Does the government know how to get value from consultants?  

Consultancy firm McKinsey has won an £800,000 contract to support the Cabinet Office’s civil service reform efforts. The question is why are McKinsey doing this work for what seems to be such a (relatively) low price tag?

We give one explanation in our new guide for people in government on using consultants: loss leader contracts and even pro bono work can be justified if they open the door to sell-on contracts. This is why strategy consultancies are increasingly expanding into implementation and the consultants that specialised in big project delivery are adding strategy to their offer. After helping to specify the reform that is needed, the consultancy is then singularly well placed to bid for the much more lucrative follow-up work, and successfully generating a pipeline of projects is a marker for advancement.

Those projects need to make a profit, so the key thing that civil servants and ministers need to remember when employing consultants is that they may be doing work that could be done by public servants – but they are private businesses whose aim is to make a return and keep their partners suitably remunerated.

If civil service reform is a top priority, then why is it being handed to a management consultant? 

So what exactly does the Cabinet Office think it will get from its McKinsey contract? In our guide, we set out three reasons for using consultants: to buy in specialist expertise, to add resource and potentially to offer a second opinion. It is not clear why consultants offer value here.  

There have been lots of attempts at civil service reform in the past – and that knowledge should be deeper within government, not outside. One benefit of consultants is that they can draw on their insights from other clients – other governments or other operations that have been through change processes. Government should also have the skills necessary to facilitate discussions on change and to develop a plan – but it may be that resources are too tight to manage this internally. However, if civil service reform is a top priority then having to contract it out seems to signal the reverse. 

The most likely answer is that ministers want an outside opinion – and think change will be easier to justify if it seems to come from an external source. The danger is that clients end up getting the answers that they wanted in the first place – just in a better produced slidepack – and that what appears to be an externally developed reform programme then lacks the internal champions to take it forward.   

There are ways for the government to make sure it gets what it needs from consultants 

So how can the government get the most from consultants? Our first big piece of advice is to know who you are buying. The big cost for consultants is staff, so they have every incentive to economise on the input of their senior staff and move as much of the project to their lower-paid colleagues. The list of impressive CVs on the bid may not be the people who show up in your office.   

Our second piece of advice is to make sure you set clear, regular deadlines and make clear what you expect to get by them (deliverables) – and have a rapid process to solve problems if you are not getting what you want, if necessary by involving senior people on each side (escalation). But that can only happen if you are clear in your own mind why you need consultants and what you expect them to do for you – bringing in consultants because you don’t know what you want is one of the reasons why commissioning can go very wrong.  

Another important recommendation in our guide is that civil service commissioners of consultants should make sure they specify upfront that the consultants will show their workings and share all their background material that justifies their findings to expose the evidence base. That should reduce concerns about consultants just playing to starting prejudices.   

We also advise that the exit strategy is agreed at the start of the contract. That means there needs to be a clear handover plan, built in from the start, not added in at the end, and time allowed in the initial bid for training up the in-house staff who may need to take recommendations or a new system forward. It’s in consultants’ interests to leave the client needing to rehire them at the end of the contract, and it is in government’s interests to make sure that it has freedom at the end to decide both whether it still needs consultants – and which consultants it needs.  

What skills does McKinsey offer that the civil service can’t provide? 

It would appear that the government believes it needs McKinsey, with ministers apparently thinking that the firm is a good training ground for senior positions: Tom Shinner, newly departed from a senior role in No.10, cut his teeth there; the new permanent secretary at the Department for Business, Energy and Industrial Strategy, Sarah Munby, is also a recent recruit from McKinsey.

Maybe one of the items on the civil service reform agenda should be to ask what skills do those consultancies offer their staff that the civil service doesn’t, and ask whether, rather than having to hire those skills in repeatedly, it would be better to build them internally.