Floodgates open for consultants in pandemic year

James Riley
Editorial Director

Multinational management consulting firms have enjoyed an extraordinarily good year in Canberra. Federal government spending on advice and services from the global outfits soared by hundreds of millions of dollars during the 2020 pandemic compared to virus-free 2019.

Spending with the global consulting houses jumped by 23 per cent in 2020, a sharp increase of more than $225 million for the calendar year, from $991 million in 2019 to more than $1.21 billion in 2020.

An investigation of federal government tenders’ data by InnovationAus.com found virtually all of the consulting giants enjoyed a bumper year during the pandemic.

The good paddock: Global consultants enjoying a pandemic boom in Canberra

KPMG’s federal government revenue swelled by $43.5 million during 2020, up 21 per cent from $203.3 million in 2019 to $247.9 million.

This included a 261 per cent increase in work with the Health department and a $50.4 million increase in spending with the company by the Department of Defence, a growth rate of 35 per cent for 2020 over 2019.

KPMG’s stellar performance is by no means a stand-out.

Deloitte grew its federal government business by 36 per cent for the year, growing revenues by a staggering $57.5 million, from $156.7 million in 2019 to more than $214.2 million in the 2020 COVID year.

Deloitte’s numbers included a 106 per cent increase in revenue from the Industry department for the year from $8.1 million to $16.6 million, and a more than ten times increase in revenue derived from the Digital Transformation Agency, from $2.3 million to $29 million.

The InnovationAus investigation started from a simple hypothesis: That federal spending on management consultants increased during the pandemic. Looking at the government’s own data at tenders.gov.au, we compared spending during the 2019 pre-pandemic calendar year with government spending during the COVID year 2020.

The calendar year data is somewhat confused by the publishing of all contracts – including multi-year contracts – that were active for a least part of the reporting year.

Our investigation took into account the length of each contract, calculated the per-day value of each contract, then calculated the number of days the contract was active during a particular calendar year and the specific value of the contract that could be applied to that year.

It is not a perfect methodology but gives a far clearer picture of year-on-year growth in spending than the raw data provided by the tenders.gov.au website. If anything, the methodology underestimates the growth in spending with the consultants for the year.

Of all the global consulting giants, only PwC’s revenues derived from government remained flat at about $189 million for both 2019 and 2020. This is understood to have been the result in part of a drop-off in work at Services Australia.

But the company enjoyed stellar revenue growth in other parts of government. Revenue from the Health department jumped by more than 110 per cent from $6.6 million to $14.2 million, while revenue from the Defence department climbed by $60.8 million to $127 million in 2020, an increase of more than 90 per cent.

In the coming days, InnovationAus will publish detailed breakdowns of individual departments and agencies with the global consulting houses.

Do you know more? Contact James Riley via Email.

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