The European Court of Auditors is examining hundreds of millions worth of contracts the European Commission has concluded with external consultants to assess whether there is fair value for money in the agreements, a spokesperson of the institution told EURACTIV on Thursday (18 March).
Only between 2016 and 2019, the Commission spent more than €462 million in contracts with auditors PwC, EY, KPMG and Deloitte, known as the Big Four in the consultancy sector, according to estimates published by EURACTIV on Thursday.
The funds spent on the big auditing firms increased since the start of the Commission’s Structural Reform Support Programme. In 2019 alone, the Big Four won contracts worth €24.38 million, financed by the Commission, to provide technical assistance to member states in 91 reforms in the fields like justice, health, or the labour market.
“We are currently auditing expenditure on external consultants made by the European Commission,” a spokesperson of the Court said.
“This audit aims to assess whether the Commission achieves value for money while protecting its interests when engaging consultants employed by contractors,” the official added.
The report is expected to be published early next year.
The involvement of consultancy firms in policymaking has raised concerns in the European Parliament, as some of the tenders could represent a potential conflict of interest, including a contract with McKinsey in the field of Artificial Intelligence.
The Commission’s executive vice-president for digital agenda and competition, Margrethe Vestager, said the work of consultancy firms is needed for “extremely complex” issues.
In an interview with EURACTIV and a group of national media, she mentioned some cases where her services needed to hire consultants, including pricing bad loans in banks’ balance sheets.
“If there is a banking case, and non-performing loans need to be dealt with, they have a book value and a market value. And very often, the market value is not the book value. That’s the problem with non-performing loans,” she said.
Vestager explained that it takes “quite a specialised knowledge” to determine the book value and the market value, and “we would not have that in-house”.
“We cannot have that in-house knowledge because then we would have to spend a lot of resources to have that passively when we don’t use it. And that would not be efficient,” she said in defence of the engagement of external consultants.
She explained that in these cases, her services (DG Competition) sign a framework contract with external contractors, “so that we know that we get the right prices” when her team cannot do the work themselves.
“I will assume that is very much also the approach of colleagues and other Commission services, but I would not know because I don’t have that kind of overview.”
Some of the contracts signed with the Big Four included a study on European consumer centres (€275,675 contract for Deloitte) and a report on capital markets literacy (€130,625 contract awarded to EY).
[Edited by Zoran Radosavljevic]