky. In our view, Mr. Tompkins’ actions created a
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chain of events whose consequences were only exacerbated by the changes caused by the
merger. It seems apparent that many of the decisions he made — particularly toward the
end of his tenure as director — were based upon personal enrichment rather than sound
judgment exercised in the best interest of the agency.
Ms. Romer-Sensky, conversely, inherited a situation that appears to have been destined
for trouble. Issues relating to the merger of two agencies to form ODJFS, the evolution
of how it was to provide social services, and myriad political considerations further
complicated issues associated with doing business with contractors. However, while
probably inevitable, the degree to which these events adversely affected the agency could
have been minimized had they been recognized sooner.
In the final analysis, this report should serve as a caution to those who would misuse their
position for personal gain. As importantly, it should serve as a guide to possible
problems that can arise in awarding state contracts. Beyond honesty and fair dealing, the
citizens of the State of Ohio have the right to expect to receive fair value. This is best
achieved through adherence to established procedures in awarding state contracts and
establishing adequate oversight throughout the entire process.
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