UK government selects 30 firms for £690 million financial consultancy framework

18 December 2017 9 min. read

30 consulting firms have been selected by the UK government as preferred suppliers for financial consultancy work. The Crown Commercial Service has awarded the firms a place in their new Management Consultancy Framework, with the total value for financial and audit services in the contract estimated to be worth £690 million over a span of four years.

The British government finds itself attempting to complete a colossal change agenda across its departments, as it attempts to modernise its structures, processes and tools in order to alleviate a time of acute pressure for policy-makers and implementors, alike. Particularly important to this agenda’s execution is the leveraging of new technologies, which offer savings in terms of value and efficiency. Notably, to this end, the UK government’s autumn budget set aside £75 million for the development of AI, as well as funding of 200 new PhD positions in the field. The budget also saw a further £76 million pledged to boost skills in the digital and construction industries.

Public health entities, for example, stand to make key savings via the utilisation of these new innovations. NHS hospitals could harness the ‘big data’ and the power of population health analytics, and use the information to project where resources are most needed, or even where prevention would be most effective, thereby lightening the load on the medical infrastructure by decreasing patient numbers. The NHS reportedly spent £640 million on consultants in 2014 alone, in a ‘cost saving’ exercise as the institution bids to access such analysis on where resources were best used. However, the appropriate use of technology in this instance could all but eliminate such a cost.

Before the potential of such technologies can be realised, however, many of the transformations that governmental departments are presently undergoing are supported by external experts, in order to deliver strategic insight and implementation management, as well as to cover shortages in staffing. This is exemplified by the Department for Exiting the EU (Dexeu), which recently handed what was reported as a £1.5 million tender to McKinsey & Company. The management consulting firm will now oversee strategic Brexit-related activities over the next six months, handling as many as 792 related plans.UK government selects 30 consulting firms for £690 million financial consultancy frameworkDespite the perceived benefits of outsourcing to professional services firms, contracting consultants to public sector projects can be a time-consuming, complex and costly process. In order to streamline the process of hiring external consulting firms, the UK government first launched the ‘Consultancy ONE’ framework. Launched in May 2013, Consultancy ONE was a framework to provide a compliant, cost effective way for the central government and the wider public sector to access a variety of consultancy advice from a wide range of suppliers. The structure designed by the Government Procurement Service (GPS) was aimed at delivering “significant reductions” in consultancy day rates of at least 20%, as local councils in particular came under scrutiny for heavy spending on consultants, who they engaged to assist with local austerity spending cuts.

Consultancy ONE expired in December 2017, and as such, the Crown Commercial Service (CCS), the authority responsible for improving government commercial and procurement activity, launched a tender for the new Management Consultancy Framework (MCF), known internally as RM3745. The Crown Commercial Service is an executive agency and trading fund of the Cabinet Office of the UK Government. The RM3745 MCF will be valid until 2021, and in that time, the government hopes that it will provide public bodies with swift, efficient and effective access to the right suppliers, who can then deliver value for money.

The framework will do this, first and foremost, by offering a standardised procurement process, with blanket terms and conditions agreed with suppliers throughout the four-year deal. Secondly, it will enable negotiating better rates across public sector, through higher volume. Most importantly perhaps, with both local and national governments worldwide coming in for intense criticism regarding their consulting contracts over the past year, the practice enables a greater deal of insight into the total public spend on consulting, allowing for a greater level of transparency.

Officially, the government itself says that the agreement will deliver a number of benefits, including maximum consulting rates being capped for four years, something which may be reduced during the secondary competition process, where firms listed in the framework bid against one another for projects in their allotted lots. A key change from Consultancy ONE will also see the value thresholds removed, meaning that work will no longer have to fall between the £100,000 and £2 million perimeter of the former format. Alternative pricing models will also be allowable to enable SMEs to feature in this framework, while the platform will also ensure EU compliance, something that is particularly important in the environment of the Brexit process,.

The expanded framework scope also allows for sector specific focus. The framework consists of eight lots: Business Consultancy, Finance, Audit, HR, Health and Community, Education, Infrastructure, ICT and Digital. The new Management Consultancy framework was advertised in the European Journal (OJEU) as having a potential total value of £2-3 billion over the coming four years. The lot for Business Consultancy, lot 1, is still in its tender stage. The lot will feature a broader scope, to ensure that the framework can meet all customer needs.

Financial consultancy: finance and audit

Following a highly competitive bidding process – the race for the lucrative contacts were hotly contested – the lots for finance (lot 2) and audit (lot 3) have been won by 30 management and finance consulting firms. The two segments now expect a maximum spend of £690 million to be divided between them by 2021. Overall, the two categories saw 42 winners, though these contained just 30 different consulting firms, with 12 recording dual successes. The retrospective contract of the framework applies from 31st August 2017, and will end 30th August 2021.

30 consulting firms win UK government Management Consultancy Framework (1-15)

Finance, which will take the lion’s share of that total figure, expects a maximum spend of £540 million. Lot 2 of the MCF was contested by 45 bidders – 22 of which were successful, including six small and medium enterprises (SMEs). The victors will now compete among themselves per project to provide advice and assurance on all aspects of the financial controls for complex project developments. This could include the establishment of financial strategies, policies, processes and departmental organisation to develop financial efficiency of its project delivery, specialist investment and financial market advisory services, capital funding, and financial risk management.

Lot 3, for Audit, which expects a maximum spend totalling £150 million, saw bidders narrowed down to 20 winning firms, one of which was an SME – the group was also one of the successful bidders in lot 2. Over the duration of the four years of the framework, the 20 winners will look to advise on services for all aspects of audit assurance, objective examination of evidence for assessment of governance, risk management and internal controls for Contracting Authorities in line with Governmental Internal Audit Standards. They will also potentially advise on financial audit and auditing annual financial statements, including the assessment of process compliance, financial performance, security, anti-fraud, quality and compliance.

30 consulting firms win UK government Management Consultancy Framework (16-30)

With the streamlined, standardised process, the government hopes that the winners will provide customers with consultancy services that support the scale and complexity of transformation across government, locally, nationally or internationally. For projects that are run under the framework, government agencies can give direct order without a further competition, or, alternatively, invite suppliers in the framework to submit tenders for a project, further competing with one another in a process which officials will hope can further push down pricing and deliver greater value for money. Entities able to access the framework experts include central government departments and their arm's-length bodies and agencies, non-departmental public bodies, NHS bodies and local authorities.

The MCF has come in for some criticism over its brief lifespan, however. Procurement specialists and SMEs have suggested the tender of the lots featured 'unfair requirements' for ‘previous supply’ evidence, which were imposed on SMEs. CCS’ management consultancy framework demands bids must demonstrate minimum total of 2200 consultancy days experience within period of 12 consecutive calendar months – something which some sources were concerned would freeze smaller consultancies out of the process. However, with 6 SMEs included in lots 2 and 3, this concern may have been over-stated.