“A vast and obscure phenomenon”: The Senate’s vicious report on the use of consulting firms

“This report is not an end in itself, but a start. The long-awaited conclusions of the work of the Senate Inquiry Committee into the influence of public policy consultancies were made public on March 17. After four months of investigations and hearings, the senators hope to “feed public debate” based on their findings. Their hearings and the disclosure of documents, obtained under the purview of a commission of inquiry, enabled the general public to make this reality better known. For calibration reasons, the investigation focused on orders from the state and its key operators, apart from the specific case of local authorities.

The intervention of consultants in the management of the health crisis from 2020 was one of the principles of this commission, formed at the suggestion of the Communist, Republican, Civil and Environmental Movement (CRCE). This was just the “tip of the iceberg”. In reality, Senator Eliane Assassi’s report exposes a “vast phenomenon,” in her words, and reveals consulting firms’ support for “entire swaths of government policy.”

According to the report, “consultancy firms have intervened in most of the key five-year reforms, strengthening their place in public decision-making”. The Commission of Inquiry cites, for example, the reform of the personalized housing assistance (APL), in which the firm McKinsey intervened, for the IT component (a service worth four million euros), the reform of the legal aid for which, with the help of the firm EY , or the simplification of access to rights for people with disabilities, which Capgemini was working on. Roland Berger supported the reform of vocational training.

Last year more than a billion euros in consultancy expenditure for ministries and public operators

The use of private advisory services did not begin under Emmanuel Macron’s five-year term. However, the senators note a clear acceleration of this practice. The profession is described as “huge” and “increasing”. According to their calculations, the expenditure of the Council of State exceeded the billion euros, the rapporteur does not hesitate to use the expression “crazy dough”, which had been used by Emmanuel Macron for the social benefits. This is only a minimal estimate because the Commission of Inquiry did not question all public operators, but only the most important ones (such as Pôle Emploi and the Caisse des Dépôts et consignations). The committee also notes that Matignon’s circular – which was published during their work in January – is late and incomplete. She finds the target of cutting spending on consultancy services by 15% ‘unambitious’.

From 2018 to 2021, the progression is constant. The expenditure of ministries in this area has been multiplied by 2.36. Before the Senate Committee of Inquiry, the Court of Auditors itself acknowledged that it was difficult to give a complete figure. In their recommendations, the senators ask for the list of advisory services commissioned by the state and its operators to be published annually in “open data”. In addition, the commission is now starting the movement by publishing in open data the list of advisory services performed at the request of the ministries between 2018 and 2021.

In investigating the various missions of the governments acting on behalf of the government, the Commission of Inquiry is concerned about a “risk of dependency on the administration” towards them. “Engaging consultancies may well have become the reflex of a state that sometimes has the feeling that it no longer knows how to do things,” the parliamentarians write. This dependency is particularly illustrated for IT consulting, an area where the state lacks human resources.

During the health crisis, the call for consultancies was not just limited to the first wave, a period when the state was unprepared and Europe was taken by surprise by the scale of the infections. However, the use of private counselors persisted throughout the health crisis. McKinsey intervened for the logistics organization and monitoring of the vaccination campaign, from November 2020 to February 4, 2022. The cabinets have lent the State a hand on important aspects of the crisis. Accenture intervened for the implementation of information systems such as the vaccination pass. Citywell advised the state on mask supply and management from March to October 2020. But not only. Some of the documents go back to the Defense Council, while others are “used to prepare an interview on BFM TV or a Senate hearing,” the report shows.

In total, 68 orders were placed with advisers by the State, for a total amount of EUR 41.05 million. According to the senators, based on a sample of five companies, the intervention of an adviser is billed at an average of 2,168 euros per day.

“Uneven” quality of deliverables

If the Ministry of Health has repeatedly defended the added value of these cabinets in a context where the staff of central administrations is in high demand, the importance of other missions raises questions, according to the report. In particular, the senators believe that the deliverables, ie the documents that the firms produce as part of their missions, are “of unequal quality”. The quality is sometimes even questioned. In the middle of the report, we learn that the Interministerial Directorate for Public Transformation (DITP) was dissatisfied with McKinsey’s work supporting the strategy for establishing the public support service in 2019. The evaluation of the DITP laments “a lack of legal culture and more generally in the public sector”. In other cases, the DITP is surprised at the “juniority” of certain consultants, going so far as to request replacements for certain consultants who are “not up to standard”. For the Senate, the evaluation should be systematic and sanctions should apply if the quality is not there.

It also happens that certain services have “no tangible follow-up”. The most discussed example, which has come to light during the hearings, remains this preparation of a symposium on the future of the teaching profession, conducted by McKinsey at the request of the Department of National Education, at a cost of EUR 496,800. “The direct consequences cannot be determined” of this contribution, the ministry said, quoted in the Senate report.

The Commission of Inquiry was not only interested in the proper use of public funds. She was particularly attentive to public decision-making. Whether they are representatives of consultancies or ministries, they all stated that the decision was up to the politicians. However, the Senate committee points to more insidious processes and calls for a “proven consultancies influence on decision-making”. They participate in the public debate by participating in think tanks. “Some of their publications, which are particularly numerous during the election period, even resemble political programs,” the report points out. Much more problematic would be the existence of “oriented arbitrations”, according to the conclusions of the inquiry committee, which is based on various examples. The report sums things up as follows: “Consultancy firms have a habit of ‘prioritising’ proposed scenarios – with the approval or even request of the administration – which amplifies their weight in public decision-making. †

Rules of Conduct: Report Calls for “Redouble our Vigilance”

The direct integration of consultants into the teams, a practice observed during the health crisis, seems to have moved the senators. According to the report, some advisers even have an email address with the domain name of the ministry. The most telling example was the drafting of documents “under the seal of the administration”. McKinsey used it during the health crisis at the Department of Health. “This working method increases the opacity of consultancy services because it is not possible to distinguish the input of the advisers on the one hand and that of the administration on the other. In their recommendations, the senators call for an end to this possibility, for the “traceability” of the services.

Last but not least, in the search committee’s viewfinder: the ethical obligations. “The intervention of consultancies can […] raising legitimate concerns in the field of ethics,” said Didier Migaud, president of the High Authority for Transparency in Public Life (HATVP).

There are rules, both on the public side and in the charters of the firms. The report nevertheless argues in favor of strengthening the current framework. Nevertheless, we must be extra vigilant because of the influence that consultancies can exert on public decision-making, especially in the field of strategy advice, the senators argue. Because several risks have been identified.

First of all, there are the potential conflicts of interest when companies advise both public authorities and private actors. The report therefore recommends imposing a declaration of interests so that the administration prevents incidents. The HATVP would be responsible for the intervention. In general, any breach of obligations should be excluded from public contracts, the senators say.

Another issue highlighted in the report is the “porosity” when companies recruit former officials into their teams. The “pantoflage” is very real. An example is given. “Of the 22 profiles proposed” by the firms BCG and EY in their response to the 2018 DITP framework agreement, “6 are former senior officials (including a former economic adviser to the Élysée and a former adviser to the Minister of Foreign Affairs) for industry),” the report notes.

Finally, the senators are calling for pro bono services, ie those services that are provided free of charge, to be banned for the ‘public interest’. The sponsorship of skills should be reserved only for non-commercial sectors (humanitarian, cultural, social), according to the committee of inquiry. Pro bono interventions pose a risk to the ‘foot in the door’ phenomenon, to use the phrase heard at a committee hearing.

The report, which was unanimously adopted by committee members on March 16, will be translated into a legislative proposal. A “transparent” bill has already been announced.