Fears consultants are ‘gaming’ procurement with smaller contracts

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Joseph Brookes

The Senator leading inquiries into government’s use of management consultants has put the spotlight on the relationships between Boston Consulting Group management and senior bureaucrats after a series of its contracts fell just below a threshold for competitive tenders.

BCG has been prolific supplier to government technology projects and regularly provides advice, working on projects like the COVIDSafe app, but has worked widely across the federal government.

A group of its contracts have drawn the attention of Labor’s Senator Deborah O’Neil, who is leading scrutiny of large consultancies and their government work through multiple inquiries.

Senator Deborah O’Neil will chair another inquiry into consultants

Government agencies are allowed to directly approach a single potential supplier for procurements of up to $80,000. There are around 40,000 of these potentially uncompetitive tenders every year, but procurement rules mean value for money is supposed to be paramount.

An audit of government contracts published last year showed that the proportion of these contracts that start under the competition threshold but then go over it has doubled over the last decade.

Senator O’Neil said she is concerned the smaller contracts are adding up, while allowing consultancies to influence the public service.

“I have grave fears that there could be ‘gaming’ going on by sophisticated players who are being rewarded back at base – KPMG, EY, Deloitte, PwC – with what is lunch money to these companies but is really significant money for every taxpayer who is putting it into the pot for the advantage of the nation,” she said.

Boston Consulting Group  is not part of the so called ‘Big Four’ but is an increasingly popular government supplier and has united with the bigger firms to help mount a defence of the industry.

The company has been handed at least half a dozen sub-$80,000 federal contracts that are within a few thousand dollars of the threshold over several years. All of these are for just a month or less of work, except one which is for two months.

One of the BCG contracts was for advice to Austrade on public service scenarios over 5 weeks. It fell just $100 below the $80,000 competition threshold and was awarded after the firm had provided the initial scenarios report to the Department of Prime Minister and Cabinet.

BCG’s government lead Miguel Carrasco told a joint committee inquiry into consultants last week that the work “heavily leveraged” the earlier report but had to take on notice how the Austrade contract was secured and how the $79,900 price was decided.

Mr Carrasco told Senator O’Neil it was likely he has the personal contact details of several senior public servants as part of his role and that he holds several ‘ad hoc’ meetings with them in addition to project liaising.

“But I would say that we adhere to all of the requirements of any government tender process. You know, we abide by the requirements and the obligations as part of that process,” Mr Carrasco said.

BCG’s relationships with public servants were thrust into the spotlight last year when a Senate committee published its emails with senior bureaucrats. The emails are contained in a submission by a former public servant who alleged cosy relationships were helping the firm land lucrative government work.

The emails show BCG consultants in 2020 gave then Department of Social Services deputy secretary Nathan Williamson a “suggestion” on how to amend an initial $1.8 million contract to provide the firm with an extra $880,000 for more research.

According to the emails, former Social Services secretary, Kathryn Campbell also gave a verbal agreement to BCG for an extension before a payment rate was determined.

BCG has denied the allegations or insinuations of enjoying a cosy relationship with officials, and said the additional research and contract extension came at the direction of the department.

After a series of procurement scandals, the Department of Finance, which oversees procurement policy, has put 700 public servants from 22 agencies through additional procurement training since September.

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