Consulting firms are the 'shadow public service' managing the response to COVID-19

In March 2020, as governments were implementing lockdown mandates at the onset of the COVID-19 pandemic, the consulting firm McKinsey made a call to someone in the Ontario premier’s office. Soon after, the firm was put in charge of setting up the Ontario government’s pandemic command structure — at a price of $1.6 million.

The story drew public attention months later when the auditor general of Ontario published a damning report, arguing that the pandemic response was being led by political staff instead of public health experts. The reliance on consultants, she maintained, resulted in needlessly complex structures, delays and a totally fragmented response.

This has happened a lot, more often than Canadians are aware. Since the start of the pandemic, the federal and provincial governments have turned to private consultants, who have little or no prior expertise in public health, granting them substantial responsibility and influence in managing the pandemic response.

Indeed, spending on consultants increased dramatically with the onset of the pandemic. In March 2021, the federal government estimated annual spending on third-party consultants would rise to $16.4 billion per year by 2022, up from $10.4 billion in 2016.

Two months later, the estimate was revised to $17.7 billion, signifying a further increase in the already ballooning costs spent on consultancy services.

Taking stock following crises

It’s perhaps not surprising that consulting firms have played such a key role during the pandemic. After a major crisis, governments often turn to consulting firms to take stock, assessing how they might do things better.

Along these lines, governments across Canada have commissioned these firms to provide advice on issues such as the impact of the pandemic on Canadian industry, the capacities of the national biomanufacturing sector, as well as assessing the first wave response of governments and the governance of long-term care homes.

Yet what’s distinctive about these firms today is the sheer scope and the scale at which they are intervening in policy-making.

Beyond providing ad hoc advice to governments, these firms are increasingly engaged in core aspects of governance, including developing the strategies and implementing the structures and processes through which the pandemic response has been organized.

For example, while McKinsey developed Ontario’s pandemic response command structure, Deloitte has played a major role in setting up Québec’s COVID-19 screening system, developing the vaccination campaign in Ontario and, perhaps most noteworthy, managing the vaccine rollout federally in a lucrative $16 million contract.

The changing scale of consulting operations is also notable, with sole-sourced contracts going to transnational professional service firms with immense organizational footprints. Indeed, the so-called Big Four firms — Deloitte, PwC, KPMG and Ernst & Young (EY) — have significantly extended their range of operations as they’ve pivoted from advising to professional services and IT infrastructures.

Consulting firms now tech companies

As noted in The Canadian Accountant, Deloitte’s vaccine contracts show these firms “are no longer strictly auditors but technology companies as well.”

And while the field remains diverse, there is evidence these firms have been able to consolidate their influence through scale advantages, changing procurement practices and mergers and acquisitions.

As of 2020, Deloitte, PwC, KPMG and EY employed more than 1,148,000 people in 150 countries. Through operating at such a scale, they command a significant degree of power and are capable of mobilizing personnel around the world.

They form a “shadow public service” instrumental in designing and implementing policies, according to a report from the Professional Institute of the Public Service of Canada, but there is almost no oversight or accountability.

The organization also notes these firms play by “an entirely different set of rules: they are not hired based on merit, representation, fairness or transparency; they are not subject to budget restraints or hiring freezes; and they are not accountable to the Canadian public.”

Currently, many governments are refusing to disclose either the contracts or the services produced by these firms in response to access-to-information requests. For instance, in response to our requests to the province of Ontario in June, we were informed that McKinsey contracts and deliverables were being withheld on the basis of cabinet discretion (Sec. 12 of the Freedom of Information and Protection of Privacy Act).

‘Scant expertise’ in public health

So we’re unable to determine the reasoning behind why these firms — with scant expertise in public health — came to assume responsibility for managing the pandemic response, or to understand the nature of the services they’re providing, often through sole-sourced contracts.

The evidence is not very promising.

For instance, Alberta’s $4.3 million contact-tracing app was launched by Deloitte in May 2020, despite major documented problems with the firms’ work on a similar system in the United States. That raises questions about why Deloitte won the contract.

As of October 2021, just 158 people out of 306,000 had reportedly entered positive test results into the app.

As governments come to depend on these firms not just for advice but for core policy-making functions, we should question the extent to which such partnerships have really augmented government capacities — or hollowed them out.