Why Taxpayers Pay McKinsey $3M a Year for a Recent College Graduate Contractor

[Adam]

McKinsey has a lot of high-flying rhetoric about strategy, sustainability, and social justice. The company ostensibly pursues intellectual and business excellence, while also using its people skills to help Syrian refugees. That’s nice.

But let’s start with what McKinsey is really about, which is getting organizational leaders to pay a large amount of money for fairly pedestrian advice. In MacDougall’s article on McKinsey’s work on immigration, most of the conversation has been about McKinsey’s push to engage in cruel behavior towards detainees. But let’s not lose sight of the incentive driving the relationship, which was McKinsey’s political ability to extract cash from the government. Here’s the nub of that part of the story.

    The consulting firm’s sway at ICE grew to the point that McKinsey’s staff even ghostwrote a government contracting document that defined the consulting team’s own responsibilities and justified the firm’s retention, a contract extension worth $2.2 million. “Can they do that?” an ICE official wrote to a contracting officer in May 2017.

    The response reflects how deeply ICE had come to rely on McKinsey’s assistance. “Well it obviously isn’t ideal to have a contractor tell us what we want to ask them to do,” the contracting officer replied. But unless someone from the government could articulate the agency’s objectives, the officer added, “what other option is there?” ICE extended the contract.

Such practices used to be called “honest graft.” And let’s be clear, McKinsey’s services are very expensive. Back in August, I noted that McKinsey’s competitor, the Boston Consulting Group, charges the government $33,063.75/week for the time of a recent college grad to work as a contractor. Not to be outdone, McKinsey’s pricing is much much higher, with one McKinsey “business analyst” - someone with an undergraduate degree and no experience - lent to the government priced out at $56,707/week, or $2,948,764/year.

How does McKinsey do it? There are two answers. The first is simple. They cheat. McKinsey is far more expensive than its competition, and is able to get that pricing because of its unethical tactics. In fact, the situation is so dire that earlier this year the General Services Administration’s Inspector General recommended in a report that the GSA cancel McKinsey’s entire government-wide contract. Here’s what the IG showed McKinsey was eventually awarded.

full article : https://mattstoller.substack.com/p/why-taxpayers-pay-mckinsey-3m-a-year