The Boston Consulting Group more than doubled revenue from its federal government business in the last financial year as the Commonwealth’s increased use of outside consultants accelerated.
For the financial year 2020/21, the first full-year reporting period of the Covid-19 pandemic, Boston Consulting grew its federal business by 120 per cent to $39 million over the previous year, according to an investigation of contract documents by InnovationAus.com.
While BCG’s stunning growth rate was coming off a relatively low base – if you consider the $17.9 million that the company earned in 2019/20 a ‘low base’ – in which case it is worth remembering that Boston Consulting had also doubled its revenue over the financial year before that as well.
The global consultants McKinsey & Company, meanwhile, grew its Canberra business in 2020/21 to $58.6 million, an increase of more than 75 per cent over the previous year. In a pandemic year, McKinsey hoovered an additional $25.2 million in revenue.
The company’s work included a $2.2 million contract (or $24,800 per day) to write a business case for onshore mRNA vaccine manufacturing; a further $2.1 million (or $27,182 per day) for advice on RFQ for onshore vaccine manufacturing; and a $4.4 million contract (or $23,209 per day) for IT consultations on the vaccine roll-out.
The Department of Industry, Science, Energy and Resources paid McKinsey $4.86 million for four-month for “Professional Advice” with no further detail available and the contract covered by a confidentiality clause for reasons of “intellectual property”. This contract paid out at a rate of $40,539 per day.
But this was far from McKinsey’s biggest day’s pay. That record went to a 16-day, $1.44 million contract signed with the Department of Defence to provide an “affordability analysis” of its Hawk trainer aircraft. That contract paid out at $90,131 per day (yes, you have read that correctly: $90,131 per day).
If it’s raining dollars in Canberra right now for management consultants – and it truly is – then you can hardly blame BCG and McKinsey for getting out and enjoying the weather. It’s what they do.
But the pandemic has provided a glorious soak. It has been the best of times, followed by even better times.
BCG and McKinsey not alone in enjoying the government’s accelerated use of outside consultants and technology service providers, and they are far, far from the biggest.
The traditional global accountancy firms Deloitte, KPMG, PwC and EY put the McKinsey and BCG federal business in the shade. The Big Four are increasingly used by government for management consultancy services and delivery, particularly in lucrative technology transformation projects.
Accenture is another multinational consulting and technology service delivery company that has enjoyed the growing trend to outsource the strategy, design and delivery work of core tech transformation projects through the pandemic.
Revenue among these global firms has ballooned during the pandemic. InnovationAus.com will in the coming days publish a series that looks specifically at the 2020/21 financial year reporting period to gauge the accelerated growth in federal dollars flowing to these companies.
A note on methodology. InnovationAus.com has taken all contracts that were active during the reporting period. For contracts that ran over more than one reporting period, the total contract value was divided by total the number of days of the contract length to get the per-day value of each contract.
InnovationAus.com has then calculated how many days each contract was active in a particular reporting period and multiplied this by the per day value of the contract.
The system of contract disclosure is opaque and difficult to track. The methodology used by InnovationAus is a better indicator of the growth in the use of multinational management consultants and Big Four tech service delivery firms than the government provides.
Sourced from Innovation Aus
Written by James Riley