PART 3: CONSULTING AND GOVERNMENT – FROM CONCERN TO ACTION
Consultants have been elevated from extra to lead actor on the government stage. It is a global trend that began in the 1980s but has accelerated in Australia over the last decade.
Recent growth in consulting (broadly defined) is staggering. Government spending on management advisory services in 2022 was five times larger than departmental resources allocated to the Social Services department. Many argue that this is creating an unhealthy dependency that is ‘infantilising’ the public service.
Political ideology has been prominent. Caps on recruitment and messaging by the previous government drove the public service into the welcoming arms of consultants.
While prominent, ideology is not the full story. An innovation cycle is also at play. Consultants have been overhyped and overused. This has led to disillusionment and a need for recalibration. In Australia, this disillusionment has been fanned by a current scandal which has added weight to claims consulting is a ‘big con’.
The election of a new government has shifted the ideological balance. This shift has created an opportunity which senior public servants are keen to take up. A recalibration of sorts has begun. Its direction is clear, but its ultimate objective is not.
The great recalibration?
Budget documents reveal a mix of aspiration and caution. Government wants to boost public service capability and has removed a formal staffing cap. But it also intends to “carefully assess” the need for additional staff and consider “alternative delivery options” before funding new staff.
Perhaps government’s most notable investments have been in an APS Capability Reinvestment Fund and funding to establish a centralised ‘internal’ consultancy. The idea of the latter is to provide high-quality consulting services more cheaply than private firms. Several departments have also received funding which will result in some contracted roles being absorbed into the APS.
Funding for these initiatives is modest. The internal consultancy has start-up funding of $10 million over two years to create an organisation which competes with sophisticated global incumbents in a market worth billions. Expectations are nonetheless high. In opposition, the now government expected to cut $3 billion from consultancy spending.
Savings, as well as transformation, are clearly on the agenda. Early signs are that public service practice is shifting, with consulting spend in 2023 well down on 2022. The earthly paradise for consultants identified in Part 2 is looking a little less bright.
Implicit in government’s messaging is an acceptance that private consulting will continue to play a role. This will disappoint some. But it reflects a sober judgement, both on government’s needs and the difficulty of change.
Unlike Hollywood, government cannot do everything everywhere all at once. Reducing reliance on private consultants, especially if it involves employing more public servants, is likely to be well down on the electorate’s priority list. Despite PwC’s efforts, those who think the window for change will not stay open for long could be right.
Imagining a different future
Let’s pretend for a moment that the window for change represents more than an ideological adjustment and will be open for longer than some expect. What should happen? Some ‘slow’ thinking which draws on Parts 1 and 2 provides some potential hints.
A first step would be to establish an objective for the government’s use of consultants that focusses on ends rather than means. One possibility might be “delivering better support for government and better outcomes for the public in both the short and long-term”.
On its own, this objective does not say much. Government is full of such statements. They provide an aspirational anchor but nothing more. To bring more definition, some intermediate principles are needed. An example would be:
consultants should be used to supplement and not supplant the public service,
public service capability should be protected against infantilisation,
government and consultant should operate as a partnership between a judicious engaged government client and a virtuous value-adding consultant.
The above three principles establish pre-conditions for a well-functioning system but do not themselves provide a basis for action. For this, some judgements are needed about what is happening. These might be something like:
the role played by consultants has grown beyond supplementation and consultants are doing tasks that would be better done by the public service,
growth in the use of consultants is unsustainable and is creating an over-dependence that risks long-term infantilisation of the public service,
neither government clients nor consultants are consistently meeting the conditions for a productive value adding relationship.
To provide clarity on the types of action needed, one more level of framing might be helpful. This involves establishing some more specific and tractable goals for change. These might be something like:
reducing demand for externally provided consulting services, especially in areas that government sees as core public service responsibility,
rebuilding public service capability where infantilisation is occurring,
creating the conditions for more productive government-consultant relationships.
Together, these areas provide a potential focus for the future. The first two have received some modest attention from government. The third, to date, has not. It is something government might be wise to address.
Seeing the elephants
In developing specific actions, it would also be wise for government to look for elephants. In many cultures, seeing an elephant is a symbol of good luck. Not in government, where elephants in the room are usually avoided. It is a mistake.
At the heart of the consulting conundrum lies one enormous elephant – government’s need for speed. Modern democracy is wildly impatient. Government’s commissioning ability far outweighs public service capacity at any point in time. Timelines are driven by political aspiration and budget funding flows rather than sensible project planning.
For governments in a hurry, spending money on external support creates much quicker action than building internal capability or adjusting priorities. The faster government wants to move the more external support will be needed. It is that simple.
A second important elephant involves tensions between competitive tendering and relational contracting. Government’s default approach - competitive tendering – works best for one-off transactional purchases where clients have clear idea of what is needed, competition is high, and consulting value can be assessed through document-based tenders. The alternative - relational contracting - works best when delivering value requires client and consultant to operate in partnership over a long period of time based on a deep understanding of each other’s context and capabilities.
Both approaches have a place in government. A relational model requires some built-in protections (eg to avoid nepotism) but is better suited to many consultant-government engagements. It is a point generally lost in government procurement.
A third elephant involves ideology. Elected governments have a right to set an ideological tone. At the end of the day, however, most relevant spending delegations rest with public servants not politicians. Public servants need to balance political preference with an independent view on what delivers best value for the public. Underpinning this view should be clear evidence on ‘what works’. This is currently lacking.
The final elephant relates to types of consultants. Most concern about government’s use of consultants centres on big global consulting firms. These firms present as Swiss army knives, able to do anything. Critics often point to alternatives – such as academic institutes or smaller firms – and argue they bring more expertise and less drive for profit. This misses an important point. The core value brought by big firms is less their expertise and more their speed and flexibility. They are available at the right time with (at least on the surface) the right capability. In a world driven by speed, this has great value.
Some ideas for the future
This series was not about providing a resolved strategy for government. After all, something needs to be left for the public service and its consultants (not me) to do. Rather, its purpose was to explore an issue that is creating much heat but less slow thinking. In this spirit, here are some final ideas / points of emphasis.
First, government should look hard at its need for speed. Elected governments are right to be demanding and aspirational. But too often speed overtakes good planning and the development of internal capacity. This leads to more problems than an over-reliance on consultants.
Second, government should make it easier for public servants to quickly find other quality, and trusted, sources of help. One approach might be to establish a panel of ‘government fellows’ from academics with a proven record of delivering public sector value. Another might be to create a ‘public sector alumni’ from the pool of retiring or retired public servants. A more sophisticated market would help public servants better match service provider to their specific needs and overcome the speed dial advantage big firms currently enjoy.
Third, government should invest more in managing its overall relationship with the consulting world. It is extraordinary that a capability larger than most departments receives so little attention. One step might be to undertake a periodic whole of government review of the relationship. Another might be to establish a clear statement of ethical expectations for consultants working with government (David Shaw’s six virtues in Part 1 provides a start). A more considered approach to relational contracting would be a third.
Fourth, government needs to take its duties as client more seriously. Expecting consultants to be more virtuous without becoming a more judicious client is not a path to success. Public servants need to be better trained in understanding when and how consultants add value, how to select the right consultant for the job and how to act as an engaged partner rather than a disinterested spectator. The communications skill gap between consulting and the public service should also be closed. These are things the APS Academy should, perhaps, take on.
Finally, if all else fails, government can always go back to Part 1 and rustle up some bezoar stones. They work wonders apparently.
Disclosure: Damala St Consulting is a sole trader which has worked with government agencies, hopefully delivering genuine public value.
First published in The Mandarin