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.
Between 2016 and 2019 alone, the Commission spent more than €462 million in PwC, Deloitte, KPMG and EY, known as the ‘Big Four’. The EU executive also signed various multi-million deals with other firms, including McKinsey and Accenture.
“We are going to look into how much money is given to the ‘Big Four’, but also to big companies and big NGOs,” the Parliament’s Monika Hohlmeier told Euractiv.
She explained that her committee will start sending preliminary questions to the Commission in July to get a deeper knowledge of the expenditure on external contractors, as part of the discharge process of 2020. But she said the committee would go back several years, even a decade, to assess the magnitude of the EU executive’s expenditure in this field.
The report will be ready by the end of this year or early next year. The Parliament must approve in plenary the Commission’s management of the EU budget each year.
The Commission’s expenditure on consultants has grown significantly over the past few years, partly due to the programme of providing technical assistance to member states to prepare structural reforms.
When the program was launched in 2017, less than 2% of the €22.5 million allocated to this initiative went to the private sector, while more than a half of the technical assistance offered to capitals came from international organisations.
However, in 2019, the most recent year with available data, the ‘Big Four’ took €24.38 million, a third of the total amount dedicated to technical assistance.
“We need to take a deeper look at the structural reform programme,” said Hohlmeier. The German MEP added she is in favour of this initiative, which under the current long-term budget will be renamed as the Technical Support Instrument and will have €864 million for the 2021-2027 period.
She argued, however, that even if consultants are good at doing their job, “permanent” technical support is needed to carry out this type of reforms.
“That is why we want to work with the European Court of Auditors to find a different working method for this instrument,” she said.
The European Court of Auditors is also investigating the Commission’s expenditure on external consultants. A spokesperson of the institution told EURACTIV that at the start of next year, the Court will publish a report on this issue, to assess whether there is value for the money paid to contractors and to assess if EU interests are protected.
The amount of funds spent on external consultants also shocked many in the European Parliament in recent weeks.
Following the information revealed by EURACTIV, 73 MEPs from the main political groups voiced their concern in a letter to the President of the European Commission, Ursula von der Leyen, about the significant amount of resources spent on consultants, their participation in the development of structural reforms and the possible conflicts of interest in some cases cited by EURACTIV.
“We want money spent wisely. Expertise must not replace efficiency,” stressed Hohlmeier.
The German lawmaker and her fellow committee members are also concerned about the content of the analyses and recommendations provided by consultants.
For this reason, her committee will scrutinise how the Commission obtains this expertise, “if it is really neutral and fact-based, and whether different parts of the society are involved”.
Meanwhile, the Commission argued that the contribution of the consulting firms is necessary, given the specific knowledge they provide in the context of the structural reform program. They contribute with “the best and most personalised offer to the beneficiary member state, in the most economically advantageous way,” said a Commission spokesperson.
Under the structural reform programme, these multinationals offered recommendations and have drawn up proposals for EU national governments in sensitive areas including Justice, security forces, the labour market or health.
The close link between consultancy firms and the Commission, however, goes beyond the structural reforms support programme.
Among other examples, the EU executive signed a €8.2 million contract with PwC to explore business areas for European firms in Southeast Asia, while almost €8 million went to EY to promote human rights in Pakistan, and €1 million was awarded to Deloitte to conduct a study on the development of an online platform for dispute resolution.
[Edited by Zoran Radosavljevic]