How do we know government is getting quality advice from consultants?

By Martin Bortz

February 8, 2018

Getting the most value for money from consulting engagements requires public servants develop a deeper knowledge of what consultants do on a day-to-day basis. It also needs public servants to skill up in other areas.

Policymaking today is as complex as it has ever been – perhaps more so. Given this, it makes sense that policymakers sit at the centre of a complex web of advisors. This web includes universities, think tanks, advocacy groups, international organisations, ministerial staff and, of course, public servants.

One of these advisors – the consultant – has recently become the focus of additional parliamentary scrutiny. Fuelled by concerns over their extensive use, the Joint Committee of Public Accounts and Audit (JCPAA) is currently inquiring into the use of consultants and contractors across the Commonwealth public sector.

Concerns over the extensive use of consultants are understandable. Private entities exist to make a profit. It is entirely conceivable that such a goal may come into conflict with providing advice in the public interest. We have recently seen this problem erupt in a dramatic fashion in the United Kingdom, where McKinsey & Company played a pivotal role in the restructuring of the National Health Service – with attendant complaints of conflict of interest.

“There are sound reasons for policymakers to seek many sources of advice, but this must be balanced with concerns for democratic accountability.”

Furthermore, consultant reports are often provided on a commercial-in-confidence basis. This means that they are generally exempt from Freedom of Information laws. As such, it makes it difficult to hold consultants to account for any advice that they may give.

At the same time, attempts to ensure that agencies are procuring an appropriate amount of consulting work are problematic. As the current Commonwealth Procurement Rules acknowledge, consultants are typically called in to provide advice on projects that require a highly technical or specialist view. These kinds of matters are inherently ambiguous, and it can be difficult to predict when exactly such expertise might be needed.

Research also highlights that clients have a limited understanding of what consultants actually do on a day-to-day basis. This can pose challenges in conducting a meaningful assessment of whether the amount or type of work was appropriate. Thus, determining some ‘right’ quantity of consulting work is always going to be a challenge.

The problem with ‘inherently government’

So what to do? While there are sound reasons for policymakers to seek as many sources of advice as possible, these issues must be balanced with concerns for democratic accountability, particularly when consultants are being used in political or policymaking capacities.

“We need to enhance the ability of public servants to not only effectively manage their consultants, but also to be able to scrutinise and critically engage with their advice.”

One approach to resolving this issue has been to allow consultants to be used only for work that is not of an ‘inherently government’ nature. Indeed, the Victorian Department of Treasury and Finance had, until June 2013, taken this approach. However, what is ‘inherently government’ work is not so clear. In 1991, the American Government Accountability Office considered this issue in great depth and found the concept very difficult to define.

While it is vital to be vigilant about the nature, role, and use of government consultants, our efforts should instead focus more on ensuring that consulting projects elicit the best possible advice. On this point, the inquiry focuses too much on reporting and governance arrangements. While this focus is reasonable within the JCPAA’s remit, it is insufficient to ensure that we are getting the most value-for-money from consulting engagements. Rather, we need to enhance the ability of public servants to not only effectively manage their consultants, but also to be able to scrutinise and critically engage with their advice.

This means two things. First, it necessitates a deeper knowledge of what consultants do on a day-to-day basis. Typically, advisory engagements will involve forms of applied research. Thus, to better understand consulting work, public servants need to better understand the research process. Second, it means that public servants should be trained in the logic of critical argument. This is not to suggest that public servants don’t have the capacity for deep thought – far from it. Rather, I am suggesting that there are technical components of argumentation, reasoning, and analysis that could be better inculcated across the public sector

Though problematic, consulting to government definitely has a place within modern systems of public policy. Because of this, the consulting phenomenon is not likely to go away any time soon – we just need to get better at understanding it.

Martin Bortz is a research fellow at the Melbourne School of Government. He is currently completing a PhD on the use of management consultants in public policy, and also worked as a consultant for several years.

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