Cornering the consultants

I read with interest that the US General Services Administration has suspended Enron and Andersen from conducting any new business with the federal government, and that a review of Andersen's activities in the UK is under way at the Office for Government Commerce, the Treasury and the Department of Trade and Industry.

In the US, the suspension applies only to future government business and does not affect existing contracts between government agencies and the two companies.

Given European procurement rules, it would be difficult to ban Andersen from competing for future tenders here, unless it can be shown that it has engaged in activities that break the law in this country, or unless it goes bankrupt.

Just because the conduct of one branch of an organisation is called into question somewhere in the world, it does not follow that it will be struck off as a supplier in another country.

And even if the UK government reports that it should be struck off, Andersen will possibly have merged with one of the other Big Five accounting firms before any action is taken.

Given the government's criteria for passing judgement on current Andersen activities it is probable that no action will be taken, since legal proceedings are taking place in the US rather than in this country or the European Community.

Tighter briefs

The review may recommend new rules so that auditors would not be permitted to perform consultancy services. This would bring us into line with the US, where auditors that review federal agencies cannot perform management functions or make management decisions.

The rules prohibit auditors from providing book keeping, record keeping and payroll services, although they can offer routine advice and answer technical questions.

Which brings me to the point that if the UK government is reviewing the Andersen case - for reasons of political expediency - why doesn't it also look at the performance of the other big consultancies, which sometimes also embrace accounting and which contribute far more to government decision-making than the electorate and politicians?

These are the firms that regularly recommend outsourcing, public/private partnerships, private finance initiatives and restructuring. But they are never called to account if the projects fail.

Failure cannot be continually ascribed to 'cultural' problems and poor change-management alone. At the risk of being controversial, perhaps the ideas were not that good in the first place. Perhaps the privatisation of the railways in the manner in which it was recommended, for instance, was foolhardy.

Public accountability

Is it not time that a review of consultants' recommendations over the last few years should be undertaken by the Public Accounts Committee?

It performed excellent work looking at IT projects a couple of years ago, showing how millions of pounds had been wasted in failed and delayed contracts.

If we continue to rely on consultants to supply knowledge and experience lacking in our own organisations, we are entitled to know whether or not their recommendations have resulted in measurable benefits.

Commercial practice dictates that we engage in continuous supplier performance review, and consultants are suppliers too.