Top consulting firms rake in £75 million for Brexit preparations

14 January 2019 7 min. read
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A collection of some of the world’s largest consulting firms have won a set of contracts collectively worth £75 million, according to an investigation by Sky News. The revelation has triggered calls for the National Audit Office to investigate the contracts, and criticisms for a lack of transparency and competitiveness for the manner the deals were made in secrecy.

In the long term, a potential economic downturn, complicated border tariffs and a shortfall of talent from the continent are expected to have a negative impact on the consulting industry, after Brexit comes to fruition in March 2019. In the meantime, however, the UK’s protracted withdrawal from the European Union has proven to be something of a cash-cow for the professional services world. Since the shock vote to leave the EU rocked the political and business establishments in the summer of 2016, consultants have been in heavy demand from clients looking to soften the blow of Britain’s secession from the remaining bloc of 27.  

The workload of a Civil Service already understaffed following a decade of austerity suddenly boomed, and subsequently Whitehall has been behind a glut of engagements for the consulting industry in the past three years. While this behaviour is also common in the private sector, with businesses across the UK – and indeed, the continent – keen to tap external expertise when addressing the uncertain future – it has come under increasing scrutiny with regards to the actions of the UK Government, which has been routinely accused of squandering public money on tasks that could be executed in-house.

A succession of reports in 2018 alone had already revealed the extent of the Cabinet Office’s Brexit consulting bill had racked up millions, with a £2 million contract being handed to Boston Consulting Group (BCG) in the summer, months after McKinsey & Company had secured a previous tender for a similar amount. Then, in the autumn, Buzzfeed News revealed that the UK Government had signed up to more than a dozen consulting contracts on the matter of Brexit, worth around £40 million, including a large bulk of that being spent on a new ‘settled status’ scheme for EU citizens living in Britain.

£75 million

That figure provoked discontent from critics of both Brexit and the Government at large, something which was further fuelled by the Government’s refusal to clarify to the British press on the exact nature of the work carried out. The reaction which that news was met with paled in comparison with the anger with which the latest development in the on-going saga received, however. That news – a result of a Sky News investigation – was that the government has quietly awarded £75 million in Brexit-related contracts to some of the world’s biggest consultancy firms in advance of Brexit.

The contracts, each between £5 million and £10 million, are understood to run through to the end of April 2019 – at which point they could be renewed at the same cost – and were handed to nine high-profile international companies, without ever being publicly announced. All nine have been explained as contracts for "the supply of Cabinet Office consultancy support for EU Exit", however beyond that many key details remain obscured.

Brexit contracts awarded to consulting firms (£ / million)

According to Sky’s Business Correspondent, Adam Parsons, while the contracts run to more than 200 pages each, crucial facts were “removed” from the documents. These include who in the Government actually signed off the agreements, and what work was actually involved. While Parsons clarified that he understood much of the total spend had been earmarked for “programme and project management, commercial expertise and advice in ‘operational delivery’,” this remains so unsuitably vague that Meg Hillier, Chair of the Public Accounts Committee, determined to ask the National Audit Office (NAO) to investigate the deals.

"This is ridiculous,” Hillier told Sky News. “We're within three months of us leaving the EU as it stands. We should know what the government is spending and what it's spending it on… This is taxpayers' money… Not to tell us what those consultants are doing, when they're being paid between £5 million and £10 million, is just crazy. I just don't understand why the government is so intent on keeping it secret."

The lack of transparency also drew comment from the Institute of Government. Joe Own, the group’s Associate Director leading research into Whitehall's preparation for Exiting the European Union, said, "There's definitely been an increase in secrecy more generally across the Civil Service as a result of Brexit, just because of how politically difficult it's been for many reasons.”

Defending the Government’s position, a spokesperson said, "It is standard for government departments to draw on the advice of external specialists to deliver key government policy. All government contracts are published online - and these are no exception.”

Big firms dominate

The contracts drew further consternation as they were awarded under ‘Health and Community’, making them very difficult for smaller companies to compete for them. While they are still entirely focused upon preparations for Brexit, the positioning of their selection process meant that the tenders were restricted to companies which had already passed a "vetting process." This essentially ended the chance of smaller, Brexit-specific consultancies winning any of these contracts. In a year when a succession of competition probes have placed the consulting industry under heavy scrutiny, this news does not sit well with some.

Commenting on the opaque procurement process, Lord Kerslake, former head of the Civil Service told the press, "The question here – given the level of spend – is this, would it not have been more appropriate to have an open tendering process where anyone can bid rather than drawing from a framework contract that was inevitably a shorter list of companies to choose from?... I do think it raises questions about securing value for money given the scale of spending involved.”

According to the figures produced by Sky’s investigation, the bulk of the £75 million instead went toward the world’s largest auditing and advisory firms, and the globe’s biggest strategy names. The American strategy giants of Bain & CompanyMcKinsey & Company and BCG – collectively known as the MBB – together won contracts worth £25 million. As seen previously with the case of a £2 million contract for BCG to support a cross government delivery coordination of the EU Exit Programme, these firms are often the first place the Government looks when it requires urgent policy guidance.

The generalist models of the Big Four theoretically make them ideal candidates to provide cross-disciplinary services, so it is unsurprising EYPwC and Deloitte raked in £10 million each from the Brexit contracts exposed, even after Deloitte provoked the anger of Theresa May’s office, when an internal memo suggested someone at Deloitte thought there was no “overall negotiation strategy” for Brexit. The furore over the quartet’s involvement in a myriad of accounting scandals also seems to have had little effect, although the firm allegedly behind the collapse of Carillion, KPMG, is conspicuous in its absence from the contracts. 

UK origin PA Consulting was among some of the largest earners from the Brexit contracts. The firm, which specialises in the provision of IT advisory services to the public sector, was awarded a £10 million contract, while Accenture took the IT services bill to a total of £15 million. Finally, engineering consultancy Mott MacDonald secured a contract for £5 million.