MPs under fire for £3bn IT consultancy bill
PAC decries government 'profligacy'
MPs and unions have lambasted the government for spending £3bn on external advice in areas such as IT.
Parliament's all-party Public Accounts Committee has hit out at the government's "profligacy" for spending nearly £3bn on consultants, without a clear idea of the benefits.
Spending on consultants has risen by a third to nearly £3bn over the last three years, with the NHS accounting for most of this increase, says the committee's report, published on 19 June 2007. Whitehall departments are repeatedly using consultants for core skills, including project and programme management and IT.
"It is impossible to believe that the public are receiving anything like full value for money from this expenditure," said committee chair Edward Leigh.
"Departments are often on the phone to consultants without first finding out whether their own in-house staff have the skills to do the job. Even worse, departments and the Office of Government Commerce do not know how much is being spent on consultancy."
Since the committee last reported on the issue in 2002, the government has made only limited progress on its recommendations. Likewise, many of the recommendations from a report in 1994 by the Cabinet Office Efficiency Unit have not been fulfilled.
Over the last three years IT consultancy and project management skills accounted for 54 per cent of total government spend on consultants. But consistently relying on external consultants for basic skills is expensive and, over a period of time, represents poor value for money, according to the MPs.
The Public and Commercial Services Union (PCS) has accused the government of cutting 100,000 civil and public service jobs and then making increasing use of consultants to plug the gaps, often at up to 10 times the cost.
The union cited the "ludicrous situation" at HM Revenue and Customs, which sought to save £105m in the last year by cutting staff, yet spent £106m on management consultants who have often been doing the same work as civil servants.
Mark Serwotka, PCS general secretary, said: "Rather than investing in its own workforce, the government have effectively given management consultants a licence to print money at the taxpayer's expense."
Departments must identify core IT skills gaps and decide on the most cost-effective use of internal and external resources, planning recruitment and training accordingly, the report says.
The report acknowledges that if consultants are used appropriately, they can provide considerable benefits. It gives the example of the Ministry of Defence's saving on procurement, after using consultants to help develop new buying methods.
Overall, departments have to adopt a much more intelligent approach to the use of external consultants and be more commercially aware in procuring consultants, drawing up fixed price contracts or ones that include incentives.
The committee's findings are based on a report by the National Audit Office published last year, as well as evidence from government buying agency, the Office of Government Commerce.
This article was originally published at Kablenet.
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"Unfortunately, the way this usually works is the infrastructure company comes in with a fixed price quote, and then proceeds to deliver utter garbage that, through some strange twist of logic could be said to meet the requirements. The big companies then proceed to milk the government department dry with change requests in order to get the software doing what they wanted in the first place."
This is so true of the Agency I work for and I agree is no doubt standard practice across the industry.
Re consultants, it also rings true of them getting paid 10x (no exaggeration) the wage for civil servants sitting next to them as does giving them project management responsibilities - essentially a blank check book, and in many cases the consultants managing the subcontractors.
I agree that a lot of this is down to employment policy, it starts with the Directors fear of taking on staff for what seems like a short-term project, or fear of lack of expertise so turn to consulting agencies. What inevitably happens is instead of getting rid of them after the planning stage they niche themselves as indispensable and end up running the Agency.
We have recently turned the tables on a group in my dept by direct recruiting of IT professionals and to be honest they are making the consultants look like amateurs. The answer is allowing gov depts the freedom to take on middle management staff and professionals on short term contracts and cut out the middlemen. I honestly don't know how they are allowed to get away with the price they charge through consultancy agencies, and for so long, it really beggars belief.
Don't confuse Civil Service with Government!
"Which is completely useless when the civil servants wipe their collective arses on what the PAC and NAO say, and go to the consultants anyway."
Do you think the Civil Service even at the higher levels suddenly decided to do this? If you do then you credit them with autonomy they do not have. It is the elected Government which is forcing the Civil Service to axe jobs and use consultants. Gordon Brown even has even set targets for amount of private sector (consultants) the Civil Service should be using.
The Civil Service would prefer not to be doing this but they have no choice as the Government controls the budgets and the policy and Gordon Brown wields these two instruments of control without mercy or compassion.
The consultants aren't the only rip-off merchants
I used to be a management consultant at one of the big firms and whenever i spoke to people on government jobs, a few things became clear:
1) None of the consultants on the job wanted to be there - the knew that they were the fall guys for incompetent gov ideas
2) Whenever money saving ideas were proposed by consultants, they were deemed to be bad or unworkable - the Department of Work and Pensions were amazingly lax in terms of expenditure and never wanted to contemplate ideas which could upset the apple cart
3) Nobody in the public sector was ever prepared to make a decision - therefore you take at least twice as much consultant time up (and they are paid by the hour) than you ought to because nobody can commit to anything
4) There is no urgency to get anything done - god knows how the Olympics will work if gov are involved.
It was always seen as decent money (although gov got healthy discounts compared to private sector) but never a pleasure from the consultants on the ground.