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High-priced help: Spending on consultants increases by 228%

December 11, 2014

3-minute read

I am not sure which is more alarming: the fact that the Saskatchewan government increased its spending on consultants by 228% in the last five years, or that Provincial Auditor Judy Ferguson found that the government can’t even justify their need for consultants.

Ferguson’s report, released December 3, devotes an entire chapter to the surging use of consultants by the Ministry of Central Services. She documents that spending on consultants increased from $8.1 million to $21.7 million from 2008-09 to 2013-14. The total spending on consultants for all ministries shot up even more: from $36.7 million to $120.3 million, or by 228%. Such a meteoric rise in consultants must mean they are desperately needed, doesn’t it?

It appears not. In 70% of the contracts her office reviewed, the government could not document why a consultant was hired. In particular, the Ministry could not explain “why a consultant was needed rather than using in-house resources.”

Throughout her report, Ferguson questions the government’s decision to use consultants over existing knowledgeable staff. Failing to properly assess internal needs and existing capacity could lead to hiring a consultant “when existing staff could complete the project/task,” she wrote. She also pointed out that “if the Ministry does not have processes to retain or transfer needed skills or knowledge, then it may rely on consultants for longer periods at a greater expense than hiring permanent employees.” Without clear processes and guidelines, “the Ministry is at risk of spending more on consultants than it would be acquiring similar skills through hiring and training employees.”

The provincial auditor linked the decisions to hire external consultants to the government’s strategy from 2010 to reduce the public service by 15% or 1,600 positions over four years. The rationale behind these cuts to the workforce was to “reduce the size and cost of government operations.” The 2013-14 provincial budget, however, shows they exceeded their goal, eliminating over 1,900 positions. Such cuts are part of the right-wing ideology of leaner, more efficient government. But how lean is a government that increases spending on outside advice by 228%?

Another alarming fact in the Auditor’s report is that the government has not been monitoring the consultants it hires. Ferguson reported that “over 90 percent of the contracts examined did not specify the position to whom the consultant was to report at the Ministry, or specify how consultants would be monitored and evaluated.”  It appears that these are free-range consultants, reporting to no one.

The Auditor’s report does not provide details on the nature of the consulting work being done in government. It is well known that one of the most expensive contracts is the $40 million deal with John Black Associates from Seattle to implement Lean management in health care. Additionally, a large part of the increase in consultants could be related to this government’s promotion of privatization and public-private partnerships (P3s). P3s are notorious for using a high number of consultants at excessive costs.

The website for SaskBuilds, the agency responsible for P3s, lists seven different consultants for the P3 schools project alone – this is even before the project has been awarded. Once P3s are in place, the cost of consultants skyrockets. The Ontario Auditor General, for example, criticized the “excessive” payment of $34 million to consultants in the building of the P3 hospital in Brampton, Ontario.

The increased use of consultants in Saskatchewan not only diminishes the role of our impartial and knowledgeable civil service, but also creates a greater reliance on private sector consultants who may have a particular interest in pushing privatization or a private sector model of running government. The private sector model, however, does not always align with the goals of public service or the public interest for that matter.

For instance, the City of Regina hired a consultant to conduct a core services review of the city’s operations and administrative structure. The consultant’s recommendations led to a 27.3% increase in managers from 2005 to 2008. The average Public Works manager went from overseeing 38 front line staff in 2001 to nine employees in 2009. The increased number of managers has not meant managers are doing more and there’s less need for consultants. Instead, the use of consultants by the City keeps rising --the 2015 city budget shows a 39.3% increase for professional and external services over last year (p. 41).

The overuse of consultants also raises the important question about transparency and accountability. Not only are consultants not accountable to the public, but their knowledge is proprietary and can’t be disclosed. Freedom of Information (FOI) laws exempt information belonging to third party companies. So if a government is relying on a business case developed by a private consultant to justify privatizing a public service or taking a certain course of action, the public will never know if the reasons were justified because that information belongs to the private company.

I have been refused access to business cases and documents produced by consultants numerous times. Key information in the business case developed by Deloitte for the City of Regina’s waste water treatment plant can’t be released because it belongs to Deloitte. Information on the government’s decision to build new schools using a P3 model was also redacted because the information belonged to a third party. The full business case justifying the privatization of hospital laundry was also redacted.

I applaud the Provincial Auditor for pointing out the serious shortcomings of this government in its use of consultants, but the public has other reasons to be alarmed. The government is essentially contracting out its obligations to the public by relying on consultants to develop public policy.

Cheryl Stadnichuk is the Chair of the CCPA Saskatchewan board and a research officer with CUPE Saskatchewan

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