The Maine Department of Health and Human Services has canceled its controversial contract with the Rhode Island-based Alexander Group because the consultant’s report on Maine’s welfare system contained passages that were plagiarized.

In addition to withholding $450,400 that has not been paid on the contract of about $925,000, the DHHS is demanding a refund of $27,000. According to the department’s plan, The Alexander Group will keep $474,760 for work it completed – $239,075 in state money and $235,685 in federal dollars.

“After thorough consideration of the performance of the provider and the remaining work outlined in the contract, DHHS has terminated their contract with the Alexander Group,” the department said in a written statement Friday. “We determined there was value contained in the content that was produced under this agreement. But serious problems with citations in the text of two reports warranted both financial penalties and an end to future work to be performed under the contract.”

When allegations of plagiarism first surfaced in May, DHHS Commissioner Mary Mayhew minimized the errors, backed the report’s findings and said attacks on the contract and the consultant were partisan.

“We are also concerned that the media and Democrats have chosen to politicize punctuation over policy,” Mayhew said at the time.

The Alexander Group was found to have copied extended passages from two freely available papers by the Center on Budget and Policy Priorities, a Washington, D.C.-based think tank.

A second analysis, by a plagiarism specialist at Dalhousie University in Nova Scotia, uncovered five other instances of missing or improper attribution in the most recent section of the report that The Alexander Group delivered, a long overview of the state’s current public assistance programs.

The second analysis was done at the request of Mike Tipping, communications director for the liberal Maine People’s Alliance and a columnist for the Portland Press Herald.

The Alexander Group submitted four of the five studies the state hired it to conduct.

In a statement Friday in response to questions from the Portland Press Herald, Gary Alexander, president and CEO of The Alexander Group, acknowledged the errors, and said that “so much as a comma out of place, or in this case, missing some citations,” is a failure to live up to the firm’s high internal standards.

“But grammatical errors do not undermine the substantive analysis and policy recommendations offered by the reports,” he said. “Our goal was to give Maine practical reforms to help lift the poor out of poverty and support the neediest like the intellectually disabled, poor children and elderly while delivering value to the taxpayers. The work we did will save the taxpayers of Maine hundreds of millions of dollars over the next ten years.”

Alexander did not respond when asked whether his firm will give the state a refund.

The contract’s cancellation follows heated debate among lawmakers over the value and validity of Alexander’s work.

Democrats have said that Alexander’s assessment of state assistance programs amounted to a government-funded campaign tool for Gov. Paul LePage, who has spent large amounts of time and political capital in his attempts to root out welfare fraud, a key issue in his re-election campaign.

Democrats also criticized Alexander for missing deadlines and for a $575 million rounding error that overstated the cost of expanding MaineCare, the state’s Medicaid program.

Republicans said that it was within LePage’s power to hire The Alexander Group, and that the Legislature shouldn’t meddle in the executive branch’s business.

A portion of the report that Alexander delivered recommended against expanding MaineCare.

LePage vetoed expansion legislation in the legislative session that ended in May, and has said repeatedly that expanding the health care program for the poor would be financially disastrous for the state, despite federal guarantees to cover most of the costs for states that participate.

When news of the plagiarized passages surfaced in late May in an editorial by the Bangor Daily News, LePage halted payments and vowed to get to the bottom of Alexander’s poor attribution practices.

“I will take every action we can,” LePage said in a statement at the time. “I am not happy about this.”

LePage was in England on a trade mission Friday, and his director of communications, Peter Steele, did not return two requests for comment.

Democrats who have been calling for the contract’s cancellation for months jumped on the DHHS’s announcement Friday, with House Speaker Mark Eves calling it “an egregious waste of taxpayer dollars.”

“This was a rush job for a political ally that would produce a report that would align with the governor’s talking points,” Eves said.