Who’s really got Ottawa’s ear?

Paid consultants are everywhere in Ottawa. This so-called 'shadow public service' offers expert analysis at a pretty penny—and never has to worry about pesky accountability The post Who’s really got Ottawa’s ear? appeared first on Macleans.ca.

Who’s really got Ottawa’s ear?

Last May, in what we now know was merely the opening chapter of the pandemic, Innovation, Science and Economic Development (ISED) posted one of the high-level help wanted ads that regularly go up on the federal government’s procurement website. ISED was seeking someone to analyze “key strategic industrial sectors,” model the impacts of COVID-19 for Canadian industry and “spark ‘big ideas.’ ” The “big ideas” bit sat perkily inside its own quotes throughout the tender documents.

The Canadian outpost of McKinsey & Company—the global consulting firm formerly headed by Dominic Barton, now Canada’s ambassador to China—won the $452,000 contract in early June, at which point its value ballooned to $3 million.

In December, as the rollout of COVID-19 vaccines became an imminent reality, the federal government invited a handful of companies to submit bids for creating a national IT platform to track vaccine shipments, storage and adverse reactions. A month later, the Globe and Mail reported that the government had awarded the $16-million contract to Deloitte for an “enhanced national vaccine management IT platform” (known as NVMIP) that would upgrade the Public Health Agency of Canada’s existing IT infrastructure.

Canadian Accountant, an online news site, crowed over the “lucrative federal government contract” that was worth more than all the audit fees earned from new clients by the so-called Big Four accountancy outfits (Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers) combined in the previous year.

And then in early March, the federal government published another tender that outlined the Public Health Agency of Canada’s (PHAC) past work on inequalities related to behavioural risk factors such as obesity, unhealthy eating, physical activity and smoking. COVID-19 has amplified these issues, the tender went on, so PHAC was seeking a contractor to “identify, assess for quality, analyze and synthesize the best available evidence” on the sorts of interventions that might help.

Government contracts for outside help like these tend to draw attention only when they go spectacularly wrong (see: Phoenix pay system) or when there are eye-bulging amounts of money involved. Aside from the Deloitte contract, that isn’t the case with these examples, but the federal government’s use of consultants is worth examining for another reason: what it says about how the public service operates, what the government of the day trusts it to do and who else has the government’s ear.

The PHAC project, for example, is classic public health policy analysis—taking a broad look at what gets in the way of your population being as healthy as possible. Only the nation’s public health agency was asking outside consultants to do the legwork.

And of the ISED search for “big ideas” to get industry back on its feet post-pandemic, David Zussman, a former senior executive in the Privy Council Office and currently adjunct professor in the School of Public Administration at the University of Victoria, says, “I would have been furious if I was working in the federal government and I saw that this contract had been given to McKinsey. That’s exactly what I thought I was being paid to do when I was in policy shops.”

Nearly every sector and entity needs to call on outside help from time to time. In the simplest sense, a consultant is any person or team hired on a freelance basis to provide some specialized expertise or service. There are communications consultants who will polish your message, government relations consultants who promise to get your cause a sympathetic ear in the halls of power, IT consultants who will handle all manner of digital infrastructure, and management consultants who help with efficiency and change.

In the government-adjacent Ottawa bubble, they are as ubiquitous as wallpaper and about as unexamined, too. Consulting shops function as very nice halfway houses for the huddled masses who exit politics; brand names like Accenture, Earnscliffe and StrategyCorp dot slick office lobbies and the sponsorship pages of conference programs, and each has their own cinq à sept headquarters downtown (in a non-pandemic world where such things happened, anyway).

These firms are one-stop shopping for a huge range of experts on call, or broad reach if, say, you are planning to host a multinational sporting event and want to know the ups and downs of how other jurisdictions have done something similar. “You could assign a bunch of public servants to do that, but it’s just easier for a global consulting company, by its very nature, to do that for you. And that might be all that you ask them to do,” says Sen. Tony Dean, a former professor at the University of Toronto’s School of Public Policy and Governance and an expert in public service reform. “It might be that they come in with what turns out to be a very expensive PowerPoint presentation.”

In federal government terms, consultants show up in the Public Accounts of Canada—the federal government’s balance sheet—as “professional services.” Research students at the Institute of Fiscal Studies and Democracy at the University of Ottawa (which is led by former parliamentary budget officer Kevin Page) used that data to provide Maclean’s with an analysis of how the federal government’s spending on consultants has changed over time. Donya Ashnaei and Elo Mamoh found that between 1995—when Jean Chrétien’s government set out to wrestle Canada’s deficit into submission—and 2000, consultants and other freelancers accounted for an increasing share of external expenses, and then flattened. And spending on outside experts has grown faster than other staffing­; between 1995 and 2020, professional services expenditure (PSE) more than doubled, rising by 213 per cent, while personnel spending grew by 138 per cent, though the government still spends much more overall on personnel. PSE grew by 6.3 per cent a year on average under Chrétien, was nearly flat at 0.8 per cent average annual growth under Paul Martin, back to five per cent growth under Stephen Harper and 4.6 per cent under Justin Trudeau.

In dollar amounts, PSE has risen from $4.2 billion annually in 1995 to $13.3 billion last year. In 2020, the largest proportion was engineering and architectural services (27 per cent), followed by business services such as accounting and human resources (18 per cent), informatics including IT and computer services (12 per cent) and management consulting (five per cent). The rest was comprised of undisclosed services (12 per cent) and a smorgasbord of other categories (26 per cent).

A 2020 report from the Professional Institute of the Public Service of Canada (PIPSC) found that between 2011 and 2018, the federal government “outsourced” $11.9 billion in work to IT consultants, management consultants and temporary contractors, and over that time, the annual bill doubled from $1 billion to $2.2 billion. IT consultants account for the majority by far—71 per cent—while management consultants eat up 24 per cent and temporary staffing five per cent. “Years of unchecked spending on outsourcing has created a shadow public service of consultants operating alongside the government workforce,” the organization says. “This shadow public service plays by an entirely different set of rules: they are not hired based on merit, representation, fairness or transparency; they are not subject to budget restraints or hiring freezes; and they are not accountable to the Canadian public.”

PIPSC—which, as the largest public service union in Canada, representing 60,000 civil servants, has skin in this game—also found that the final bill for IT consultants comes in at double the cost of the original contract on average, while management consultants and temporary help carry an average “markup” of 65 per cent over the original estimates.

Nearly everyone knowledgeable about this area who was interviewed for this story described the same decision flow-chart when a government is sorting out where to find expertise. First is to figure out whether you have the ability already within the public service. If you are lacking something, you need to decide whether it makes more sense to build a team internally or cover the need temporarily with a consulting contract.

“More and more, they’re being asked to solve the types of issues that used to be done internally,” says Zussman. “It takes a huge investment of time and energy to build this capacity up. And in terms of the federal government, the priorities have not been to build the policy capacity up.”

The government did not make anyone available to discuss its strategy on consultants. For its part, PHAC said its tender on health inequalities was necessitated by the “rapidly changing demands” of the pandemic, which mean that “PHAC experts are expected to allocate their attention to a number of files, making it challenging to devote themselves to a single project.”

Paul Boothe, a former senior public servant and retired professor at Western University’s Ivey Business School, distinguishes between two categories of consultants: professional services and what he calls “advising.” A government brings in the professional services sort when it needs specialized expertise, he says, such as the restructuring of Chrysler and General Motors during the 2008 financial crisis when they brought in accounting firms and bankruptcy lawyers. “They have an expertise that, one, you don’t have,” says Boothe, who was deputy minister at what was Industry Canada at the time. “And probably, two, it doesn’t make sense for you to have on standby in government.”

That is different to him from the advising type of consultant. “In my experience, that takes place when the political side—ministers’ offices, the prime minister’s office—wants to hear from a particular person,” he says, mentioning Michael Barber, an adviser to Tony Blair’s U.K. government who was trotted around Ottawa and out to cabinet retreats in the early days of Justin Trudeau’s majority government, before that buzz faded to a shrug. “It might not be the very biggest in dollar terms, but it may have a lot of impact on their thinking and actions.”

Governments may seek that kind of input because they don’t trust the public service; in Boothe’s experience that is more often the case with Conservative governments, not for ideological reasons, but because they are in power less frequently and have less comfort with the public service. “My other motive for seeking outside advice is that you think that all the smart people are outside government, so they would have a better idea of how to get the government to do things that you want,” he says. He finds that is more common with Liberal governments, though he’s not exactly sure why. He worked as an adviser to Alberta provincial governments through the ’80s and ’90s and they had an expression to illustrate this tendency: “An expert is from 50 miles away.”

And a sense of distrust or frustration between a government and the public service can set in from the earliest moments of the relationship. A new government will sweep into power with a full slate of ideas to implement (remember 2015?) and then run headlong into a public service that is, by design and necessity, all about mediating between competing interests, identifying obstacles and proceeding with caution. “The problem is that a lot of these things can’t be implemented, or can’t be implemented the way they were planned, or there are actually other, more pressing problems,” says Peter Donolo, vice chairman at Hill + Knowlton Strategies and former director of communications to Chrétien. “And then governments hear resistance from the public servants, and governments say, ‘Well, screw you, we’re going to get a consultant in to tell us how to do it.’ ”

There is natural selection at work if governments are now mainly interested in the second half of the “fearless advice and loyal implementation” mantra of public service. “Some of this has to be understood in terms of what governments expect of their public service. If a government wants creative strategic advice from the public service, well, they will seek it and build it,” says a source with deep knowledge of this area, who agreed to speak on background. “If all they want is execution of their ideas that they came in with . . . then there’s not so much call for the public service providing that kind of advice.” And there is a circular nature to this: if certain abilities in the public service are allowed to atrophy, then when they are needed, it may seem more expedient or less expensive to bring them in temporarily through consultants. “It would never have been perfect and the public service never had a monopoly on good advice, but I think you would witness a very strong and clear deterioration on the policy advice role,” says that same informed source. “They may be better than they used to be on execution; they may be better than they used to be on implementation. But on the policy and advice role, it’s a muscle that hasn’t been used enough.”

Budget pressures can also carve off that type of capacity because it’s a back-of-house function that doesn’t immediately affect services to citizens. “It’s short-sighted because it’s hugely costly in the long term,” that same source says. “But it’s politically easy.”

As for the value consultants offer, Don Drummond, Stauffer-Dunning Fellow at the School of Policy Studies at Queen’s University and a former senior bureaucrat in the federal finance department, is “agnostic” about the basic concept. “It can be misused, but it can be very valuable,” he says. In 2011, he was asked by the Ontario government to head a commission on reforming the public service. The bureaucrats had already run three attempts and come up empty because of a tendency they dubbed the “RCMP Musical Ride phenomenon” when Drummond worked in the federal public service. That is, if you ask people to suggest cuts to their own department, they will offer up the one thing that is most beloved by the public and politicians so that everyone backs off. “They gave me all the materials from these three exercises,” he guffaws. “And I said the only thing I learned from going through these things is there are four-inch D-ring binders.”

In a case like that, Drummond argues, bringing him in as a set of fresh eyes was the only way to get Ontario’s deficit-reduction plan done. “For the cost of the salary of an assistant deputy minister, I laid out an entire economic and fiscal blueprint,” he says. “This is going to sound extremely egotistical, but I do have the proof that no Ontario civil servant could do it because they tried it for many years and they didn’t pull it off.”

But Drummond, having worked extensively as a public servant himself, is perhaps the ideal inside-outside set of eyes for a job like that. Another person with deep knowledge of the federal public service said they once spent time with a consultant from one of the big accountancy firms who needed basic information about government that any undergrad would know spoon-fed to them. “That was some of the most wasteful money ever spent,” they say. “They do help shake out inertia, or incrementalism or whatever—that can be good—but the reckless consultant comes in, builds, leaves and they don’t have to live with the consequences of their advice.”

This person says there is also a misguided notion that policy should only come from the public service—or ever really did. “The role of the public service is not to be the R&D generator of ideas,” they say. “It is to take all kinds of ideas and competing interests where you can’t make everybody happy . . . and turn them into actionable choices in a cabinet room.” To this person, those who argue that some earlier version of the public service was a more noble, capable and potent entity are falling into a rose-tinted nostalgia trap.

But the hired-gun aspect of consultants creates a more fundamental problem: they don’t have to live with the results of what they recommend. “The irony of course of consultants—I’m a consultant!—is consultants don’t execute,” says Donolo. “Consultants give you advice and then walk away. They might give you a plan, but then they walk away. They walk away. They’re not the guys who are there at the end of the day holding the bag or doing the job.”


This article appears in print in the May 2021 issue of Maclean’s magazine with the headline, “Welcome to consultant town.” Subscribe to the monthly print magazine here.

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