Government consulting revenue soars again for McKinsey and BCG

07 March 2022 Consultancy.com.au 4 min. read

The federal government’s consulting largess continues to be scrutinised, with new analysis suggesting it again doubled its McKinsey and BCG bill during the 2020-2021 financial year.

The world’s two biggest traditional strategy and management consulting firms – McKinsey & Company and Boston Consulting Group (BCG) – have together doubled their Australian federal government income over the past financial year, according to analysis from online publication InnovationAus.

A review of tender notices reveals BCG grew its government take by 120 percent, while McKinsey bumped up its revenues by over 75 percent.

Government consulting revenue soars again for McKinsey and BCG

It’s the second consecutive period in which BCG has doubled the worth of its government contracts, jumping from $17.9 million during the 2019-20 financial year to $39 million over the following twelve months. The uptick in government work has helped the strategy firm bounce back from what was described as a double-digit hit in 2020, although true earning figures at the privately-held, internationally-entwined firms are notoriously hard to assess.

So too when it comes to assessing government spending on consultancy, with the government frequently capitalising on a lax tender reporting system to conceal details around contracts, or even outright refusing to disclose how and what they were awarded for. The opposition Labor party recently shot down a bill designed to enforce greater transparency, but has vowed to clean up the system to some degree if it wins the upcoming election.

McKinsey meanwhile grew its federal public sector year-on-year revenues by $25.2 million in 2020-21 according to the AusTender data, pulling in a total of $58.6 million. The windfall was part of a now $1 billion-plus annual government outlay on consulting and services among the seven largest providers alone, which together with McKinsey and BCG includes Accenture and the Big Four: PwC, Deloitte, Ernst & Young and KPMG.

Much of the boost to revenues has come on the back of Covid-19 response and economic recovery measures, along with the digitisation of government services. For BCG, that has included a lucrative contract at the outset of the pandemic to help develop the government’s poorly-received COVIDSafe contact tracing app, along with broader engagements for the Digital Transformation Agency and advising the government on its ‘gas-fired recovery’ plans.

In respect to McKinsey, the firm was likewise engaged by the DTA, and also bagged a number of Covid-related contracts, including on the national vaccine roll-out and the establishment of an onshore manufacturing facility. In addition, the firm won large contracts with the Department of Defence and national science agency CSIRO, which was famously overlooked in favour of McKinsey on the government’s emissions reduction modelling.

According to the InnovationAus calculations (with the publication noting that the value of active contracts which crossed reporting periods was divided on a per day basis and calculated to reflect 2020-21 revenues alone), the juiciest work McKinsey performed was an “affordability analysis” for the Defence department on its Hawk trainer aircraft – which earned the firm more than $90,000 per day over a two and a bit week period, totalling $1.44 million.