Defence awards consulting contracts to Big Four and McKinsey

24 February 2020 3 min. read

The Department of Defence has awarded million dollar consulting contracts to Deloitte, KPMG, McKinsey & Company and PwC. 

With over 65,000 employees and an annual budget of over $32 billion, the Department of Defence – part of the Australian Defence Organisation and tasked with defending Australia and its national interests – is one of the government’s largest department. 

As part of its 2019-2023 strategic plan, known as ‘One Defence’, the department is working on a number of major reforms and change initiatives. These include building a more agile and responsive organisation, underpinned by business process transformation, integrated service delivery and technology, and workforce reform, including transforming its workforce to meet rapidly evolving national security challenges (e.g. cybersecurity) and upskilling its talent base.

Defence awards contracts to Big Four and McKinsey

Much of this change agenda is guided and supported by external specialists, such as management consultant and digital experts. According to the latest annual report of the Department of Defence, the unit last year spent $255 million on consulting contracts and around $900 million on project management and delivery contracts.

Spending on IT consultants for among others system an application building and the roll-out of enterprise information management (EIM) and enterprise resource planning (ERP) systems runs in the billions.

However, industry experts believe that the actual fees paid to consultants is much higher than official statistics, mainly due to the narrow definitions on ‘consulting services’ used by the department and the Australian National Audit Office. Illustrating this, the Big Four already have at least 3,000 people focused on the Department of Defence, suggesting that their revenue alone from the unit is upwards of $700 million. 

In its latest round of contract awards, the unit has selected McKinsey & Company to provide an independent assurance review and to advise on the design of a new IT operating model. The global strategy consulting firm – the largest of the MBB trio in Australia (M = McKinsey, B = BCG, B = Bain) will bag over $1 million for its services. 

Three of the Big Four accounting and consulting giants also landed contracts. Deloitte has been awarded a $5 million contract with Defence for IT consulting services for three months, and similarly, KPMG and PwC have won bids of $4.5 million and $4.4 million to provide information technology advisory services.

KPMG and PwC have meanwhile also scooped million dollar project management contracts. KPMG has been tapped to support an international policy programme on a 18-months contract, while rival PwC will provide project management support services on a 7 months contract to a large business transformation.