Alix Partners deal – did MOD really inform Cabinet Office?

Hey! Got a mention in the Mirror  and the Express as well as the excellent Times feature.  The Mail featured the story but with no acknowledgement to us or the Times. Ba****ds.

Two more points to pick up on the MOD / Alix Partners affair.

One of the remaining mysteries about the contract was the comment MOD made to Michael Savage at the Times that "it was agreed across Whitehall and by the Cabinet Office". And MOD special advisers are claiming they "had cover from the Cabinet Office".  That did not seem to stack up with the official comment we got from the Cabinet Office, or some unofficial views I also got from that source, which suggested they were not aware of the deal.

Now the mystery may be solved. My sources suggest that the MOD considered that by talking to the Shareholder Executive (who we know were involved from the first MOD responses) they were in effect "getting Cabinet Office approval". Now whether this was innocent stupidity from MOD, or a deliberate strategy to keep the deal away from the Efficiency and Reform Group (ERG) in Cabinet Office, we can't tell.

The Shareholder Executive (SE) does have links with Cabinet Office although it is currently residing within BIS. When we hit them with an FOI request they pretty much said they had nothing to do with this contract, other than they'd recommended a few potential firms to MOD. On the other hand, MOD said the SE had been involved in the process of selecting the provider and approving the commercial deal.

So we don't know quite how much involvement SE had - if they did see the deal, you might have thought they would have said, "isn't that  a little expensive"? But they're an unusual organisation, run by ex private sector bankers, corporate finance people, lawyers and so on, so perhaps they didn't think £5K a day was excessive. Or perhaps they didn't get into that detail.

Anyway, that could explain the MOD SPADs claim that "Cabinet Office knew" (although it is a pretty pathetic argument to be honest) and the fact that ERG didn't.

Point 2 now - just to say we had some comments last week that are well worth going back to the posts to read. One point that came through loud and strong was the view that, even if MOD did need help on this, why Alix Partners (Jason Busch's point), and why so expensive? As well as our commentators, a partner from a top consulting firm told me last week that  "even we would have charged less than half that, and I guarantee we could have done as good a job". And several comments questioned the "success fee", making the point that if you were paying £4K a day, wouldn't you sort of expect success? Great point!

And that's the problem when you don’t run proper competition. You don't get to test the market, you don't get negtoating leverage, you don't necessarily choose the best. And the supplier is laughing.

First Voice

  1. Adam:

    Yahoo’s just caught up too….http://uk.news.yahoo.com/comment/dont-panic/ministry-defence-hires-consultants-sack-soldiers-113229439.html

    Interesting comment from Mary, former Alix Partner…

    “As an ex AlixPartners consultant (also years at other Big 4) I am surprised to see the firm working at the MoD.

    The UK office is small and there was no deep defence or indeed public sector expertise (unlike some of the other big consulting groups)

    The consultants are hard nosed and ruthless – you have to be pretty bright (i.e tougher recruitment process than Big 4) to get in but the firm is not the intellectual heavyweight of McKinsey or BCG. Consultants generally have more experience than other consulting firms – they are generally 10 years + so hence they are not going to be fielding clueless grads as consultants but the day rate they are receiving is obscene and whoever negotiated this contract should be shot. The FoI request should identify who signed off on this. Alix is ripping their eyes out!!!! Hope they do the knowledge transfer and the MoD applies the so called ‘procurement expertise’ Alix allegedly offer (bit cynical about this as I probably know the procurement expertise of those working on the project!) to negotiating a better advisory /consulting contract after they reach the current end stage.

    In terms of the work being done around the procurement piece it is bad practice if Alix is setting the contract baseline and then raking in success fees on the banked savings. Note also has to taken of how they are dealing with RPI linked contracts and how savings flow here.

    I know they were ‘wooing’ the Shareholder Exec (who are increasingly involved in driving value from the Public Sector) and it certainly seems odd that a niche firm with limited PS/defence experience have been awarded this contract. I think the response from the SharEx needs to be further investigated. Someone needs to be held accountable for this poorly negotiated contract.”

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