Does the government know how to get value from consultants?

28th July 2020

From The Institute for Government.

Government spending on consultants was rising again in the wake of Brexit, and its response to Covid has seen that trend accelerate. Consultants have a role to play, but they need to be properly managed if they are to offer value for money, argues Jill Rutter.

Consultancy firm McKinsey has won an £800,000 contract to support the Cabinet Office's civil service reform efforts. The question is why are McKinsey doing this work for what seems to be such a (relatively) low price tag?

We give one explanation in our new guide for people in government on using consultants: loss leader contracts and even pro bono work can be justified if they open the door to sell-on contracts. This is why strategy consultancies are increasingly expanding into implementation and the consultants that specialised in big project delivery are adding strategy to their offer. After helping to specify the reform that is needed, the consultancy is then singularly well placed to bid for the much more lucrative follow-up work, and successfully generating a pipeline of projects is a marker for advancement.

Those projects need to make a profit, so the key thing that civil servants and ministers need to remember when employing consultants is that they may be doing work that could be done by public servants - but they are private businesses whose aim is to make a return and keep their partners suitably remunerated.

If civil service reform is a top priority, then why is it being handed to a management consultant?

So what exactly does the Cabinet Office think it will get from its McKinsey contract? In our guide, we set out three reasons for using consultants: to buy in specialist expertise, to add resource and potentially to offer a second opinion. It is not clear why consultants offer value here.

There have been lots of attempts at civil service reform in the past - and that knowledge should be deeper within government, not outside. One benefit of consultants is that they can draw on their insights from other clients - other governments or other operations that have been through change processes. Government should also have the skills necessary to facilitate discussions on change and to develop a plan - but it may be that resources are too tight to manage this internally. However, if civil service reform is a top priority then having to contract it out seems to signal the reverse.

The most likely answer is that ministers want an outside opinion - and think change will be easier to justify if it seems to come from an external source. The danger is that clients end up getting the answers that they wanted in the first place – just in a better produced slidepack – and that what appears to be an externally developed reform programme then lacks the internal champions to take it forward.

Read the full article HERE