Civil servants paid equivalent of £2,000 a day for advice from ex-civil servant, declassified file reveals
Senior civil servants paid the pro rata equivalent of half a million pounds a year to one of their former senior colleagues to come in and advise them on how to shake up their management structure in the 1990s, newly declassified government files reveal.
Officials in Stormont’s Department of Health and Social Services (DHSS) decided that when they were asked by the government to remove layers of management they did not have the expertise within the department to advise on such a task.
Instead, they turned to private consultancies, with DHSS permanent secretary Alan Elliott writing to Touche Ross (now Deloitte), Price Waterhouse and Coopers & Lybrand (now merged as PwC) to ask them to bid for the work.
The department then chose Tony Hopkins, a Touche Ross consultant who until just three years earlier had been a senior civil servant, to lead the review and advise them on the issues which they said current civil servants were unable to do.
Touche Ross explicitly marketed to the department that Mr Hopkins was someone who had “21 years of experience gained within NICS and a statutory agency and with four years at permanent secretary level”.
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In a proposal to the department, the company said: “Time commitment cannot be fully planned until after Stage 1, and, therefore as you have requested, we are providing you with a quotation for daily rates.”
The rate for Tony Hopkins was £1,040 a day (the equivalent of more than £2,000 in today’s money) and £715 a day for Philip Heaton (almost £1,500 in today’s money). On a pro rata basis, those figures would equate to more than £520,000 and £390,000 a year respectively.
The document made clear that on top of those huge sums, fees and expenses would be charged and the small print of the contract said that the daily rate only covered 7.7 hours of work, and where overtime was required it would be charged on top of that fee.
Mr Hopkins, who was then managing partner of the consultancy firm, had started off his career in consultancy before joining the NI Civil Service to work for what would become the Industrial Development Board, rising to become its chief executive in 1988 before leaving the civil service four years later to return to the world of consultancy.
However, a file declassified at the Public Record Office in Belfast under the 20 year rule shows that the way the contract was handled was queried internally.
A March 8, 1995 memo from DHSS purchasing manager Tom Gilgunn said it was “regrettable that I have only been consulted on this matter at this stage”.
He recommended that the consultants should be given clear terms of reference by which to judge their work and also queried why a daily fee was being proposed. He said: “It is advisable to have a fixed fee contract” so that the contractor would have to complete the tasks “for an agreed fee within a given timescale”.
He said that the best estimate was that Mr Hopkins would be working ten days and Mr Heaton 30 days, meaning an estimated bill of £40,000 (£80,000 in today’s money).
He also highlighted that the consultants’ proposal “implies that following the acceptance of the new proposed structure [for the department] and the consequent implementation plan there will be a need for further consultancy assistance. It is also further implied that the natural source to carry out such work would be the firm involved in this initial review.
“I would advise that the department indicate that any subsequent consultancy assistance would be the subject of further competition”.
The file contains an unsigned page headed “Alan. Notes for discussion”, which appears to have been drafted by Mr Gilgunn. It said that “the department’s approach to the proposal [is] suspect because:
(a) there is an apparent absence of openness and transparency in the approach to the marketplace. Although there was a limited competition which may be defensible;
(b) there is no evidence that this ‘offer’ represents value for money…”
On the other hand, the note said that it was “clearly a case” where external consultants were required due to a lack of internal civil service expertise” and that because the contract was for less than £150,000 it would be difficult for an unhappy company unable to bid for the work to take action against the department.
Even after Mr Gilgunn’s robust questioning of what was happening, civil servant Alan Charles suggested to the department’s deputy permanent secretary that “in the interests of expediency, you may wish however to go ahead on this project with a simple acceptance to Touche Ross based on what has been agreed to date. We can then clarify any future procedures with Tom Gilgunn in a more informed atmosphere at a later date.”
He said that “the difficulty as I see is in an exercise of this nature is drawing the balance between allowing the consultants maximum flexibility but at the same time ensuring that the department obtains best value for money and complies with the appropriate regulations”.
DHSS Principal Establishment and Finance Officer Peter Small replied to Mr Charles to accept that Mr Gilgunn should have been involved in the contract at an earlier stage but said: “I am not sure that the issues raised in his minute are as straightforward as he believes.”
He argued that specific terms of reference could not be prepared “because senior management reviews are evolving and there as yet no clear pattern”.
He argued that it was “to the department’s advantage that we have a reasonably flexible approach to the Touche Ross input to the exercise. If we attempt to constrain them too tightly now and find at some stage later that we in fact need a different input from them, that would undoubtedly have costs attached….”
And he defended the fees, saying that “our interests are best served by a daily rate approach to costing” and “I cannot accept the proposition that there is no evidence that the offer represents value for money. There are a limited number of firms who have the expertise which we require for this type of work and the fact that the bids from all three were in or around the same daily rate would suggest that the price we are being asked to pay is not unreasonable.
As is often the case with declassified files, it is unclear what happened. There is no copy of the final management review in the file and there are no related files referred to in the index.
MORE FROM THE DECLASSIFEID FILES:
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