MOD Alix Partners deal back in the headlines – lousy procurement or something worse?

The MOD Alix Partners contract raised its head again last Thursday with more national press coverage - here in the Mail for example.  £5.5 million has already been spent, with day rates of £3950 plus 30% bonus plus expenses.

As regular readers know, we exposed this whole thing in the first place way back in April. But I've been disappointed to say the least since then on various counts - the MOD Permanent Secretary’s failure to reply to my formal letter about the issue; the MOD's failure to actually stop the contract; and Cabinet Office apparent failure to intervene despite them indicating that they would be taking action, as this seemed to breach their own rules on getting sign-off on consulting spend. (Does this indicate that actually, Francis Maude doesn’t have quite a much power as the Cabinet Office would like other Ministers to think? What happens if another Department just says "no")?

Anyway, having suffered these three disappointments, I've now got back into pro-active mode and I have written to Margaret Hodge, Chair of the Public Accounts Committee, with copies to Amyas Morse at the National Audit Office, the Minister and Shadow Minister for Defence, my MP, and John Collington at Cabinet Office.

I’ve asked Ms Hodge to look into the process used to select and engage Alix. I've never particularly suspected anything dodgy, but you can't help wondering and there seems to be a fair bit of it around at the moment (allegedly) in the public sector, some of which we've featured recently.

So I would like someone – please - to examine whether EU procurement regulations were breached; whether the process by which Alix were selected, and their fees agreed, was appropriate and whether there were any suspicious circumstances around it; and whether the contract represents good value for money overall. And let's be clear; whether or not Alix are doing a good job, they are being paid at least twice the market rate for even senior level  "big 4" type consultants. (Perhaps I was naive to rule out dodgy dealings...)

And thanks to "Adam" for pointing out a feature on this from Yahoo news which got a very interesting and pertinent comment  from "Mary" - apparently an ex-Alix person. Interested to see her mention the Shareholder Executive, as we had previously discovered their involvement, and here is her comment in full.

Comment from "Mary" on Yahoo

"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.”

Voices (2)

  1. Hugh Cox:

    We are all trying to understand why every week we find a list of failed / failing procurement negociated projects within the UK Government. We have noticed in dealing with the government, as is the case with all organisations that the issue is with the leadership. We are fortunate to have leaders at the top of the Cabinet Office with interesting track records (see link http://www.dmossesq.com/2011/10/you-just-cant-keep-good-man-down.html). Having read this biography we can all stop hoping for change and improvement and just watch the waste continue until the leadership changes.

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