What is the reason behind the government's payment of 300 million yen a year to new graduate consultants?

by Austin Distel

The New York Times and ProPublica reported on 4 December 2019 that consulting firm McKinsey has created President Trump's immigration policy. It has long been known that McKinsey is not only a private company but also the government, but the writer Matt Stoller argues why the government has paid a lot to McKinsey.

Why Taxpayers Pay McKinsey $ 3M a Year for a Recent College Graduate Contractor
https://mattstoller.substack.com/p/why-taxpayers-pay-mckinsey-3m-a-year

According to Ian MacDougall , a lawyer and journalist who wrote a accused article at The New York Times, the United States Immigration and Customs Enforcement (ICE) has partnered with McKinsey to help the government crack down on illegal immigrants. I left it to McKinsey. McKinsey consultants have made proposals to reduce food and medical expenses for immigrants, supervision of detainees, etc., and have been criticized by some ICE staff. From leaked documents, you can read how ICE relied on McKinsey.

How McKinsey Helped the Trump Administration Detain and Deport Immigrants — ProPublica
https://www.propublica.org/article/how-mckinsey-helped-the-trump-administration-implement-its-immigration-policies

According to Stoller, McKinsey's service is very expensive, while a new graduate consultant working for the Boston Consulting Group charged $ 30,306.75 per week to the government, while McKinsey's `` 'Business analysts' were lent out at $ 56,707 (about 6.2 million yen) a week and $ 2,294,764 (about 320 million yen) annually. This business analyst sometimes seemed to be a student or a person with no experience at all.

As to why McKinsey can trade at such a high price, Stoller says that 'because of an unethical strategy'. In July 2019, the US Common Services Agency (GSA) inspector, who manages federal property and official documents, revealed that GSA should cancel the agreement between McKinsey and the government (PDF file) . The inspector disclosed McKinsey's overpriced orders as follows and noted that the GSA internals were corrupt:

Stoller explains why McKinsey's contract value has become high because McKinsey has raised the service price of IT professionals that were already expensive by 10-14%. Although the proposed price increases are contracting officer it seems to have turned down as 'ridiculous', to the Division length, which is the boss McKinsey personnel In response to this, in 2016 ' Schedule 70 contract personnel is, It would be very helpful if you could understand how this contract would benefit the government, ”he said.

This harassment email will work, and finally the head of business will renew the contract with the amount that McKinsey presents. The head of the business unit lie to the inspector, manipulates price data, breaks the rules of a single contract, and proposes to use McKinsey to various government authorities, including the US Oceanic and Atmospheric Administration. Later, the head of business said, “My only interest was in helping contractors.”

From 2006 to 2019, when McKinsey signed the original price statement, McKinsey received $ 73.5 million (approximately 8 billion yen) annually for a total of $ 956.2 million (approximately 100 billion yen). The inspector estimates that the cost of the fraudulent contract change in 2016 was $ 69 million (about 7.5 billion yen), but he judged that it was not bribery and recommended the dismissal or arrest of the head of business not. For this reason, the mystery remains as to why the headquarters of the business headquarters took actions that increased government costs.

McKinsey & Company | Global management consulting
https://www.mckinsey.com/

What is involved here is the “ Industrial Funding Fee ” (IFF), which is a quarterly contract management fee that companies that contract with the government must pay to the GSA. GSA Federal Procurement Service (FAS) can receive 0.75% of the contract fee as a commission. As far as McKinsey is concerned, IFF revenues since 2006, when the contract was signed, have risen to $ 7.2 million (approximately 780 million yen). IFF is sometimes pointed out as an incentive to outsource government work, and it was McKinsey's case that this problem appeared prominently. A similar case occurred in contracts with companies such as Carahsoft, Oracle, and Deloitte. At this time, the boss hurt the career of the person who tried to trade at a fair price, and the contract was changed according to the contractor's request. It is pointed out .

IFF was introduced in 1995 by Bill Clinton, the then president, to raise entrepreneurship as part of “government reform”. This measure worked very well, and in 2002, we got so much money that we didn't have to rely on parliamentary budgets. By 2010, GSA had achieved “sales” of $ 39 billion annually. GSA is supposed to use the profits it earns for taxpayers, but it is actually treated as a reserve, and “basically, the culture of government procurement agencies is distorted.” Stoller says. IFF, which was supposed to be a mechanism for purchasing specialized knowledge for the government, has been changed to a mechanism that earns income by letting contractors use a lot of money.

McKinsey can be said to have skillfully used the government mechanism, but it is also true that McKinsey is not the only one who is doing this kind of act. Stoller argued that the IFF system should be abolished and the budget allocated through parliamentary budgeting.