Supply Side
Deloitte Grovels Before Power

Just before Christmas, the Times reported that Deloitte, the consulting and services firm, has agreed not to bid for any “government” contracts for six months. This is a penance – less painful but a lot more expensive than self-flagellation with birch twigs – for a memo that some unnamed Deloitte consultant wrote in November (apparently for internal purposes) that got leaked to the press.

As Politics Home reported at the time, “According to the report the document was produced for the Cabinet Office – although the Government maintained it had not commissioned it”.  It seemed that the two-page document that suggested the Brexit process was a bit chaotic and Ministers were split in terms of their approach, was not produced for a government client, although there is still some confusion as to exactly why and how it was produced, and whether it was based on real research (such as conversations with government insiders) or was just the views of a Deloitte staffer.

Deloitte does a lot of business with government, so a six-month moratorium could cost them a lot of money, although obviously it depends on how many new contracts come up for bidding in that period. It might also affect the public sector side negatively; what if Deloitte is actually the best supplier for a partial piece of work but does not bid?

So we’ve got mixed feelings about this move. We are fully in favour of suppliers being punished when they fail to deliver against major contracts; the way Serco and G4S were handled after the prisoner tagging (and other) contract issues showed government taking a strong but justified line on supplier performance. But in this case, it is not supplier performance that is the question; it is a supplier embarrassing the government.

The risk is that this leads to a culture where all government suppliers feel the need to be very careful about what they say or write about anything political. Might that even extend into personal life? Let’s say a senior manager from Capita or IBM is filmed in a pub after a few beers saying “that Boris Johnson is a b***y idiot, he doesn’t know what he’s doing”. Then that video gets leaked to the press. Is that something that means the firm will then have to grovel and agree to withdraw from bidding for certain contracts?

That is something that happens in many countries around the world, where being critical of the government is a guaranteed way of ensuring you don’t get to win contracts. (The situation in Turkey where thousands of public sector workers have lost their jobs for supporting a rival to President Erdogan is perhaps analogous). Where personal patronage or grudge plays a part in public sector contracting decisions, we don’t tend to look up to those countries as beacons of good practice and proper procurement.

Now there may be more to this case. One report suggested that Deloitte is being punished for a security breach, which is a more acceptable justification. But anyone interested in good public management needs to keep a careful eye on this sort of thing; let’s hope it is a one-off rather than a harbinger of things to come.

On a personal note, I once was personally affected (from a career and financial point of view) because I publicly criticised the government of the day. It wasn’t that big a deal in the greater scheme of things for me; the full story will be in my autobiography one day, and the guilty party knows who he is. But the Deloitte case mustn’t lead to a slippery slope that really no country would want to descend.