Brexit department picks McKinsey for £1.9 million consulting contract

06 November 2017 Consultancy.uk

McKinsey & Company has been revealed as the consultancy to have successfully obtained a sought after government tender for the implementation of nearly 800 Brexit-related plans. The contract helps further paper the cracks at Whitehall, following the extensive streamlining of the British Civil Service in recent years, while the future hiring of some 5,000 staff is likely to further boost operations ahead of 2019’s deadline for negotiations with Brussels.

In the wake of Conservative Prime Minister Theresa May’s decision to trigger Article 50 at the end of March, the Department for Exiting the EU (Dexeu) launched what was reported as a £1.5 million tender for a management consulting firm able to oversee strategic Brexit-related activities over the next six months, handling as many as 792 related plans.

Britain’s civil service, which had seen its headcount depleted by roughly 25% in under a decade, due to governmental austerity plans, was found to be severely stretched by the current demands of Britain’s lengthy separation from the EU – with the government courting a number of high profile professional services firms for outside support. 

David Davis at EU commission negotiations

Contenders reportedly included Big Four firms KPMG, EY and PwC, while Deloitte ruled themselves out of the running for any governmental contracts at the time, following a leaked memo disparaging the government’s Brexit strategy, which caused Theresa May’s office to release an unprecedented attack on the firm, claiming the firm was “touting for business” through “unsolicited” analysis.

Following the hunt for expertise in the Spring, news has finally emerged that the UK’s Department of Exiting the European Union awarded the lucrative contract, the value of which is now speculated as being £1.9 million, to consulting giant McKinsey, to help it coordinate the government’s approach to Brexit, according to people familiar with the matter. While the contract was only formally announced in an email Friday, an accompanying excel sheet shows that the consultancy giant was hired on April 24, less than a month after the Prime Minister invoked Article 50 of the Lisbon Treaty, setting the country on course for two years of negotiations to leave the bloc of 28 EU countries.

The announcement has provoked strong criticism from opposition politicians, following increased public scrutiny of public spending on private consulting contracts, including a Parliamentary investigation into Whitehall’s ill-fated dealings with PA Consulting. Speaking on the McKinsey deal, Labour's Chris Bryant MP, a supporter of the Open Britain group, said, “Taxpayers’ money is being spent to support the Government’s extreme and damaging Brexit plans. But they could hire all the consultants in the world – their plan still wouldn’t work.”

Refilling Whitehall

The hiring of McKinsey comes after a period in which Conservative ministers have been single-minded in their efforts to slim down Whitehall departments in the name of a more efficient government. However, the streamlining of Whitehall left the government drastically understaffed when the unexpected workload of Brexit emerged following a shock referendum result in 2016. Dexeu has since struggled to hire and retain talent, since taking the drastic measure of hiring an extra 3,000 civil servants, while expecting to employ a further 5,000 next year in order to cope with the demands of leaving the European Union.

The workers taken on next year will be employed by HM Revenue and Customs as the body looks to implement a new border regime on leaving the bloc. Brexit Secretary and Dexeu lead David Davis told colleagues in the Cabinet last week, “Alongside the negotiations in Brussels, it is crucial that we are putting our own domestic preparations in place so that we are ready at the point that we leave the EU.”

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