BCG govt work still growing after pandemic jump

Brandon How

Federal government contracts with Boston Consulting Group grew by another seven per cent in the last financial year after an explosion of government work during the pandemic, thanks in part to controversial deals with the Industry department and Digital Transformation Agency.

Overall, the federal government spent $42.6 million on Boston Consulting Group (BCG) services across 34 active contracts in financial year 2021-22, according to analysis of AusTender contract data undertaken by The increase in government spending with the consultancy builds on BCG’s mammoth 2021-22, when its revenue from federal contracts jumped 120 per cent.

It now costs government agencies an average of more than $15,000 a day to engage the services of BCG. For one project with IP Australia it is as high as $32,00 a day.

The most frequent contractors were the Department of Health, Department of Defence, and Services Australia, each with five contracts with the global giant. Defence spent the most on BCG contracts in the year, followed by IP Australia and the former Department of Agriculture, Water, and the Environment.

Boston Consulting Group headquarters in Massachusetts, United States. Photo: Tada Images/Shutterstock

The figures are based on AusTender data and represent the actual dollar amount paid to BCG during the financial year, rather than the value of the contracts awarded in the year.

The Department of Industry, Science, and Resources spent around more than $3 million with the consultancy, of which $2 million was for ‘professional advice’. The multi-million dollar advice was split across two contracts, citing a need for ‘independent research or assessment’, and need for ‘specialised or professional skills’. But it drew the ire of the then-Opposition Labor party and the public sector union.

According to the Coalition government at the time, the $385,000 contract for ‘independent research or assessment’ was for “a review of the portfolio’s program suite”.

In October 2021, the public sector union accused the federal government of “wasting money and undermining the role” of the public service. The following month, a Digital Transformation Agency contract for the delivery of similarly reported “strategic advice and professional services” over nine months with BCG nearly tripled in value from $275,000 to $750,000.

A third Industry department contract with BCG was worth $1 million over two months, roughly $125,000 a week, for the production of supply chain resilience reports on semiconductors and telecommunications equipment to support the Coalition founded Supply Chain Resilience Initiative.

About 29.2 per cent of the government’s spend with BCG was through the Department of Defence, with contracts totalling more than $12.4 million. All these contracts were for management advisory services according to AusTender disclosures, with two having started before financial year 2021-22.

IP Australia was the federal agency that spent the second most on Boston Consulting Group contracts, with two of its three contracts for work on an ‘operating model for innovation and investment’. The total value of these contracts for 2021-22 was just under $4.4 million, with some of the work stretching into financial year 2022-23.

The largest single contract was with the former Department of Agriculture, Water, and the Environment, at just under $4.3 million, for the broadly described model delivery, consultancy services, and reports. This is on par with the $4.2 million spent on four contracts by the Department of Education, Skills, and Employment.

In October, Finance and Public Service minister Katy Gallagher announced plans to establish an in-house consulting model to rebuild “core capabilities and functions” within the Australian Public Service.

Ms Gallagher said at the time that work was underway “on a model for the government to consider by the end of the year”. This was proposed in a Senate inquiry in 2021 into the APS’ capability, among a suite of other reforms.

Prior to the election, Labor promised to cut spending on consultants by $3 billion over four years to halt the process of “privatisation of the APS by stealth”.

A federal inquiry is currently examining Commonwealth procurement after repeated warnings from the Australian National Audit Office about deficient government buying processes.

Do you know more? Contact James Riley via Email.

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