A performance audit into NSW Government Agencies’ use of consultants has found that Agencies did not procure and manage consultants effectively.
In his report NSW government agencies’ use of consultants, Deputy Auditor-General Ian Goodwin said he examined the role of the NSW Procurement Board and NSW Procurement (a unit within NSW Treasury) in supporting and monitoring Agency procurement and management of consultants.
“Our review of a selection of consulting engagements indicates that Agencies do not procure and manage consultants effectively,” Mr Goodwin said.
“We found most Agencies do not use consultants strategically and do not have systems for managing or evaluating consultant performance,” he said.
“We also found examples of non-compliance with procurement rules, including contract variations that exceeded procurement thresholds.”
Mr Goodwin said NSW Procurement had made improvements to the information available about spending on consultants, including additional analysis and reporting.
However, he said there was no single data source that accurately captured spending on consultants.
“Our analysis of data on whole-of-Government spending on consultants, drawn from Agency annual reports, indicates that four large professional services firms accounted for about a quarter of consultancy expenditure from 2017–18 to 2021–22,” the Deputy Auditor-General said.
“This concentration increases strategic risks, including over-reliance on a limited number of providers and potential reduction in the independence of advice,” he said.
“It is also highly unlikely that NSW Government Agencies will meet the Government’s 2019 policy commitment to reduce consultancy expenses by 20 per cent each year, over four years, from 2019–20.”
Mr Goodwin said NSW Treasury advised that to implement this commitment, Agency budgets were reduced in line with the savings targets.
However, he said actual spending on consulting in NSW Treasury’s Reports on State Finances 2020–21 and 2021–22 was almost $100 million higher than the savings targets over the first three years since 2019–20.
Mr Goodwin made seven recommendations including three to all NSW Government Agencies to develop a more strategic approach to the use of consultants; ensure all consulting engagements comply with NSW Procurement Policy; and improve record-keeping practices.
The Auditor-General’s 50-page report can be accessed at this PS News link.
