This article is an excerpt from the 2020 edition of The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its June 2019 report entitled Departments’ use of consultants to support preparations for EU Exit, the UK’s Auditor General found that a small number of large consulting firms received a disproportionate amount of the government’s Brexit consulting support services work. By way of background, the report noted a significant overall increase in consulting costs since the Brexit vote:
The figures reported in departments’ annual reports for consultancy costs totalled £332 million for 2017-18, compared with £134 million for 2015-16. Cabinet Office informed us that it was working to understand the difference between the data sets and was planning to review trends in departments’ spending on consultancy and other professional services.
The report also noted that Brexit preparations posed a significant challenge to government departments:
Preparing for the UK’s exit from the EU has been a significant challenge for departments and has required skills that are in short supply. Government has long-standing skill shortages in areas required for EU Exit, such as project delivery and commercial skills. In summer 2016, following the EU referendum, 12 of the then 17 main departments had identified a ‘considerable’ or ‘significant’ impact to their capability in policy, operational and specialist skill areas.
The Auditor General found that six large consulting firms received 96% of the Brexit consulting work and that government departments failed to meet transparency standards by properly publishing the details of those contracts:
Six consultancy firms have received 96% of EU Exit work under the Cabinet Office arrangements. The Cabinet Office contracted with nine consultancy firms to provide services to departments for the first year of the call-off arrangement. Six of these firms were primary suppliers, to which the Cabinet Office allocated most of the work, by value: Deloitte (22%); PA Consulting (19%); PricewaterhouseCoopers (18%); Ernst & Young (15%); Bain & Company (11%); and Boston Consulting Group (10%). Most individual pieces of work with consultants (68%) ran for less than three months, but departments have regularly extended these; 43% of engagements with consultants have been extended at least once. There was a peak in extensions in April 2019, following the extensions of Article 50 and the changes in the date when the UK is expected to leave the EU. Departments continue to prepare for EU Exit and total spending on consultancy support will rise.
Departments have not met the standards of transparency expected by government when publishing details of contracts for EU Exit consultancy. In December 2017, the Crown Commercial Service issued guidance to encourage greater transparency in government procurement. It recommended that departments publish basic information about the award of contracts within 90 calendar days. We found that it has taken on average 119 days for basic details of EU Exit consultancy contracts to be published, compared with 82 days for all consultancy contracts. In our review of contracts for EU Exit consultancy we found that some had not been published as recommended and all that had been published were significantly redacted.
As this case study illustrates, even when faced with significant time-sensitive operational constraints, government institutions remain open to scrutiny in their use of consulting services and the transparency of those spending decisions. Public institutions should therefore establish proactive practices to ensure transparency in their spending decisions for time-sensitive portfolios.
