newsCO.com.au–Federal government procurement spend hits $47 billion in 2016-17

December 8, 2017

The Coalition government’s moves to cut 15,000 public service jobs has coincided with a doubling in spending on private consultants with specialist skills, with the big four consultancy firms winning billions in work since 2012-13.

A new report from the Australian National Audit Office showed federal government consultancy contracts established because of “need for specialised or professional skills” grew from more than $200 million in 2012-13 to more than $500 million last financial year.

Job cuts since the 2013 federal election have seen the public sector workforce at the lowest level in nearly a decade and nearly $700 million being spent on consultancy contracts in 2016-17.

The figures include contracts which required independent research or assessment to be completed, and skills considered “currently unavailable” within the contract’s home department or agency.

PwC Australia topped the list of largest suppliers of consultancy contracts to the public service, earning nearly $175 million from 411 contracts in the five-year period.

Ernst & Young had 350 contracts worth $129 million, ahead of KPMG with 512 contracts and $118 million.

Deloitte had 344 consultancy contracts worth $80 million, ahead of professional services firm Accenture who received 22 contracts worth $39 million.

The largest advisory and consultation categories included management advisory services, IT consultation, research programs, strategic planning, business intelligence consulting and economic and financial evaluation of projects.

During Labor’s time in office under Kevin Rudd and Julia Gillard, the size of the federal bureaucracy peaked and spending on consultants dropped every year, falling 32 per cent over five years.

In August it was revealed federal government spending with Australia’s biggest consultancy firms more than doubled since Tony Abbott’s election win, costing taxpayers nearly $1 billion since 2013, despite pledges to drive down public service outsourcing.

Figures provided to a Senate committee showed contracts with the big four consulting firms more than doubled in value from $196.4 million in 2013-14 to $420.3 million in 2015-16.

The spending was highest in the 2015-16 financial year, topping $500 million across the four biggest firms.

The total number of annual contracts grew by more than 300 in the period, passing 1000 in 2015-16 alone.

Former South Australian senator Nick Xenophon described the cost to taxpayers as “staggering and outrageous” and asked the Commonwealth Auditor-General to investigate the processes involved in awarding contracts.

Whole-of-government procurement cost taxpayers $47.4 billion in the 2016–17 financial year alone.

The latest report showed the Defence Department and Defence Materiel Organisation had 123,319 contracts in the five-year period, worth $12 billion.

The Department of Immigration and Border Protection had 13,200 contracts worth $15.2 billion, ahead of the Department of Human Services with 12,800 contracts worth $7.3 billion.

Spending was biggest on commercial, military and private vehicles and accessories, costing a total of $42 billion.

The month of July remains the most common month for new federal government contracts to start, with the data showing a significant increase in the number of contracts commencing in the final month of financial years.

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