State spends billions on consultants
March 29, 2010
Debate raged for years over whether the state should invest in a new Opera House. Now it turns out that beleaguered state welfare agency NAV has spent almost as much as the Opera House ultimately cost just on private consultants since 2007. The state’s widespread use of private consulting firms is once again sparking criticism.
Newspaper Aftenposten reported over the weekend that NAV alone has paid out NOK 3.8 billion to private consulting firms just over the past three years. Topping the list over firms with lucrative state contracts is Accenture Norge, although neither Accenture officials nor NAV will reveal the amount of Accenture’s billings. Other consulting firms hired by NAV have included CapGemini, Sirius IT and ErgoGroup.
NAV has been by far the state agency subject to the most criticism for poor public service in recent years. Dealing with NAV, which handles everything from sick leave and unemployment benefits to pension payouts in Norway, has been described as a nightmare by many users and NAV has received hundreds of millions in extra state funding to help it improve.
NAV director Tor Saglie told Aftenposten it was necessary to hire in consultants to help its own staff implement the agency’s merged operations and major reforms such as that involving Norway’s public pension program.
“The reason our consulting fees got so high is tied to the information technology (IT) projects behind the NAV-reform and pension reform,” Saglie said, adding that it was “expensive” to get all NAV offices around the country linked to the same IT platform.
Saglie claimed NAV always checks whether it has the necessary competence internally before hiring in external consultants. “And when we have temporary needs for expertise, it’s cheaper to hire in consultants than to build up our own,” he said.
The state has long been a fertile area for consulting firms like Accenture, McKinsey and a host of others that have been involved in everything from health care to higher education over the years. Norway has a large treasury, is a reliable bill-payer and is viewed as a prime customer.
‘Misuse of taxpayers’ money’
The use of expensive consultants, whose hourly fees can run into the thousands, is a sensitive subject, though, not least for the current left-center government that campaigned against privatization and market forces. It’s ironic that the state’s use of consultants has risen during the current government’s tenure, instead of falling.
“Such unbelievably high use of consultants amounts to misuse of taxpayers’ money and misuse of competence,” said Turid Lilleheie of a state employees’ union (Norsk Tjenestemannslag). “It’s also a workplace problem, because the competence disappears.” Saglie admitted it was “a challenge” to “transfer the consultants’ competence to our employees.”