Economy

McKinsey received special honorarium treatment at the Home Office

Interior Minister Horst Seehofer (CSU)

Interior Minister Horst Seehofer (CSU)

picture alliance / Flashpic | Jens Krick

The consulting firm McKinsey apparently received lucrative special treatment for billing fees from the Federal Ministry of the Interior between 2020 and 2021. This is based on research by NewsABC.net.

Accordingly, last year the Ministry of the Interior obliged the McKinsey subsidiary Orphoz as a general contractor to implement the Online Access Act. According to a ministry spokesman, the subject of the contract was the achievement of 87 milestones from May 2020.

While other consulting firms were mainly paid by the ministry according to expenditure, the house of Horst Seehofer (CSU) agreed a fixed price with the McKinsey subsidiary. According to information from NewsABC.net, the federal government paid a flat rate of around 1,000 euros per consultant per day. The only strange thing is that, according to a confidential audit report by the Ministry of the Interior from the beginning of this year (available to NewsABC.net), the Ministry waived all mandatory control options.

The consultants did not have to record their working hours, even though this is required by the Federal Office of Administration (BVA) as the central purchaser of the federal government for such services. The ministry also refrained from recording performance for the work in progress, although the Federal Audit Office had already warned the Ministry of the Interior in 2017 that there were clear performance specifications and deadlines. Accordingly, the BVA protested against this approach – but without success. In an internal ministry note, it says: The Ministry of the Interior “waived the performance recording (…) contrary to the requirements of the framework contract and was instructed by the BVA that the waiver represents a one-sided deviation from the specifications of the framework contract, which the BVA only takes note, but does not approve. ”

The BVA warns: “In addition, due to the suspended performance recording, there is no possibility for the BVA to assess the scope and progress of the project”. Adjustments to the content of the contract with Orphoz are not possible because the required controlling data are not available.

In plain language: Nobody could check whether the flat fee paid was really appropriate. In the first place, this would not be necessary with an agreed fixed price, because Orphoz or McKinsey bears the cost risk in the event of additional expenditure. But the audit report on the McKinsey work, which the state consulting company “PD – Consultants of the Public Sector” has drawn up, points in a different direction.

According to this, 23,000 so-called person-days were planned for consulting for a project with a duration of eleven months. Orphoz told the BVA that he wanted to use 80 McKinsey consultants from Germany and Poland. You would then be busy with the project full-time for the duration of the project.

A ministerial survey of seven McKinsey consultants who had been reported to the BVA, however, casts doubt on the presentation: According to the consultants, they stated that they were deployed “selectively as required”. The test report states: “There was no permanent assignment of content to the OZG project or full-time work for this project.”

So were fewer consultants actually working on the project than claimed? This is exactly what is speculated internally in the ministry. It was not possible to check this, however, because there are no time or performance records. Nothing can be deduced from the consultants’ invoices either, according to the test report. “The whole price model is not transparent,” criticized an official. The audit report comes to the same conclusion.

The fact is: The offered 1000 euros per consultancy day is “super little” compared to other consultancy firms, according to an industry expert. However, the cheapest price is often one of the key selection criteria in an administrative tender. If, in the end, fewer consultants were actually used than claimed, the daily rate per person would in truth be higher than the 1000 euros offered. Would Orphoz or McKinsey have received the order at all?

According to information from NewsABC.net, the Ministry of the Interior has now ordered that the contract with McKinsey no longer be used for consultant days. According to reports, the model of cooperation is believed to be opaque. A total of around 8,000 days were canceled.

Upon request, the Ministry of the Interior officially claims that the invitation to tender and the decision for a fixed price are legal. The fact that the 8000 days had been canceled was due to “delays in the course of the project due to external circumstances that were not foreseeable and controllable by both parties (in particular due to the delayed project implementation by countries in the 14 subject areas of the OZG implementation)”, according to a spokesman. As a result, a number of planned milestones could not be achieved or could not be completed by the contractor within the contractually agreed period, the spokesman continued. Therefore, one did not need the other planned consultant days.

But wouldn’t the collaboration have simply been extended? McKinsey itself does not want to say anything about the audit results either. A spokeswoman merely explains: “Our work was carried out as a request from a framework contract for which we had successfully applied in a public tender.”

The spokeswoman does not want to say anything about information from NewsABC.net, according to which two high-ranking McKinsey consultants for the public sector who were closely involved in the Interior Ministry project have meanwhile been released from their previous duties. The spokeswoman on request: “For reasons of our confidentiality obligations towards our clients and to protect our employees, we do not give any further details about our consulting work or our employees.”

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