Use of External Consultants by NI Departments Follow-up

Mr Kieran Donnelly, Comptroller and Auditor General, today issued his report to the Assembly on ‘Use of Consultants by Northern Ireland Departments: Follow-up Report’.

Background

Aggregate spending on external consultants is significant. Over the period 2005-06 to 2009-10, Northern Ireland departments (including agencies, NDPBs and health trusts) have spent £144 million on external consultancy services. Expenditure peaked in 2006-07 at £42 million but subsequently fell to £19.5 million in 2009-10.

In June 2004, the Northern Ireland Audit Office published a report that examined the use of external consultants. At that time we found that departments were failing to comply fully with DFP guidance and that there was considerable scope to improve their procurement and management of external consultancy services.

This follow up study examined the extent to which the level of compliance with DFP guidance and good practice has improved since we first reported in June 2004.

Main Findings


Compliance with DFP guidance and good practice

Departments have demonstrated a significant improvement in compliance with DFP guidance and good practice. In particular there has been greater compliance in the preparation of business cases, adherence to competitive tendering arrangements and completion of post project evaluations.

However, we noted a number of key areas where further improvements are required:

  • Some 40 per cent of contracts that we reviewed encountered cost overruns;
  • a substantial number of business cases did not fully comply with DFP guidance in terms of content and were not sufficient for the assignment being undertaken;
  • of 86 contracts we examined, 16 (with a value of £0.9 million) had not been competitively tendered; and
  • the results of post project evaluations are not being disseminated throughout departments or the wider public sector.

The quality, consistency and comprehensiveness of information on external consultancy spending

Consultancy can be difficult to define and distinguishing between external consultancy, staff substitution and contracted out services can be complex. We identified a number of inconsistencies in relation to the expenditure data we received and the sample of contracts we assessed.

In 2008, DFP gave a commitment to the Public Accounts Committee that comprehensive and accurate data on all consultancy expenditure would be available at the touch of a button through the Account NI system. We found that this is not happening and have recommended that it needs to be addressed as a matter of urgency.

DFP undertakes a test-drilling exercise on departments’ external consultancy and produces an annual compliance report summarising the results of this exercise. We noted that there have been significant delays in producing this annual compliance report and have made a number of recommendations including the need for:

  • Departmental Accounting Officers to ensure that information provided in annual consultancy returns is accurate complete and timely;
  • DFP to ensure that annual consultancy returns are commissioned promptly; and
  • the annual compliance report to be widely disseminated to Audit Committees, consultancy coordinators and Heads of Division.