4 Being an astute customer
17. Consultants' charges can be complicated; in particular,
aspects such as the relocation of staff, use of flat rate expenses,
and travel rebates which require close monitoring to ensure they
are in line with departmental policies and contracts.[29]
18. Departments do not actively engage with or manage
the relationships with key consultancy suppliers to better understand
how they work. Most departments are not aware of all the consultancy
projects that are done by their key consultancies within their
department. Departments rarely identify their key consultants
or have regular, open communications to discuss pricing strategies,
the capabilities of their suppliers, or their performance. Discussions
often take place at project level, but departments rarely act
as a single, joined-up customer when dealing with their consultancy
suppliers. In some cases, suppliers are better informed about
the consultancy work done at a department than the department
itself.[30]
19. There was an increase in the value of central
government business for the top 15 suppliers in 2004 and again
in 2005.[31] At the time
of the C&AG's Report, estimations suggested that small and
medium sized firms accounted for less than half of the consultancy
spend in central government, despite often being better placed
than larger firms to provide specific expertise.[32]
Between 2003 and 2005, central government reduced its total
spend on consultants, indicating that the top 15 suppliers have
increased their share of the central government consulting market.[33]
OGC makes available to departments financial, contract and strategy
information on some consulting suppliers, however of these, only
one is in the top five and only four are in the top 10.[34]
20. In 2003 OGC identified use of incentivised contracts
as an area to improve.[35]
But still only 1% of central government consulting contracts are
paid this way. Time and materials remains a common form of payment.[36]
Incentive and fixed price payment mechanisms can help control
costs and formalise the joint objectives between clients and consultants.
The different payment options require a strong understanding of
the project's objectives, outputs, outcomes, risks, and approach.
For example, in fixed price arrangements, public bodies need to
be clear on how to deal with changes in scope; in incentivised
ones, they may need to incorporate potential price variations
into their financial planning.
21. Departments do not have adequate controls on
awarding contracts by single tender which means departments do
not get the benefits of competition such as better prices and
a broader range of ideas.[37]
Of the C&AG's case study departments, four rated as having
only made 'some' progress and one as minimal or patchy progress
in this category.[38]
22. It is important for departments to create the
right environment to make a consultancy project a success and
to invest in getting their staff fully engaged with consultancy
projects.[39] Projects
may fail to deliver the expected benefits when there is little
incentive for departmental staff to make the project a success.[40]
Fewer than half of central government organisations consult with
the responsible senior manager involved in the consulting projects
on their satisfaction with the consultants, and only 64% collect
this information from project staff.[41]
29 C&AG's Report, para 1.9; Qq 1, 62, 110-111 Back
30
C&AG's Report, para 3.2; Q 104 Back
31
Qq 7, 65 Back
32
C&AG's Report, para 2.11 Back
33
C&AG's Report, para 2.10 Back
34
C&AG's Report, para 3.4 Back
35
Ibid Back
36
C&AG's Report, para 2.15, 2.16; Qq 63, 68-70 Back
37
Q 90 Back
38
C&AG's Report, Figure 2 Back
39
C&AG's Report, Supporting Paper I, Para 4 Back
40
C&AG's Report, Supporting Paper I, Para 2 Back
41
C&AG's Report, Para 2.18 Back
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