Australian government keeps $2 million McKinsey engagement secret

11 August 2021 3 min. read

Australia’s federal government has worked together with McKinsey & Company for two months on a top-secret engagement, remaining tight-lipped on the actual nature of the project.

In recent years, public spending on consulting work has increasingly come under the media’s microscope in Australia. For the longest time, the federal government has justified its hiring of private firms with tax payer money by arguing it has helped advance strategic agenda’s, or simply plug gaps in capacity and skillset.

This year, the situation seems to be coming to a head though. Earlier in 2021 analysis revealed that the federal government had spent $1.2 billion on consultants in 2020 – the first time in history the annual spend had surpassed the $1 billion milestone, rising from just under $980 million in 2019 – with the lion’s share going to some of the world’s biggest firms: McKinsey, BCG, Accenture and the Big Four.

Australian government keeps $2 million McKinsey engagement secret

Amid the public scrutiny heaped on the government resulting from this, rather than scaling back spending the government looks to have obscured its procurement of advisors. The most recent example of this has seen the press push the federal government for details on a $2.2 million confidential contract with McKinsey & Company to little effect.

McKinsey received the multi-million pay-out for just two months of work, as revealed by AusTender – the government’s own tender website. However, beyond the fact it was through the Department of Education, Skills and Employment, even the most basic details have been kept from the public eye. The department itself has declined to answer questions about the nature of the work McKinsey was conducting, how it was selected for the work, or what about the engagement could merit such a hefty price tag.

In a sparse statement, a spokesperson told the press, “Information on the contract awarded to McKinsey is available on AusTender.” The information on AusTender merely states that the work relates to a research programme, and an “inter-departmental workforce taskforce,” though.

Critics of the government are concerned that handing out contracts without any chance for public debate means the government is not securing value for money.

It should be noted, though, that there are several reasons why the contract could have been kept confidential. While the government may want to keep it secret as it may spark lengthy debate, or compromise the project’s goals before they are realised, it could also be that there are official secrecy statutes and privacy laws which mean the contract must stay private.

At the same time, it is possible McKinsey does not want it to go public. The worlds largest strategy consulting firm (and arguably most prestigious) is notoriously secretive on its engagements, and does not share details of its projects, clients, or its pricing.

Elsewhere, it is not the first time the government has cloaked its relations with McKinsey. In 2020, the government took advice from McKinsey on its vaccine and treatment strategy, which cost $660,000 for four weeks of work. The ABC attempted to secure the McKinsey advice through freedom of information laws, but the only document it could obtain was an eight-page summary of publicly available vaccine data.

McKinsey is also being paid $2.1 million to investigate the potential for onshore mRNA manufacturing, which could allow for production of the Pfizer and Moderna vaccines in Australia. The report will not be made public, and according to InnovationAus, the contract was not posted to AusTender for months after the work was done – something which violates procurement rules.