Commission spending on Big Four consultancy firms grows in 2020

The updated figures for last year corresponded to Commission President Ursula von der Leyen’s first full year in the role. [Pool/EPA/EFE]

The European Commission’s contracts with consulting firms PWC, Deloitte, EY and KPMG, known as the Big Four, continued to increase last year, surpassing €156 million, partly due to the reform support programme, according to estimates made by EURACTIV.

The Commission updated on Tuesday (29 June) its Financial Transparency System with the figures corresponding to 2020.

The impact of the most severe recession since World War II did not constrain Commission’s expenditure on third parties last year, but rather the opposite.

Contracts signed with the Big Four in 2020 were worth at least €156 million, of which €101 million had been spent by December.

In 2019, contracts concluded with these firms amounted to €125 million, of which €102 million was paid that year.

The Commission explained that the difference between the two figures is due to the time passed between the moment the contracts are signed and when actual payments are made. Some of contracts run for several years.

Over the past two years, Deloitte obtained the biggest amount of EU funds among the Big Four, wining contracts worth €53 million in 2020 and €57 million in 2019.

Deloitte did not respond to EURACTIV’s request for comment for this story.

In recent years the Commission has spent increasing amounts on external contractors, particularly on the Big Four, after the EU executive launched the Structural Reform Support Programme in 2017.

This instrument provides technical assistance to member states to design structural reforms, either via Commission’s in-house expertise or experts hired with EU funds from international organisations, NGOs, or private companies.

Since the programme started, the Big Four have increased their slice of the pie, attracting more than a third of the funds allocated to the instrument last year. They got projects worth around €28 million of a total of €75 million spent by the Directorate-General for Structural Reform Support in 2020.

In 2019, they received €24 million to provide reform support, just short of a third of the €79 million dedicated to the entire programme that year.

The Commission’s consultancy bills are likely to keep increasing over the coming years. The Technical Support Instrument, the successor of the Structural Reform Support Program, will receive a total of €864 million for the 2021-2027 period, around €115 million per year.

The Commission said that more than 60% of the support requested by member states for 2021 is for reforms included in the national recovery plans to access the EU’s Recovery and Resilience Fund.

The updated figures for last year corresponded to Commission President Ursula von der Leyen’s first full year in the role. Before she took over, the German parliament investigated lucrative contracts awarded when she was at the helm of the country’s defence ministry.

But the sizeable amount of funds spent on consultants by the Commission started before she became Commission chief.

EXCLUSIVE: Commission’s ballooning bill with consultancy firms revealed 

The European Commission spent more than €462 million between 2016 and 2019 in contracts with the ‘Big Four’ consultancy firms, according to estimates made by EURACTIV based on official documents.

EURACTIV revealed in March that the EU executive awarded contracts to PWC, Deloitte, EY and KPMG worth €462 million between 2016 and 2019 alone.

Following these revelations, a group of 73 MEPs sent a letter to von der Leyen and Commission Executive Vice-president Valdis Dombrovskis, expressing their concern.

In the letter, MEPs from across the political divide questioned the involvement of consultants in the Structural Reform Support Programme, in particular in sensitive areas covered by projects financed, including the labour market or the justice system.

MEPs grill Commission about growing expenditure in consultancy firms

A group of 73 MEPs have sent a letter to the European Commission expressing concerns about hundreds of millions of euros spent on consultancy firms and their involvement in policymaking in the wake of an exclusive report by EURACTIV.com.

In the reply sent on 11 June, and seen by EURACTIV, Dombrovskis defended the role played by consultants in the Commission’s reform programme.

He argued that external contractors “are intended to bring the best and most tailored solution to the beneficiary Member State, in the most economically advantageous manner.”

He pointed out that contracts are awarded by public procurement and the contractors are not involved in policymaking, but instead they provide “knowledge-based and intellectual services/consultancy services.”

“Where a task is temporary in nature, or where it requires a skill set which is rapidly evolving -notably in relation to IT development – use of external expertise is a sensible option, bringing in the necessary skills for a time-bound exercise, in a specific field,” he added.

In documents attached to the letter, the Commission said that it spent €542 million in study contracts awarded to external companies between 2016 and 2020, including executive agencies.

Parliament to look into Commission’s multi-million bill with consultancy firms

The European Parliament will examine the European Commission’s sizeable expenditure on big consultancy firms, recently revealed by EURACTIV.com, and propose a different approach to limit their influence in structural reforms, the chair of the Parliament’s budgetary control committee has said. 

Philippe Lamberts, co-president of the Greens group in the Parliament and promoter of the letter, told EURACTIV that he was “not satisfied” with the answer provided by the Commission. 

“I don’t buy the efficiency argument,” he said. “We are not talking about catering services, this is the core business of the Commission”, he added.

Lamberts stressed that the issue is not whether the contracts signed with external consultants are legal, but whether there is “democratic legitimacy” to “sell” public functions to private contractors.

The Green MEP warned about the risk of conflict of interests, as the European Ombudsman flagged in the Commission contract awarded to BlackRock. The world’s largest asset manager was hired to study the inclusion of environmental, social and governance (ESG) objectives into EU banking rules.

[Edited by Josie Le Blond]

Commission ponders stricter rules for contracts with consultancies  

The European Commission is considering strengthening its rules to avoid conflicts of interest in contracts with consultancies, following complaints from the European Parliament and recommendations made by the European ombudsman.

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