PAC Reports on External Consultancy Spend

The Public Accounts Committee has returned to the issue of public sector use of external consultants in a report published today. The original report, published in February 2008, recommended a number of improvements for the Department of Finance and Personnel (DFP)

Today’s report shows that, while there has been a significant reduction in external consultancy expenditure and improvement in compliance with DFP guidance and good practice, there are still many examples of poor practice across the public sector.

Speaking at the launch of the report, Chairperson Paul Maskey MP MLA, said: “When the Committee last looked at the use of consultants we found significant problems — costs more than doubled over the previous five years and it looked like expenditure was spiralling out of control. Too often, external consultancy was used as an attempt to provide protection for civil servants’ decision making.

“I am pleased that this situation is now changing. The latest annual spend has reduced to around £14 million, compared with a peak of £42 million in 2006-07. There has been a change in mindset which needs to continue and become embedded throughout the wider public sector.

Mr Maskey continued: “However, poor practice remains. This was demonstrated by the fact that around 40 per cent of the contracts ended up costing more than their original value. The extent to which some contracts were extended, and the repeated nature of some contract extensions, give cause for concern.”

A prime example of continuing problems highlighted in the report was Account NI, a major reform initiative to implement a centralised accounts processing system in the Civil Service. External consultancy costs increased from an original contract value of £0.97 million to £9.6 million and consultancy support was required for four years longer than originally envisaged.

Speaking in relation to this project, Mr Maskey said: “The Committee is appalled that DFP did not accept that this represented a cost overrun. The Committee is unambiguous on this matter – the project experienced a huge cost overrun and should have been retendered and opened to competition. The lack of competition for almost £9 million is simply unacceptable.

In closing Mr Maskey said “Undoubtedly, there have been improvements on consultancy spend since our last review in 2008. However, the latest annual spend, £14 million, is still a lot of money and, as I have outlined, more still needs to be done, if we are to ensure that spending in this area is transparent, well-managed and represents good value for money.”