State finalizes efficiency study contract with Alvarez & Marsal
Monday, October 5th, 2015 @ 5:26PM
TOPEKA—Work will begin Tuesday on a governmental efficiency study after the state reached an agreement with global professional services firm Alvarez & Marsal (A&M) last week to identify potential cost savings and service delivery improvements.
The newly signed contract with A&M includes three main objectives. The first is a comprehensive analysis of the budget through examination of spending trends and comparisons to peer states. The second objective includes efficiency and cost saving recommendations in areas such as the role of government, service levels and delivery, consolidation, internal and external shared services, and effective use of both technology and human resources operations. The final objective of the contract relates to the state budget process and areas where private and public sector best practices could be implemented.
The contract as negotiated will compensate A&M less than $2.6 million. A preliminary report to the legislature is due January 1, 2016, with a final report due no later than February 1, 2016.
A&M was selected after a competitive bidding process that elicited proposals from four firms, all of which went through a rigorous review process from the Legislative Budget Committee.
Last year, A&M conducted a multi-agency review in Louisiana that resulted in recommendations that, when fully implemented, would save the state $2.7 billion over a five year period. Last December, the state announced that “it was on track to reach the savings and efficiency goals outlined” in the A&M report.
Starting in 2013, A&M was engaged to provide financial leadership to address fiscal emergencies in Medicaid system in North Carolina. As a result the program recovered from a $487 million shortfall to a $63.6 million surplus the next year. Last year, the system ended the fiscal year with a surplus of $130 million. Equally important, credibility was restored around the agency’s financial projections, which previously had been notoriously unreliable.
“A&M has produced positive results for clients that range from the State of Louisiana to the New York City school system,” said House Appropriations Chair Ron Ryckman Jr. (R-Olathe). “I believe their efforts will lead to better services in a more efficient manner for all Kansans, which, they deserve and should expect. I’m very confident that this investment will deliver long term benefits for our state.”
The contract directs A&M to review state agency functions and domains, including the Department of Administration, insurance and employee health and welfare, real estate, procurement, technology, education, transportation, revenue and taxation, economic development, Medicaid and social services, and corrections.
“I’m impressed that A&M employs executives who routinely step in to act as interim CFOs, comptrollers, and other top leadership positions in organizations around the world,” said House Speaker Ray Merrick. “That kind of experience combined with a fresh perspective should provide us with the recommendations we need to make state government more efficient and effective.”
The motion to award the contract to A&M was approved by the Legislative Budget Committee with bipartisan support.
“I think the Legislative Budget Committee liked the fact that A&M executives made a point to testify on a regular basis in front of legislators, auditors, and stakeholders in Louisiana, some of whom weren’t on board with the study,” said Senate Ways and Means Chair Ty Masterson. “I think that illustrates they’re willing to build consensus and be collaborative. We also liked the fact they were able to more than pay for themselves within a matter of days.”
Founded in 1983, A&M is a leading global professional services firm that delivers business performance improvement, turnaround management and advisory services to organizations seeking to transform operations, catapult growth and accelerate results through decisive action. For more than a decade, the firm has been helping public sector entities operate more efficiently, provide services more effectively, implement business-like management systems and save taxpayers’ money.
A&M brings significant leadership, management and operational experience to this assignment. It includes individuals who have played key roles at federal and state agencies, in the not-for-profit sector, and in the corporate arena, having re-designed and restructured organizations and implemented new strategic plans.