The governor's office and Workforce Safety and Insurance agreed Tuesday to the specific scope of an outside audit into the agency.

Stemming from a request by Gov. John Hoeven, the outside auditor will examine WSI's management, human resources and claims processing procedures.

The auditor also will review claim outcomes going back to January 2005. It will be charged with looking at whether WSI's decisions were made "appropriately and with consistency," according to the bid proposal agreed to Tuesday.

Whatever firm is chosen will be looking into an agency that has endured turmoil during a 2006 internal investigation of an employee e-mail revealing salary information, charges against executive director Sandy Blunt stemming from the use of driver's license photos for that investigation, and five employees filing for whistleblower protection when Blunt returned to work this fall after the charges were dismissed.

The 2006 performance audit of WSI - conducted by state auditor Bob Peterson's office - found that the agency had troubles in management, human resources and procurement procedures.

Hoeven called for this outside audit last month after WSI internal audit manager Kay Grinsteinner reported that claims were being unfairly denied in the hopes that workers would not appeal the decisions.

The audit proposal was prepared by Hoeven's staff and the Office of Management and Budget, a state agency under the governor's office.

To help ensure independence and speed, it required bidders to have done no work with WSI for the last five years and to have their proposals in by Dec. 21. This deadline was moved to Dec. 28 after WSI board chairman Bob Indvik complained that a three-week timeframe would conspire with the holiday season to reduce the number of qualified bidders.

The firm will be chosen by the WSI board in early January, and a final report from the consultant will be due to the board on Feb. 15.

Ryan Bernstein, who serves as Hoeven's attorney and represented the governor at Tuesday's meeting, said a bidder's ability to get the process done within this proposed timeframe would be a primary consideration in choosing which firm gets the work.

"We want this done as quickly and thoroughly as possible, and I think we all recognize that," he said.

Bernstein said the office won't have any idea how much such an outside audit will cost until the first bids start rolling in.

Once those bids are in, the WSI board will choose among them using a scoring system set by the bid proposal.

Bernstein and Indvik disagreed at Tuesday's meeting over what level of participation Hoeven's office should have in picking the firm.

Indvik said active participation from the governor's office would eliminate any perception that the results of the audit are skewed in favor of WSI because WSI was solely responsible for choosing who conducted it. Bernstein countered that a fair process would be ensured because the board has to follow objective scoring criteria drawn up by the governor's office in the bid proposal.

(Reach reporter Jonathan Rivoli at 223-8482 or jonathan.rivoli@;bismarcktribune.com.)