[MFLoon]

Sort of a buried lede here. There's nothing shocking about overpriced, underdelivering consultants. But the bit about how the GSA is essentially profit sharing with said overpriced consultants at the expense of the rest of the government and taxpayers, via the IFF incentive structure, is pretty mind blowing. Another brilliant financial "innovation" by the Clinton Administration that's been quietly burning billions of taxpayer dollars to the end of significantly less efficient government for decades now...

[TrackerFF]

McKinsey, Bain, BCG, et. al. are all extremely close to state and industry in all countries.

I'm from Norway, and every now and then someone will publish articles about the governments exorbitant use of consultants (McKinsey at that) for seemingly menial tasks which should be handled internally.

Truth is, these management consulting firms have some very good advantages to keep their business model going:

1) Their alma matter is spread all over the world, usually in the upper management.

2) They get highly detailed information from all sides, and can tweak their best practices accordingly.

3) They take the blame, so as others have mentioned, they're basically a million $ CYA insurance for both politicians and executes alike.

You could remove incentives like those mentioned, but I'm sure they'll find some other way to make money. They're so tightly integrated, and in so many places around the world, they probably have hundreds and thousands of strategies up their sleeves.

[MFLoon]

Yea, I don't doubt they would remain closely entangled with the US Government even if we changed the IFF incentive structure. But even so, the present incentive structure is particularly perverse because it's creating a positive feedback loop. The GSA has ~$40 billion yearly revenue because of the profit sharing model, which it is incentivized to continually increase, and the consulting firms don't even need to lobby for bigger contracts, the GSA itself lobbies for them.

[ethbro]

The article gives short shrift to the reason this was originally put in place: to incentivize the GSA to aggressively outsource the government.

The GSA, like the departments they're serving, are filled by government employees.

Absent an incentive structure, a radical new executive commandment like "Outsource all the things" would get a yawn, papers filed, and absolutely no mass action.

And unlike private industry, I believe performance bonuses aren't really an option for government employees.

The flip side of job security is decreased initiative.

[l5870uoo9y]

It is not only a US pattern, go to every major European capital and the consultancies will be located right next to the ministries.

[MFLoon]

I'm sure they are, but do the European governments equivalent of the GSA also have incentives to actually drive up the price of consulting contracts they source for their governments? It's not just the coziness that is concerning, but the particularly perverse incentive structure that essentially makes the GSA an inside agent of the consulting industry.

[michaelt]

Here in the UK we usually go for the traditional things: Consultants provide free assistants to ministers. Assistants advise that X is a superb idea. Government pays consultants for help implementing X, which they happen to be experts in. Then everyone impacted by X also hires the consultants to figure out what's going on. Later the minister leaves government and is hired for a £x00,000 salary for one day a week of 'advice'.