Management consultants and the public sector

For decades, I have sought to spice up otherwise dull speeches with quotes from Norman R. Augustine’s book Augustine’s Laws, which examined the complexities and conundrums of management and came up with 52 witty and wise laws.

Law Number XXXII reads: “Hiring consultants to conduct studies can be an excellent means of turning problems into gold, your problems into their gold.”

In recent decades, governments have made increasing use of consultants to support both policy development and operational activities. Governments could not function effectively and efficiently without the support of consultants in a wide range of areas. Reliance on consultants, however, involves risks and potential problems. In short, there is a place for consultants in the governing process and consultants should be kept in their place.

A small number of accounting and management firms — Deloitte, PricewaterhouseCoopers, KPMG, Ernst and Young and McKinsey — dominate the consulting industry on a global basis. These firms, along with numerous smaller companies, interact thousands of times annually with different parts of a sprawling public sector and deliver positive results which definitely serve the public interest.

Consultants provide specialized knowledge and skills the public service lacks. They can help with policy design and evaluation, organizational and managerial reforms, improvements to program delivery, strengthening financial management and with the application of digital technology.

There are, however, notable potential drawbacks to reliance on consultants. Competitive bidding among firms is supposed to deliver value for money, However, over time, based on working relationships, “preferred” firms emerge, leading to sole-source contracts and automatic renewals.

Heavy dependence on consultants can undermine internal public sector capacities by hollowing out expertise within government institutions. Bureaucracy bashing by politicians can lead senior public sector executives to hire consultants who will provide answers they think their political masters want to hear.

When governments downsize their internal policy capacity to save money, there is the risk that consultants will shape policy formulation without being subject to the transparency, scrutiny, ethical norms and accountability requirements which apply to the public service.

Driven by corporate metrics and profit goals, consulting firms may attach more certainty to their recommendations than is warranted. They have been known to over-promise the efficiency and improved performance they can deliver in public organizations. Large sums are spent on consulting services, sometimes without clear goals. Lack of oversight can lead to poor-quality work and cost overruns.

All the major consulting firms have, in different countries at different times, been embroiled in scandals involving corruption, misuse of client information and the failure to deliver promised results.

Too often the problems are attributed to a few “rotten apples” but this is contradicted by corporate retaliation against whistleblowers who expose wrongdoing and by organized cover-up campaigns to limit negative publicity and avoid the loss of future contracts.

Multiple factors affect how frequently different governments seek the support of consultants. The ideology of the governing party is one such factor.

In Manitoba, there is a significant contrast between the Progressive Conservatives and the NDP.

PC premier Brian Pallister believed in the superiority of private sector approaches and was suspicious that a public service “friendly” to the NDP would resist his downsizing agenda.

Accordingly, KPMG was hired to lead the contraction and consolidation of the health-care system and to conduct efficiency audits of the core government departments.

The PCs also used consultants to support the development of mental health policy, formulate cuts to Manitoba Hydro and introduce more for-profit daycare.

When in opposition, the NDP criticized excessive use of consultants. It estimated total spending by the PC government on the “political use” (the NDP term) of consultants to be in the range of $20-25 million.

In office since October 2023, the Kinew government has made limited, selective use of consultants. It hired MNP to conduct a review of the provincial budgetary situation and hired Deloitte and KPMG to audit the five health authorities.

Like most provinces, Manitoba does not track total consultant spending but the NDP government has clearly spent less than its predecessor.

Political controversies and negative publicity surrounding scandals should not crowd out recognition that governments routinely depend on consultants for technical, legal and operational support to develop and deliver improved programs and services.

Most consultants are well-educated, experienced professionals who often possess specialized knowledge and skills missing in the public sector. Most individual consultants act with integrity to help their clients.

Governments should use consultants selectively, be clear what they want from them, monitor their performance and ensure the promised results are produced before ever using them again.

Paul G. Thomas is professor emeritus of political studies at the University of Manitoba. As an academic researcher he has consulted to national, provincial and local governments.