KPMG lands huge civil service contract
KPMG has announced a new £223 million contract with the government. In the long-run, the engagement aims to further reduce Whitehall’s dependence on the external advisors, however, with the Big Four firm working to train civil servants.
A 14-month deal with the Cabinet Office will see KPMG manage learning and development services across the UK’s civil service, including overseeing courses on policymaking, communications and career development. It has been reported that the Big Four firm will “manage the catalogue of products and services” outlined in the deal. It will not directly supply training for accredited qualifications – those services will instead be delivered by universities, business schools and specialist providers.
The news will further divide opinion on consulting spending in the public sector. The consulting industry has long argued that specialists coming in for short-term projects is more cost-effective than employing them in government departments full time. But critics counter that Whitehall’s reliance on expensive private sector consultancies was poor value for money – especially as it prevents the UK’s civil service developing in-house skills.
In this case, KPMG could be argued to be helping to beef up those in-house skills through its engagement. However, critics are unlikely to be moved by that, given the hefty price-tag attached to the work. According to data provider Tussell, the role is the second-biggest public sector contract ever awarded to KPMG, and could be worth close to 8% of KPMG’s annual UK revenues.
At the same time, KPMG’s current record contract came in a separate learning and development deal with the Cabinet Office worth £237 million. According to Tussell, that four-year contract expires in October, and also oversaw technical training for civil servants, such as professional qualifications.
With the new government having pledged to reduce its spending on external expertise to the tune of billions, saving £14 million of £237 million may not seem like a significant change in direction. However, according to a government spokesperson, the £223 million figure is “a maximum limit” of the contract value, and not “the total cost or likely spend”.
Speaking to The Financial Times, they added that any expenditure under the contract “must represent good value for money”. The article also confirmed that while the contract is only now beginning, it was agreed by the previous Conservative administration.
The Management Consultancies Association has fiercely defended the industry against claims that government consulting contracts do not represent value for money.
Speaking during the election, when both major parties pledged to cut back on spending, Tamzen Isacsson, chief executive of the MCA, commented, “We stand ready to serve the next government in power and recognise the financial constraints any new administration will face. As MCA members we work in partnership to support government’s ambitions to improve public sector productivity and innovation, enabling them to do more with less, using specialist expertise and world class capabilities. We are proud to deliver outstanding public sector projects and to transfer skills and capabilities to the civil service leaving them better equipped to respond to future challenges."
