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Category: McKinsey

  • ANAO to scrutinise Australia’s vaccine rollout

    The national audit office will put a spotlight on Australia’s troubled vaccine rollout, with an inquiry to report back early next year.

    The Australian National Audit Office (ANAO) has launched an audit into the vaccine rollout, which has been plagued by delays, supply issues and concerns around a reliance on labour hire and private consultants.

    The ANAO will accept submissions on the issues until 30 January 2022, and is expected to table its report in April next year.

    “The objective of this audit is to assess the effectiveness of the planning and implementation of the COVID-19 vaccine rollout,” the ANAO said.

    The national audit office will examine Australia’s troubled vaccine rollout and provide a report early next year

    Australia’s vaccine rollout began in February. More than 10.5 million people have had at least one dose and more than 6 million people are fully vaccinated. The federal government initially planned for all Australians to have received both doses by October, but has since revised the target.

    The audit will specifically be looking at whether the vaccine rollout has been effectively planned, if effective governance arrangements have been established to manage it and if the rollout has been effectively implemented.

    The audit will likely look in-depth at Department of Health decisions around vaccine supply and sourcing, along with eligibility criteria and advice to individuals on receiving the vaccine.

    It will also cover the Department of Health’s use of private consultants to assist with the vaccine rollout.

    On Christmas Eve last year the Department announced that multinational consultancies PwC and Accenture had received significant contracts to assist with the vaccine rollout.

    PwC is being paid nearly $1 million each month this year as part of its role as the program delivery partner for the vaccine rollout, under a contract kept secret until this month, despite it being signed nine months ago.

    PwC’s role in the vaccine rollout and what it has delivered remain largely unclear, as is how the consultancy is working with the vaccine taskforce stumped up recently by the federal government.

    Accenture has received nearly $20 million from the Department of Health for data and software solutions in relation to the vaccine rollout. There are ongoing concerns about the level of data available on the vaccine rollout, and how this is being communicated to the public.

    Fellow big four consultancy McKinsey was also paid nearly $2 million late last year to assist with the vaccine rollout, but this contract was also kept secret for several months.

    McKinsey has also received more than $4 million to assist the Industry Department in its attempt to launch a local mRNA vaccine manufacturing capability.

    The Department went to the market for such a facility in October last year, but is still yet to announce a successful bidder.

    The public sector union has also criticised the Department of Health’s use of labour hire throughout the pandemic. As of the end of 2020, more than 15 per cent of the Department’s workforce was made up of labour hire, with 22 per cent of its salary budget being spent on contractors and consultants.

    This means the Department is not building the necessary internal capability to respond to future crises, the Community and Public Sector Union has said.

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  • Govt pays consultants $13m for visa processing advice

    The federal government has paid consultants nearly $13 million to assist with its new visa processing system before a contract has even been signed, with many of the same companies which helped with a failed previous attempt involved again.

    The Department of Home Affairs went to the market in October last year for a “permissions capability” to initially handle visa processing but with the platform eventually to be used across the Commonwealth for various digital government services.

    It came after the government abandoned its previous attempt to launch a new Global Digital Platform for visa processing early last year.

    The new tender was for an “integrated, enterprise-scale workflow capability to be used across the Commonwealth”, with plans for a contract to be signed nearly six months ago.

    digital people consultants
    Permission granted: Visa processing

    Despite reports Accenture has won this work, the Department has said that no contract has been signed, with the inclusion of COVID-19 related health information delaying the plan.

    In answers to Senate Estimates questions on notice, the Department revealed that a smorgasbord of private consultants have been paid $12.7 million in total as part of the program, before a contractor has even been selected.

    Between April last year and March 2021, Pragma Partners was paid $6.5 million, KPMG landed $2.98 million, Maddocks received $400,000 and MinterEllison was paid $1 million for work on the permissions capability plan.

    All of these consultancy and legal firms were involved with the previous failed plan to launch a new visa processing system. KPMG was paid just under $8 million for this work over three years to the start of 2020, while Pragma received $2 million, MinterEllison received $2.7 million and Maddocks got just under $1 million.

    Boston Consulting Group, which received the large majority of consultancy fees for the previous plan at $40 million, have not been contracted on the new plan.

    McKinsey has been brought in and was paid $720,000 in the last year, while fellow consulting giant Deloitte has also been paid $1 million.

    These contracts for the new scheme have been jointly signed by Home Affairs and by the Digital Transformation Agency.

    Consultants were paid a total of $65 million to advise on the previous attempt to develop a Global Digital Platform to replace the existing visa processing system, which was scrapped early last year before a contractor was selected.

    The answers on notice also revealed that the Department received eight responses to its tender for the permissions capability, with five of these deemed to be compliant with the tender requirements.

    The requirements around taxation in the new tender raised eyebrows, with concerns they had been watered down compared to the previous effort.

    This time round, the successful tenderer is required to have a “satisfactory tax record”.

    The Department has explained that this is because the new plan has a “completely different” economic model where it will be “publicly funded, owned and operated”, and the requirement is now uniform under the Black Economy Procurement Connected Policy.

    “That policy was not in force when the Global Digital Platform tender documents were issued and so the Department drafted its own tax requirements having regard to the underlying economic model for that procurement,” the Department said.

    The national audit office is eyeing the procurement process behind the permissions capability for a potential audit in 2021-22.

    The plan to go to the private sector for the visa processing platform has been criticised by the public sector union, which has said it should have been done in-house.

    “Community and Public Sector Union (CPSU) members know that they have the skills and experience to deliver this project for the department,” CPSU assistant national secretary Michael Tull said.

    “But they were not given an opportunity to make a case that the work be done in-house. It’s yet another example of the rush to use consultants, contractors and external vendors for work that could and should be done by the public service itself.

    “We believe that there are strong arguments, on both cost and capability development grounds, for the government to reconsider the decision to go for a complete external build.”

    It’s the third time in the last two decades that the federal government has attempted to replace its existing visa processing platform.

    In 2006 it embarked on plans for a Generic Visa Platform, to be built by IBM. Five years later and after $450 million being spent, the platform was launched. But it was in operation for less than 12 months before it was decommissioned after being deemed to be not fit for purpose.

    In March last year the Coalition ditched its previous plan for the Global Digital Platform, before soon announcing its intention for the new permissions capability.

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  • Mystery surrounds consultants role in Australia’s vaccine rollout

    Mystery surrounds multinational consulting firm PwC’s role as the federal government’s delivery partner for the COVID-19 vaccine rollout, as concerns continue over the prominent use of private contractors to assist with Australia’s response to the pandemic.

    On Christmas Eve last year, Health Minister Greg Hunt announced the federal government had signed a contract with the UK consulting giant to act as the “program delivery partner for the vaccine rollout”.

    Mr Hunt also announced that Ireland-based consultancy Accenture had been appointed to be the data lead for the rollout.

    At the time, the minister said that the “finalisation of these contracts confirms Australia is on track to achieve a well-ordered, efficient and safe rollout of the COVID-19 vaccine”.

    But there has been little information since on the role of these two multinational consultancies in Australia’s troubled vaccine rollout, with few details around what has been delivered by the firms and how much money they have been paid.

    The Department of Health has this week declined to provide further information on how much PwC has been paid for this work, what the firm has delivered so far and if they are even still being engaged by the government.

    The contracts underpinning PwC’s work as the delivery partner for the vaccine rollout have not been posted publicly. The consulting firm has entered into contracts with the Department of Health worth a total of more than $5 million since the onset of the pandemic, including for work assessing Australia’s national medical stockpile.

    But there have been no contracts posted to AusTender since the December announcement that PwC would be working on the national rollout.

    “PwC has been engaged by the Department of Health to provide services assisting in the national rollout of the COVID-19 vaccine, including overseeing operations of the program, coordinating activities across functional areas such as logistics, data, policy and communications, supporting in risk / issue identification and contract management, providing program schedules to track, report on and monitor progress of implementation through program phases,” a department spokesperson told InnovationAus.

    Since the announcement in December, Accenture has been paid $20 million for a vaccine data and ordering system. The firm was paid $8 million to deliver a COVID-19 vaccine data solution earlier this year, and a further $13.3 million to make “modest enhancements” to its vaccine ordering system for the COVID vaccine.

    The federal government has engaged a number of multinational consulting firms to assist with Australia’s response to the COVID-19 pandemic. Along with Accenture and PwC, McKinsey has won lucrative contracts to assist with local mRNA vaccine manufacturing, with some not revealed publicly until months after the work had been completed.

    McKinsey’s role in the vaccine rollout in France has also been in the spotlight. The French government awarded McKinsey a contract worth millions of euros late last year to guide the rollout, which has since been criticised for being too slow. Accenture, which is providing data solutions in Australia, is also working with the French government.

    In Australia, the large use of consultants and contracts in the pandemic response has led to concerns around transparency and secrecy, and difficulties in determining the effectiveness of this work and whether value for money is being obtained.

    Community and Public Sector Union assistant national secretary Michael Tull said there is a lack of transparency around these lucrative contracts.

    “All the government does is just report the contracts, and even this is fairly opaque and not always up to date and accurate. We never find out what they actually get – this is a huge problem all across the public service,” Mr Tull told InnovationAus.

    CPSU members regularly raise concerns that consultants and contractors are being brought in to do work that could have been done in-house.

    “When we do see what has been produced, regularly we come up surprised or alarmed about how terrible it is,” Mr Tull said.

    “We regularly hear from our members that consultants are in the workplace and doing a project that the APS could do themselves more quickly and cheaply. Often they’ll come in and use the department’s data and use the knowledge and skills of the department staff to produce the report and are then paid for it.”

    Other consulting firms that have won major government contracts during the pandemic include Boston Consulting Group (BCG), which worked closely on the development of the COVIDSafe contact tracing app.

    BCG and McKinsey’s contracts with the federal government doubled last year during the pandemic, while Deloitte’s work jumped by 35 per cent.

    In total, the government’s contracts with multinational consulting firms increased by just under 25 per cent, an increase of more than $225 million to more than $1.21 billion.

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  • Accenture lands $7M govt deal for vaccine data work

    The federal government will pay Accenture a further $7 million to make improvements to its COVID-19 vaccine data solution, with the global consulting giant now having raked in nearly $15 million for the work amid concerns about a lack of data on the national rollout.

    Late last year Health minister Greg Hunt announced that Accenture had been contracted to be the federal government’s digital and data lead for the vaccine rollout. This work was worth $7.8 million and involved the Ireland-domiciled firm developing a software solution to track the vaccine from arrival to injection.

    The solution is meant to offer “point in time” visibility of the vaccine doses across the entire supply chain, including receipt of the vaccine by health services, the vaccination of patients and the monitoring of any adverse reactions.

    Accenture has won a $7M contract for vaccine data work

    But there have been ongoing concerns about the extremely limited amount of data being provided publicly on the vaccine rollout in Australia, with the department only publishing an infographic with basic information on an ad-hoc basis.

    The latest vaccine rollout update, published on Thursday, included data on the total number of vaccines administered, a breakdown state-by-state, international comparisons, and statistics for aged care and primary care.

    The government has now awarded Accenture a new contract worth $6.7 million for “vaccine data solution enhancements and support”. The Department of Health signed this deal at the end of May, and it will run until 22 October.

    The department declined to provide any further detail on what this further work will involve, and what Accenture has delivered so far under the original $8 million contract.

    The Accenture vaccine data solution, which is in use in the US as well, is based on Salesforce technology, and includes a vaccine management and tracking platform, supply management, community education and engagement, contact management and analytics and reporting.

    Large global consultants have played a prominent role in the Australian government’s response to Covid-19 and the subsequent vaccine rollout, with many landing lucrative contracts.

    PwC was appointed in December last year as the program delivery partner for the vaccine rollout.

    Fellow large consultancy McKinsey has also landed a number of contracts relating to mRNA vaccines, including to develop a business case for the establishment of a local manufacturing capability and to advise on the procurement process for this.

    A further $2 million contract with McKinsey to assist with the vaccine rollout was signed by the Health department late last year, but kept hidden until recent weeks, with the government blaming human error.

    Many contracts are also not being posted publicly, with a Health spokesperson confirming that procurements of Covid-19 vaccines, treatments and related goods and services are exempt from public reporting rules.

    As InnovationAus reported, spending on global consulting firms increased by nearly 25 per cent in 2020 during the pandemic, with more than $1.21 billion spent in the calendar year.

    KPMG’s work with the Health department jumped by more than a threefold, while the Boston Consulting Group was paid millions of dollars for its work on the COVIDSafe contact tracing app.

    The federal government’s spend with Accenture reached $358.4 million in 2020, up nearly 15 per cent from the previous year. The overall value of contracts landed by the Irish-headquartered firm totalled $786.4 million.

    Accenture is also currently being paid $2.5 million per month for its work on the Australian Taxation Office’s digital identity program, under a contract worth more than $14 million across the first six months of 2021.

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  • Another $2m McKinsey vaccine contract hidden

    Multinational consulting giant McKinsey was paid nearly $2 million over three months late last year by the federal health department to assist with the Covid-19 vaccine rollout. But the contract was kept hidden until last month, with the government blaming human error.

    The Department of Health awarded McKinsey a $1.859 million contract for “strategic supply chain support services”, running from 29 September to 18 December last year.

    But details of this contract were not revealed publicly on AusTender until 10 May, in breach of the government’s own procurement rules.

    vaccine
    Vaccine value: McKinsey paid another $2m to investigate onshore manufacturing

    A spokesperson for the department said this was due to human error.

    “The contract for this work had not been posted to AusTender as it had been incorrectly registered in the department’s Financial Management Information System as being exempt from reporting,” the spokesperson told InnovationAus.

    “The error was discovered during the department’s routine assurance activities and the correction was made as quickly as practicable.”

    The Health spokesperson said that procurements of Covid-19 vaccines, treatments and related goods and services are exempt from public reporting rules “in order to protect human health in the context of the Covid-19 global pandemic”.

    The McKinsey contract was initially registered as exempt from public reporting under this clause, but this was a mistake by the department. The work by the consulting giant did relate to the vaccine rollout.

    “Given the scale and complexity of Australia’s Covid-19 vaccination program, the Australian government, through the Department of Health, has procured services to inform and support the rollout through the provision of expert knowledge and skills, including from McKinsey & Company, to augment its own functional expertise, including with program delivery, logistics, administration of vaccines and data support,” the department spokesperson said.

    It’s the second McKinsey contract in recent weeks revealed to have been hidden from the public, with a $2.1 million deal to develop a business case for local mRNA vaccine manufacturing capability not posted publicly until months after the work was completed.

    This was also against procurement rules, with the industry department blaming an “administrative error”.

    The final report that McKinsey produced as a result of this $2 million contract will also not be made public.

    It was also revealed at Senate Estimates last week that the department had paid McKinsey a further $2.1 million to assist with the mRNA manufacturing capability procurement process. This contract has not yet been posted publicly.

    McKinsey enjoyed a sharp uptake in its federal government work during the first year of the Covid-19 pandemic.

    The dollar value of its contract nearly tripled in 2020 compared to the previous year, reaching $50.6 million. This figure is now closer to $55 million with the two previously unreported contracts last year.

    One of these contracts was worth $660,000 and was awarded in August last year. As ABC News revealed last week, this work resulted in McKinsey producing an “eight page summary of publicly-available vaccine data” after four weeks of worth, and no “specific advice” to government.

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  • McKinsey gets another $2m for mRNA vaccine help

    The federal government has awarded McKinsey another $2 million contract to assist with its efforts to establish an onshore mRNA vaccine manufacturing capability, after the consulting giant developed a secret business case earlier this year.

    The government has now paid McKinsey more than $4 million to provide advice on local mRNA vaccine manufacturing, with the process still in its infancy.

    At a Senate Estimates hearing on Thursday morning, industry department general manager David Luchetti revealed that McKinsey was recently awarded a $2.1 million contract to provide assistance to the government during its approach to market for a local mRNA manufacturing capability.

    This is on top of a $2.2 million contract awarded to McKinsey last year to develop a business case for this local capability.

    vaccine
    Vaccine value: McKinsey paid another $2m to investigate onshore manufacturing

    The government has refused to release this business case despite confirming that it is driving its policy decisions in the space, and the McKinsey contract was not publicly released until months after the work was completed, in violation of government procurement rules.

    This was due to an “administrative error” the department later said.

    The new contract was recently awarded to McKinsey and is yet to be posted publicly on AusTender.

    It means McKinsey has now been paid more than $4.3 million to provide advice to the government on a local mRNA vaccine capability.

    This was needed due to a lack of knowledge within the department, Mr Luchetti told the Senators.

    “Within the department we don’t have specific expertise around mRNA technology. It’s a very new technology. We’ve been using McKinsey to assist us with this and provide advice around the manufacturing process,” Mr Luchetti said.

    “In Australia industry itself does not have an existing capability to actually manufacture the mRNA vaccination. One advantage of McKinsey is they’ve allowed us to reach back to other countries in their network to understand the requirements and challenges of this space.”

    In last month’s federal budget the government provided funding for an onshore mRNA capability, but did not reveal the dollar amount due to “commercial in confidence” sensitivities.

    Weeks later it opened up an expression of interest process for manufacturers, other companies and state governments to present a fully-costed blueprint on the issue, which will be open for two months.

    The government has also established an mRNA advisory board to assist in this process, but will not be revealing its members due to concerns that companies applying to the tender process may approach them.

    Crossbench Senator Rex Patrick raised concerns with this, saying that secrecy around the awarding of contracts is an “incubator for corruption” and that the “US would not tolerate that”.

    The Victorian government allocated $50 million in the recent state budget to support mRNA vaccine manufacturing in the state.

    The industry department representatives told the Estimates hearing that this could be entirely separate to the federal government’s efforts, and that Australia could end up with two mRNA manufacturing capabilities, or they may be combined.

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  • Govt keeps McKinsey’s $2M mRNA report secret

    A report on the development of onshore mRNA vaccine manufacturing capabilities that the federal government paid McKinsey $2 million to write and is driving its push for a local facility will be kept secret from the public.

    The contract for this business case was also not posted publicly until more than a month after it was completed, against the government’s own procurement rules.

    Late last week the industry department opened an expression of interest (EOI) process for the establishment of a local mRNA vaccine manufacturing capability, with manufacturers, other companies and state governments invited to present a fully-costed blueprint.

    It came after last year’s MYEFO update included an undisclosed amount of funding to develop a business case for this process.

    On Christmas Eve last year the government awarded McKinsey a $2.2 million, three-month contract to provide “professional advice” on this business case.

    But this contract was not posted publicly on AusTender until mid-April, after the report was already finished and well later than the 42-day deadline procurement rule requires.

    A spokesperson for the department said this was due to an “administrative oversight”.

    CSL
    Vaccine-maker CSL has welcomed the government’s mRNA focus

    “Procedures have been reviewed to safeguard against this happening again. To ensure this does not happen again there will be additional procurement training, escalation of reporting reminders to senior staff and the automation of reminders,” the spokesperson told InnovationAus.

    The spokesperson also confirmed that this business case for a local mRNA capability will not be released to the public.

    “Given the commercial information in the business case, and that it is contributing to the government’s deliberations, it will not be released publicly,” the spokesperson said.

    The business case also won’t be made available to parties responding to the government’s EOI on the matter.

    This month’s federal budget included funding for the development of an onshore mRNA vaccine manufacturing capability, but the exact dollar amount has been kept secret due to “commercial in confidence sensitivities”.

    Through the EOI, the government is looking for fully-costed proposals to establish the manufacturing capability, which can be fully operational no later than three years after an agreement is signed.

    Industry minister Christian Porter said the business case presented by McKinsey revealed the “desirability and potential” of developing mRNA vaccines in Australia.

    “We know that mRNA is an extremely promising branch of medical science and we know from work already undertaken that Australian businesses and researchers are developing mRNA capacity,” Mr Porter said.

    “However, our market analysis also shows that there are gaps and challenges to scale-up, which means it’s not currently possible to commercially manufacture mRNA treatments locally.”

    The government has adopted a “two-pronged approach” to the task, continuing discussions with existing manufacturers and also approaching the market for other proposals, Mr Porter said.

    And the EOI documents make it clear that it’s possible no funding will result from the process.

    “There is no guarantee that this process will result in the Australian government undertaking any grant, procurement activity or other financial support for any proposal that involves any respondent to this approach to market,” the EOI documents said.

    “The Australian government may not undertake any open procurement or grant process following this approach to market and may seek to enter into arrangements directly with one or more respondents to this approach to market or with any other entity.”

    Respondents to the EOI won’t have access to the business case developed by McKinsey or get any insights into the amount of money the federal government has set aside for the significant task.

    “Given the inherent commercial nature of this process we are not publishing funding information associated with establishing an onshore mRNA manufacturing capability. We are asking for proposal submissions that are fully costed to enable the Australian government to make an informed decision about how to secure the best mRNA capability for Australians,” it said.

    Tender rules will be bypassed in the process as it is “necessary to protect public health”, while the government may also opt to not actually go through a procurement process and instead just award a grant to a company or consortium to build the capability.

    The government’s focus on mRNA vaccine manufacturing was welcomed by CSL, which is currently manufacturing the AstraZeneca vaccine in Australia. The company said its vaccine business, Seqirus, has been researching mRNA vaccines for “several years”.

    “We look forward to continued collaboration with the government on how mRNA vaccine technology might be delivered to Australia,” Seqirus senior vice-president of research and development Dr Russell Basser said.

    In its own budget, the Victorian government committed $50 million to support the manufacturing of mRNA vaccines in the state. The state government will also have to go through the Commonwealth’s EOI process as it looks to establish a facility in Victoria.

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  • Govt ‘permissions capability’ project behind schedule

    The federal government is still yet to choose which large US tech firm will be handed a significant contract to develop a “permissions capability” which will first handle visa processing.

    After a tender was issued by Home Affairs in October last year for the development of an “integrated, enterprise-scale workflow capability to be used across the Commonwealth”, it was reported last month that three US firms had been shortlisted for this work.

    The government’s timeline had the contractor to be selected and announced in March, but the procurement is still ongoing, a spokesperson confirmed. 

    The Department is hoping to launch the platform with digital incoming passenger declarations and digital visa processing capabilities in the third quarter of this year.

    It’s the third go the government has had at digitising visa processing, after two botched attempts in the last 15 years. Most recently, the government shelved plans for a Global Digital Platform in March last year before a contractor was selected, with nearly $100 million already spent.

    Despite the Digital Transformation Agency (DTA) having control of the wider project, Home Affairs issued a tender for the bulk of the development work in October last year. The winning bidder will build the base platform that is initially capable of handling the digitisation of incoming passenger declaration cards and a simple digital visa application service.

    The platform will also have the ability to be reused for government services across the Commonwealth, including for permits, accreditation, licences and registrations, and is estimated to cost $75 million to build.

    The tender closed in mid-December, with the Department planning to sign a contract last month.

    In March it was reported that three US tech firms – IBM, Pega and Oracle – had been shortlisted for this work, with a decision expected imminently.

    IBM is going it alone in the bid, while Pega has teamed up with Accenture and Oracle has formed a coalition with PwC and Sayers.

    A spokesperson for the Department of Home Affairs confirmed this procurement process is still ongoing.

    “The procurement timetable is indicative only. The Department will not comment on the procurement process while it is ongoing,” the spokesperson told InnovationAus.

    After being announced last year, only one contract is been signed for work on the permissions capability, with consultancy giant McKinsey handed nearly $1 million to provide “strategic advice” from late May to early July in 2020.

    McKinsey was paid nearly $150,000 per week to “inform” the new initiative.

    The Coalition previously attempted to build a platform to handle digital visa processing, with more than $90 million spent in recent years, including $65 million to private contractors. The scheme was scrapped early last year following ongoing concerns around the outsourcing of a key government function, and a number of conflicts of interest surrounding the bidders.

    The Community and Public Sector Union (CPSU) has criticised the new plan, writing to the Department of Home Affairs last month arguing that it would be cheaper and more effective to do this work in-house. The APS was not given the chance to pitch for this work before the government turned to the private sector, the CPSU said.

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  • Floodgates open for consultants in pandemic year

    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.

    tenders
    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 investigated 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.

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  • BCG and McKinsey govt contracts double in 2020

    The dollar value in government contracts awarded to Boston Consulting Group and McKinsey doubled in 2020, with both large US management consultant firms enjoying a sharp increase in federal work during the pandemic.

    The value of contracts awarded to Boston Consulting Group (BCG) increased by 105 per cent year-on-year in 2020, rising from a total spend in 2019 of $15.1 million to $31 million last year, according to an InnovationAus investigation.

    The total value of contracts held by BCG that were either awarded last year or that were still active during 2020 was $60.3 million. This included an increase of more than 200 per cent in the dollar value of contracts awarded to BCG by the Industry department for work specifically related to the pandemic or Australia’s economic recovery from it.

    For fellow American management consultancy McKinsey, the value of government contracts jumped by 173 per cent, or nearly tripled. The total spend in 2019 on McKinsey work for the government was $18.5 million, which soared to $50.6 million in 2020.

    This included a more than 1000 per cent increase in work from the Digital Transformation Agency across a range of projects.

    To calculate these figures, InnovationAus analysed all contracts active in those years as posted to tenders.gov.au, to compare 2019 to the pandemic year of 2020. The reporting structure involves the reporting of any contract that is active in that period.

    For the yearly spend, InnovationAus measured the length of each contract, calculated the daily expenditure for that work, and multiplied that figure by the number of days each contract was active during the periods being investigated.

    Last year was shaped by the ongoing COVID-19 pandemic, with the focus and spending of the government focusing on the health crisis. There was an increased reliance on outsourcing and private consultants across a range of departments and projects.

    Overall, government contracts increased by more than $20 billion or 6 per cent, reaching $331.275 billion in 2020.

    The InnovationAus analysis revealed that BCG’s growth largely stemmed from increased demand for the company’s services from the Department of Industry, Science, Energy and Resources and from the Digital Transformation Agency (DTA), both key departments and agencies during the COVID-19 response.

    The DTA did not award any contracts to BCG in 2019, but handed the firm $2.232 million during 2020 across a range of projects, including the development of the much-maligned COVIDSafe contact tracing app.

    BCG earned $1 million for its work on COVIDSafe, providing an advisory role in the early phase of its development. The firm was also contracted for whole-of-government ICT policy and governance and a funding options analysis worth $875,000.

    DTA chief executive Randall Brugeaud worked briefly at BCG from 2008 to 2010, while former DTA chief strategy officer Anthony Vlasic left the agency in February 2020 to join BCG.

    BCG’s work with the Industry department jumped sharply by 234 pe cent in 2020 compared with the previous year, from $684,000 to $2.2 million during the pandemic.

    These contracts included a first pass report on the supply chain resilience initiative, worth $330,000 for one months’ work, and a new $5.5 million contract for “model delivery, consultancy services and reports” for the industry department.

    The firm was also awarded an $80,000 contract to provide advice on integrating gas modelling for the department, a key facet of the government’s COVID-19 economic recovery plan.

    McKinsey’s increase in government contracts came largely from Services Australia and the DTA.

    The firm enjoyed a near-1000 percent increase in the dollar value of its contracts with the DTA last year, from just $186,000 in 2019 to $1.9 million in 2020.

    McKinsey won a $1 million contract in May last year to develop a business case for a revamped version of the myGov platform which Deloitte is building. It also was awarded $1 million to work on a new visa processing platform.

    The firm’s work with Services Australia increased by 281 per cent, from just under $6 million to $22.9 million in 2020. This comes after McKinsey helped to design Services Australia itself in late 2019 under a near-$1 million contract.

    Services Australia now accounts for 45 per cent of McKinsey’s government work, while the DTA accounts for 3 per cent.

    McKinsey’s three contracts with Services Australia in 2020 were all for “business advisory services”, with one of these contracts worth $8.6 million over eight months.

    The public sector union last week raised concerns that Services Australia had been “run down” by a reliance on outsourcing and private contractors which has led to “substandard” IT delivery.

    “Services Australia has lost sights of the benefits of in-house ICT development. A lack of career paths for ICT professionals and the government’s bargaining approach have impacted the agency’s ability to attract and retain ICT talent,” the Community and Public Sector Union (CPSU) said in a submission to government.

    “The CPSU has been vocal about the phenomenal increase in consultancy expenditure both in Services Australia, and the APS more broadly in the past five years.”

    Photo Credit: Shutterstock – canyalcin; mariakray

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  • Deloitte lands new $4.5m contract for myGov work

    The federal government has handed Deloitte a contract worth $4.5 million for further work on the new myGov platform, bringing the consulting giant’s total bill for the project to nearly $35 million over just 18 months.

    The government has also gone to the market for vendors to work on the next stage of the project, which will involve the integration of “core customer experience capabilities” into the new myGov platform.

    The Digital Transformation Agency (DTA) has led the project to develop a new version of myGov, to initially run alongside the existing platform before eventually replacing it.

    digital ID
    Nice earner: Deloitte’s work on myGov beta worth about $35 million over a year and a half

    Deloitte has been the key contractor on the project since early 2020, after first being awarded a near-$1 million contract to build a prototype as part of a ‘90-day sprint’.

    The company was then awarded a $9.5 million contract to turn this into a working beta, which was launched publicly late this year. The cost of this contract has since blown out to $28.1 million.

    In November last year Services Australia handed Deloitte a further $1.2 million to continue its work until the end of 2020.

    The department has now handed Deloitte another contract to continue its work on the new myGov platform, this time worth $4.61 million over six months.

    Listed only as being for “information technology services, a spokesperson for Services Australia confirmed the work relates to the new myGov platform, with Deloitte selected as part of the new Systems Integrator Panel.

    “Services Australia is leading the technology work on sustaining the current myGov system and developing the enhanced myGov beta. Deloitte Digital is one of a number of vendors which will be engaged from a Systems Integrator Panel, which was established in late 2020, to provide technical resources to support this work and the ongoing COVID response implementation to work within myGov,” a Services Australia spokesperson told InnovationAus.

    Deloitte has now worked on all three stages of the myGov project. Most of the consultancy’s work last year was on the creation of the beta platform, which included personalised contact, a web-based myGov inbox, opt-in notifications and login access to myGov. Users have been able to access the beta by choice since late last year.

    The final stage of work will see the beta platform fully developed, including a dashboard, profile, inbox and forms.

    Once fully functional, this new platform will offer a user experience more in line with social media giants and other tech companies such as Netflix.

    “This platform will collect services, apps and other customer experience capabilities to give users everything they need. This will operate on a ‘Netflix’ model, providing users with what they need to do next based on their previous interactions with government services – similar to Netflix’s ‘recommended to you’,” the DTA said last year.

    Services Australia posted a new request for expressions of interest last week for private contractors to work on this stage of the program. Vendors will be asked to “provide suitable software capabilities to enable any of the prescribed bundles of the core customer experience capabilities”.

    These capabilities are content management, experience delivery and experience analytics. They include the personalisation of the customer experience on the new myGov, and the collection of data and analysing of this information.

    The REOI closes on 3 march, with a product verification exercise to be required as part of the second stage of the procurement.

    Along with Deloitte, a number of other contractors have been brought in to assist with the project. Fellow consultancy Nous has been paid just over $1 million for advice and support on the second stage of the project, while McKinsey scored $1 million to develop a business case for the work.

    Law firm King and Wood Mallesons will be paid $1.75 million to provide legal services, while Maddocks will also be paid $100,000 in legal fees.

    Proximity Advisory Services was also brought in to provide probity advice on a $100,000 contract.

    Total contractor costs for work on the project over 18 months are at more than $40 million for the myGov beta.

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