The dollar value of contracts awarded by the Digital Transformation Agency to tier one management consultants has increased by nearly five times in the financial year since it was moved into Government Services Minister Stuart Robert’s portfolio.
In the 2019-20 financial year, the DTA handed significant contracts to large global consultancies including Deloitte, McKinsey and the Boston Consulting Group for work on some of its most important projects.
Several of these firms have barely worked with the DTA previously, with the amount of money flowing from the DTA to these consultancies increasing by huge sums in the 2019-20 financial year. The value of contracts awarded to several of these firms increased by more than 10 times.
Mr Robert was appointed as Government Services Minister, with the DTA falling under this umbrella, in May last year.
Since then, more than $30 million in contracts have been handed to Deloitte, McKinsey, KPMG and the Boston Consulting Group by the DTA, compared to just over $6 million in the 2018-19 financial year.
This equates to more than five times the amount of taxpayers’ money going to large consultancies in the most recent financial year from the DTA compared to the 2018-19 financial year.
The DTA was established by then-Communications Minister Malcolm Turnbull in 2015, as the Digital Transformation Office, in part to bring tech expertise within the public sector and to reduce the reliance on external contractors.
Mr Turnbull has since criticised the “cult of the consultant” within the Australian Public Service.
Many of the DTA’s most significant pieces of work, including the digital identity scheme, a revamped myGov platform and the COVIDSafe contact tracing app, have heavy involvement from these large consultancies.
In response to a series of questions on consultant usage at the DTA, a spokesperson said the composition of the agency is “actively managed”.
“External consultants and contracts are procured on an as-needs basis following standard Commonwealth government procurement guidelines and procedures,” the DTA spokesperson told InnovationAus.
“The composition of DTA skills and resources is actively managed to ensure we are best placed to deliver on key priorities (including COVID-19-based initiatives), adjusting our workforce as needed,” he said.
The increase in consultancy use corresponds with Mr Robert’s reign at the DTA, with the agency moved in with the newly created Services Australia in mid-2019.
A spokesperson for Mr Robert declined to comment, instead referring to the DTA’s response.
Deloitte is by far the biggest contractor with the DTA, thanks to the $23 million deal to develop a new myGov beta, GovDXP. In the 2018-19 financial year, Deloitte landed six contracts with the DTA worth more than $25 million, compared to two in 2018-19 worth just $623,000.
This equates to a 20-times increase in the value of business signed with Deloitte in the last financial year. The number is still a 4-times increase even if the large GovDXP contracts are taken out of the equation.
There was a 10-times increase in contracts handed to McKinsey in the 2019-20 financial year compared to the DTA’s five-year existence before this. McKinsey landed three contracts with the DTA in 2019-20 worth more than $2.3 million after not receiving any work from the agency in 2018-19.
The only time McKinsey has been contracted with the DTA before the most recent year was in 2015-16 when it landed a $260,000 contract for management advisory services.
McKinsey’s deals included work on a new visa processing platform and the development of a business case for the new version of myGov being worked on by Deloitte.
Global consultancy the Boston Consulting Group has enjoyed a tight relationship with the DTA in recent months.
Before July 2018 Boston Consulting Group had not won any contracts from the DTA. Since then, it has been awarded four contracts worth more than $1.3 million, with all of these – except for one worth $110,000 – awarded since the beginning of 2020.
This work included on the development of the contentious COVID-19 contact tracing app, and recent deals to develop a funding options analysis and whole-of-government ICT policy and governance.
Boston Consulting Group originally landed a $484,000 contract with the DTA for an advisory role on the development of COVIDSafe. It received an extension worth $200,000 last month, and this week landed another extension and a further $140,000.
DTA chief executive Randall Brugeaud worked briefly at the Boston Consulting Group from 2008 to 2010. And ex-DTA chief strategy officer Anthony Vlasic left the agency to join the consultancy in February 2020.
Mr Vlasic was replaced at the DTA by Scott Cass-Dunbar, a former technology and government advisory partner at KPMG.
KPMG is also a regular contractor with the DTA, raking up $1.365 million in tenders in 2018-19. This was a decrease from the previous financial year where the firm won just over $5.5 million in contracts with the DTA, but this included a more than $4 million deal on GovPass, the DTA’s digital identity project, which is still running.
Both McKinsey and KPMG also provided advice and support in the development of the new Services Australia department within which the DTA now sits.
In the last financial year, the DTA also called on another big four consultancy, PwC, for the first time, with a $440,000 deal for the establishment of the digital review.
Mr Turnbull, who established the then-Digital Transformation Office in 2015 as Communications Minister, recently raised concerns with the over-reliance on consultants in the public sector.
“You’ve basically had this ‘cult of consultants’ to the point where the skills for doing so many things that are really core business are no longer in the public service,” Mr Turnbull told InnovationAus in April.
“It’s worse in some departments than others, but the consultants who obviously make a fortune are, frankly, doing quite a bit of damage to the public service. They’re not doing it on purpose, I’m not saying that, but those smart people with those skills and those interests should actually be in the public service.
“You should only be using consultants to do things that are a little bit exotic, where you need a specialist expertise.”
The DTA’s internal workforce is also dominated by contractors and staff on short-term contracts. It was revealed last week that the agency has seen near-100 percent staff turnover in the last 18 months, with 215 staff members ceasing employment from July 2018 to February 2020. The total employment at the DTA as of February 2020 was 256.
The DTA has said these high turnover figures are due to the agency’s “agile” way of working, with high levels of short-term contractors and secondees from other departments within the APS.