3.14 Use of Consultants and Senior Advisors in Government
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Chapter 3 Section 3.14 Use of Consultants and Senior Advisors in Government from $434 million in the 2008/09 fiscal year to 1.0 Summary $360 million in 2017/18, with fluctuations over those 10 years. About 80% of the 2017/18 spending was for IT The Ontario Public Service requires external servi- consultants, and the rest for consultants in manage- ces and advice from time to time when its own staff ment, communications, policy, technology, and are unavailable or lack the required skills or exper- research and development. tise. It usually fills these needs by using consultants The Province does not track its spending on and advisors. As a general rule: advisory services, but we estimated it at about consultants provide expertise and strategic • $4 million a year. advice to government for use in decision- We audited the procurement of goods and making; and services, including consulting services, in a 2016 • advisors provide high-level advice to the Pre- report titled “Supply Chain Ontario and Procure- Chapter 3 • VFM Section 3.14 mier or a minister. ment Practices,” and noted an over-reliance by the Using consultants can be costly, as they are gen- government on IT consultants. Since the audit, both erally paid more than full-time staff. In 2016, the the Treasury Board Secretariat and Supply Chain Treasury Board Secretariat compared the cost of Ontario made improvements and hired additional information technology (IT) consultants to similar full-time staff with a goal of reducing the reliance full-time staff, and determined that an IT consult- on IT consultants. We also noted since the 2016 ant costs $40,000 a year more, or about 30% audit that expenditures for consulting services have more, than similar full-time staff, after factoring in decreased by 10%. employee benefits. A similar comparison by the U.K. Although there has been improvement, there National Audit Office in 2016, not specific to IT con- is still an over-reliance on IT consultants. We also sultants, found that consultants doing operational noted that ministries at times used consultants work were paid around twice as much annually as for ongoing or operational work that could have similar full-time staff. However, consultants can been undertaken more cost-effectively by full-time be cost-effective when they are engaged for short permanent or term employees. periods, to perform specialized services, or for their The Ontario Public Service Procurement Direc- expertise, instead of having to hire new permanent tive (Procurement Directive) outlines the require- full-time staff. ments for ministries to follow for the procurement Overall spending on consultants by ministries and management of consulting services. It has dropped more than 15% over the past 10 years, 619 620 stipulates that consultants are not to be used when substantially more work at an additional cost internal government resources are available, and of $360,000, quadrupling the value of the that ministries must manage consultants to ensure original contract to $480,000. that deliverables are completed on time and within • Contract deliverables and invoices often budget. From our review, we generally found that lack details to determine if value for ministries were procuring and managing consult- money was received. We found in our ants in accordance with the procurement directive, review of consulting contracts that most did with a few exceptions noted. not have specific costs attached to the various The following are some of our significant deliverables in the contract. Lack of detail on observations: the expected deliverables can make it difficult • Consultants perform ongoing or oper- to determine if they were received before ational work that government staff could making payment, and if they provided value be doing, and at a higher cost. Ministries for money. We also noted that the majority used consultants for regular operational and of invoices submitted for contracts that we ongoing work such as project management, reviewed provided little documented detail instead of for short terms (less than a year on the work performed. As a result, the invoi- or two), specialized services or expertise, for ces were paid with little detail or evidence which the costly consultants are best suited. about what was received. For example, an individual consultant was • Post-assignment evaluations of consult- hired to provide analysis and development ants not completed. Post-assignment for the e-Careers software application. The evaluations help assess the quality of work initial contract from February 2014 to March and value for money received. They are also 2015 was for $210,000, but was extended useful to assess the suitability of a consultant three times to March 2018 at a total cost of for future work, and to avoid repeated issues. over $900,000. Based on the average cost of We found that post-assignment evaluations Chapter 3 • VFM Section 3.14 permanent IT staff, this work could have cost were not completed for the majority of about 40% less if undertaken by permanent contracts we reviewed, and there was no evi- full-time staff. dence that past performance of consultants • Contracts amended for more work without was considered before contracting them for competitive procurement. Twenty-two per- new work. cent of the contracts we reviewed that were • Management information on the use of competitively procured had amendments consultants not reliable or timely. The greater than $10,000 without an option in the Province may be missing out on potential sav- contract to allow for the amendment or where ings because it lacks the reliable and timely the amended amount exceeded the amount information needed to perform analysis approved for the contract. Most amendments and make strategic decisions on the overall were between $100,000 and $500,000, with use of consultants. We noted errors in the two as high as $1.5 million. The additional self-reported information collected by Sup- services included in these amendments were ply Chain Ontario on consulting contracts not competitively procured. For example, a entered into by ministries, such as contracts consultant was hired through a competitive being counted twice and amended contracts procurement at a cost of about $120,000 being reported as new. In addition, the to review work processes within a division. information was not available on a timely The contract was later amended to include basis, and was not reviewed for strategic analysis purposes. Use of Consultants and Senior Advisors in Government 621 Processes to appoint advisors need • OVERALL RESPONSE strengthening. We noted that 25% of the advisors we reviewed did not complete a The Treasury Board Secretariat (Secretariat) conflict-of-interest disclosure, and some and the Ministry of Government and Consumer business cases to support the appointment of Services (Ministry) would like to thank the Aud- advisors did not include assurance that the itor General and her staff for the engagement on advisor was providing their best comparable consulting and advisory services. We welcome rate for their services. the insights and appreciate the recommenda- In June 2018, the Ontario government tions in the report. introduced a freeze on discretionary spending, The Secretariat and Ministry are committed including time-limited services contracts for con- to improving our practices and to enhancing sultants. Around the same time, the government transparency and accountability. also froze hiring, except for essential positions Actions will be taken by the Ministry and in, for example, jails, policing, firefighting and Secretariat, in collaboration with ministries and front-line services. provincial agencies, that focus on improving the Ministries were also told to increase scrutiny of efficiency, effectiveness, value and oversight all expenditures, specifically those that were frozen. of consulting and advisory services. Work They were also advised that they will have to report is already under way to address the govern- on the implementation of the expenditure and ment commitment to centralizing government hiring freezes. purchasing. As part of the work, the rules and controls for procurement will be reviewed and modernized. The observations and recom- Overall Conclusion mendations in this audit will be instrumental The Province and its ministries generally have as we consider the actions required to fulfill the processes in place for the use of consulting and government commitment. advisory services to ensure they are acquired We look forward to a continued constructive Chapter 3 • VFM Section 3.14 and managed in accordance with the Ontario relationship with the Auditor General and her Public Service Directive and the Agencies and staff as we move forward with fully imple- Appointments Procurement Directive. We noted menting the recommendations in this report. a few exceptions, such as that cost estimates and the need for consulting services were not always supported in business cases for the engagement of consultants. 2.0 Background In addition, we noted that some improvements are needed to ensure consulting and advisory 2.1 General Overview services are used with due regard for economy and The Province requires external services and advice delivered efficiently. This is because the Province from time to time when its own staff are either does not assess the overall cost-effectiveness of unavailable or lack the required skills or expertise. its use of consultants, and ministries often rely on It usually meets this need by engaging consultants costly consultants rather than considering the hir- and appointing advisors. ing of full-time or term employees. Ontario ministries spent approximately This report contains 10 recommendations, with $360 million on consulting services in the 2017/18 17 action items, to address our audit findings. fiscal year, down from $434 million in 2008/09, 622 with some fluctuations over the past 10 years, as research and development. Details on the types of shown in Figure 1.