I like to think I am as mulishly resentful of overpriced management consultants as the next wage slave. Who do they think they are with their high-flown jargon and their fancy flow charts and did I mention how outrageous their fees are?
But before we all march off to storm the Langevin Block over the latest report of the federal government’s skyrocketing use of outside consultants, it is perhaps worth pausing to ask a few questions.
The numbers, to be sure, are eye-popping. Under the Liberals, the annual bill for private providers of “professional and special services” – management advice, IT support and the like – has increased by 74 per cent, from $8.35-billion in fiscal 2016 to nearly $15-billion in 2022. Of the tens of thousands of such contracts (more than 283,000, by one count) signed in that time, nearly two dozen, worth about $100-million, were awarded to McKinsey & Company, the global management consultancy headed until 2018 by Dominic Barton, an influential adviser to the government and former ambassador to China.
Now, $15-billion is a lot of money, even if it was only 3 per cent of federal program spending last year. And while the share going to McKinsey may not seem large, either in proportion to the total of $69-billion spent on outside services since the Liberals took power, or the similar amount in revenues the company collected from all sources over the same period, it’s still legitimate to ask whether it might be a sign of a too-cozy relationship between the company and the governing party, especially in light of this government’s previous record of cronyism.
But asking is not the same as answering. It sounds shocking to hear that spending on outside consultants increased by 74 per cent over six years, until you discover that total program spending increased by more than 75 per cent in the same period. The number of consultants doing business with the federal government may be proliferating, but so is the number of federal employees, up more than 30 per cent since 2015.
It’s safe to assume that private-sector advice came at a premium over the advice they might have received simply by consulting in-house staff, who after all are already on the payroll. While hourly compensation for members of the federal public service is roughly 50 per cent higher than for their private-sector equivalents, it is probably less than for top-drawer consultants.
But it’s not enough, for prudent budgeting purposes, to say something cost more than something else. You have also to ask what benefit each produced: the value for money.
Very well. Did the service the private consultants performed provide more benefit to the government than it could have received by sourcing the same services in-house – and was the extra benefit, if any, sufficient to justify the extra expense? Did it provide a return on investment – whether in improved quantity/quality of government services, or savings on government costs – that was as good or better than might have been obtained from putting the same funds to another use?
I don’t know the answer to these questions, and neither do you. It’s tempting to simply dismiss the work of consultants as so much hocus-pocus – paying “these advisers from outer space,” as Conservative Leader Pierre Poilievre put it, for “a bunch of PowerPoint presentations” that “provide no value” – but we don’t actually know this, even if it plays to current popular prejudice.
Maybe the work they produce is completely useless. But would Powerpoint presentations prepared by fully paid-up members of the Public Service Alliance of Canada be any less useless? Certainly we have no reason to take the latter’s word for it: the private consultants are their competition, or the nearest thing to it they are ever likely to encounter.
Even if the consultants charge a higher hourly rate, they are paid only for services rendered, and then let go. Often this is for highly specialized, infrequently performed work – computer system overhauls are a particular example – requiring the sort of skills the public service simply doesn’t possess. Nor, arguably, should it: the savings from keeping someone with comparable training and experience on the federal payroll full-time on the off-chance their services might be required may be doubted.
None of this is to say there is no problem here. The $54-million cost of the ArriveCan app and similar debacles raise the question of whether federal officials are negotiating the best possible terms on these contracts, or with sufficient oversight and accountability. So yes, the rising cost of federal contracts should certainly be closely investigated. But so should the rising cost of federal everything.
Andrew Coyne