MEPs grill Commission about growing expenditure in consultancy firms

European Commission President Ursula Von Der Leyen delivers her first state of the union speech at a plenary session of European Parliament in Brussels, Belgium, 16 September 2020. [EPA-EFE/OLIVIER HOSLET]

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.

“We would like to raise our concerns regarding the recent revelations made by EURACTIV on the resources dedicated by the Commission to external consultancy firms, especially the ‘Big Four’ [PwC, KPMG, Deloitte, EY]”, reads the letter sent Tuesday (30 March) to Commission President Ursula von der Leyen and Executive Vice-President Valdis Dombrovskis. 

The letter was drafted by the co-president of the Greens in the European Parliament, Philippe Lamberts, and signed by members of a majority of groups including the EPP, the Socialists, the liberals (Renew Europe), the Greens and the Left.

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.

The Commission spent more than €462 million between 2016 and 2019 in contracts with PwC, KPMG, Deloitte and EY alone, according to the EU’s Financial Transparency System. A growing part of this expenditure was allocated to the Structural Reform Support Programme, launched  in 2017.

The programme provides technical assistance to member states to design structural reforms, either via the Commission’s in-house expertise or experts hired from other international organisations, NGOs, or private companies. 

When the programme was launched, only EY obtained two programmes worth €221,820. That year, less than 2% of the €22.5 million allocated to the programme went to private contractors, while more than half of the funds were granted to international organisations.

But the Big Four’s involvement grew exponentially over the following years. In 2018, they received €11.04 million of a total of €30.5 million. In 2019, the most recent year with figures available, they doubled their funding to €24.38 million for 91 reforms, again almost one-third of the €79.4 million dedicated to the programme that year.

Under the current EU’s long-term budget (2021-2027), the Structural Reform Support Programme became the Technical Support Instrument with additional resources amounting to €864 million.

Citing the examples published by EURACTIV, the MEPs expressed their concerns about the involvement of consultancy firms, especially the Big Four, in policy making and the potential conflict of interests in some areas.

‘Strong action’

“The Commission must take strong actions to avoid the risk of undue influence by private consultancy firms on its decisions and on the design of structural reforms in sensitive areas of public policy,” the letter reads.

MEPs asked the Commission to explain the significant surge of funds spent in private contractors, instead of using in-house expertise or hiring experts from international organisations.  

The Commission should also provide the total amount spent on studies drafted by external firms between 2016-2020, including impact assessments, policy recommendations, interim reports and others, the signatories wrote.

In addition, the EU executive should assesses “whether resorting more and more to external private consulting is both relevant and economically sound compared to the option of hiring personnel to do similar tasks internally.”

MEPs also ask the Commission what measures it has taken or intends to take in order to follow the EU Ombudsman’s recommendations to have a rigorous vetting process to avoid conflicts of interest following the BlackRock case.

The Commission had awarded BlackRock, an investment management firm, a contract to carry out a study on integrating environmental, social and governance (ESG) objectives into EU banking rules. 

MEPs are not the only ones looking into the resources spent in consultancy firms. 

EU Court of Auditors looking into Commission’s contracts with consultants 

The European Court of Auditors is examining almost half a billion euro worth of contracts the European Commission has concluded with external consultants to assess whether there is fair value for money in the contracts, a spokesperson of the institution told EURACTIV on Thursday (18 March).

The European Court of Auditors is currently auditing Commission’s expenditure on external consultants, a court spokesperson told EURACTIV. 

“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.

A Commission spokesperson said that contracts were awarded following public tenders, selecting those contractors who bring “the best and most tailored offer to the beneficiary member state, in the most economically advantageous manner.”

The Commission official denied that consultancy firms are responsible for policymaking.

EURACTIV contacted PwC, KPMG, Deloitte and EY for comment but none provided a response. 

[Edited by Josie Le Blond]

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