Why Taxpayers Pay McKinsey $3M a Year for a Recent College Graduate Contractor • Hacker News Board

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

#191

Post by bumby » Thu, Dec 05, 2019, 9:05 PM UTC

zentiggr wrote: post #175

bumby wrote: post #159

Earlier quoted context omitted.

> there's a massive perverse incentive for public servants in charge of awarding contracts to pick the most expensive one. I'm not quite following your logic here, could you elaborate a bit more? There's nothing prohibiting well-funded competitors from similar GSA approval, is there? My understanding is that this method is used to streamline contract awards...being listed on a GSA schedule means you've gotten a stamp…

Reread the part about the IFF - GSA gets paid a percentage of their contracts. So the bidding process gets corrupted, ignored, anything and everything the staff can do to inflate the contracts so they get more IFF back. That IFF honestly sounds like the cleverest pork barrel hack since all the military contractors got theirs set up...

The part I don't understand is what's keeping competitors like the Boston Consulting Group from listing similar services on the GSA schedule at a better rate.

The article talks about the IG finding evidence that the GSA improperly approved cost increases for McKinsey. This makes sense in regards to perverse incentives but I didn't see anything about the GSA shutting out less costly competitors from the schedule of approved contractors. Since the GSA generally doesn't award contracts, I would expect to see some evidence that McKinsey was unduly favored in the schedule listing for stronger evidence of corruption.

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

#192

Post by sailfast » Thu, Dec 05, 2019, 9:06 PM UTC

> 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.

Nope. This is illegal under the FAR. If they're doing it, they should be barred from Federal contracting.

For what it's worth, I think this author gives the GSA a bad wrap based on the analysis of one individual. GSA has to do a LOT of work to award and manage a large number of contract vehicles that allow everyone in government to purchase goods and services at negotiated rates (which also saves them hundreds of thousands on hiring their own contract staff). The fact that the funding fee incentivizes GSA to help people spend more money is not necessarily a perverse incentive - it gives them the incentive to ensure their contract vehicles are effective vs. a normal procurement.

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

#193

Post by ineedasername » Thu, Dec 05, 2019, 9:07 PM UTC

antjanus wrote: post #171

slg wrote: post #143

Earlier quoted context omitted.

Thanks. At this point I should probably go ahead and hire an editor to review my comments before publishing.

if you don't want to feel like you're pandering to HN comments, you can probably hire a consultant to do the proof reading for you! =D

I cut out the middleman and just pay people to comment for me entirely. This one cost me $34, one dollar per word. But punctuation is free so it is not a bad deal.

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

#194

Post by bumby » Thu, Dec 05, 2019, 9:10 PM UTC

ndarwincorn wrote: post #190

bumby wrote: post #159

Earlier quoted context omitted.

> there's a massive perverse incentive for public servants in charge of awarding contracts to pick the most expensive one. I'm not quite following your logic here, could you elaborate a bit more? There's nothing prohibiting well-funded competitors from similar GSA approval, is there? My understanding is that this method is used to streamline contract awards...being listed on a GSA schedule means you've gotten a stamp…

Everyone replying answered this, I'd just like to point out that the answer to 'could you elaborate a bit more' is to read the parent article. Another excerpt: > In 2013, the GSA Inspector General traced a similar situation with different contractors. Managers at GSA overruled line contracting officers to raise prices taxpayer pay for contractors Carahsoft, Deloitte and Oracle. Government managers at GSA micro-manage…

Thanks, what I'm not quite getting is that the other contractors are listed. What seems to get lost is that the GSA doesn't select the contractors, they just list them.

The connecting dot that's missing is why agencies choose the more expensive option when it benefits the GSA, not the agency using their schedule.

For the perverse IFF incentive structure logic to hold true, it seems like GSA would be incentivized to approve rate increases across the board. Why just McKinsey?

In other words, the GSA sets the contract but not the order. If there are cheaper contracts available in place on the GSA schedule, I would think agencies are incentivized to choose the lower bid.

edit: mistakenly stated "agencies" instead of "contractors" regarding what gets listed

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

#195

Post by goatinaboat » Thu, Dec 05, 2019, 9:10 PM UTC

Aunche wrote: post #103

xvector wrote: post #23

From the linked article[1]: I find it absolutely INSANE that highly specialized organizations like the NSA rely on McKinsey to direct their future operations. These people have intimate knowledge of their organization and culture, shaped and hardened by years of challenges and learned experiences. What can they possibly think bringing an outsider in to do a complete overhaul will solve!? Why can they not apply their…

The director of the NSA gets a modest salary of $180,000. That's roughly the comp of an associate at Mckinsey or entry level at a FAANG. I doubt that they can attract the top talent with the amount they're paying. https://cryptome.org/2014/03/nsa-salaries.htm#:~:targetText=... .

He’s not motivated by money but by something no one else can offer: knowing secrets.

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

#196

Post by Spooky23 » Thu, Dec 05, 2019, 9:11 PM UTC

xvector wrote: post #23

From the linked article[1]: I find it absolutely INSANE that highly specialized organizations like the NSA rely on McKinsey to direct their future operations. These people have intimate knowledge of their organization and culture, shaped and hardened by years of challenges and learned experiences. What can they possibly think bringing an outsider in to do a complete overhaul will solve!? Why can they not apply their…

Easy, McKinsey and their ilk give zero shits about office political stuff, just the principal paying the bill.

In some orgs, people working in the org cannot defy certain non-cooperative people. The consultants can come in, demand the data they need, and immediately escalate to the principal.

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

#197

Post by ineedasername » Thu, Dec 05, 2019, 9:11 PM UTC

I guess it doesn't change the value proposition much, but the whole "23 year old recent college grad" thing is a little overblown. Sure, a college grad like that might land somewhere with a title of "Business Analyst", but the higher the consulting contract the more likely it's some "distinguished" or at least older person with a shoe shine and 30 years of absorbing all of the management buzzword trends.

I just had a round of them come through where I work, and 3 of the 4 met this description. The 4th was the younger "college grad" and they made him actually click the power point slides forward.

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

#198

Post by johnnyo » Thu, Dec 05, 2019, 9:12 PM UTC

guntars wrote: post #144

johnnyo wrote: post #127

Earlier quoted context omitted.

This assumes you don’t have gridlock in the House/Senate, so it’s a bad idea. We already have govt shutdowns when we can’t pass a budget, imagine if a law that legalized gay marriage was allowed to expire, or one that granted people health care or immigration status. Even if a non-discrimination law only expired for a short period of time, that would be enough to do real damage to people’s lives.

Other countries have solved this issue simply by automatically forcing an election if a budget is not passed. Their representative are somehow able to overcome ideological differences and pass legislation once their jobs are on the line.

That doesn’t solve the problem because the idea here is that some laws should sunset, some shouldn’t.

When a civil rights law sunsets, lots of bad can happen in a short period of time.

I’m using the example of the government unable to agree on a budget as an analogy.

What happens when we can’t agree on how to renew the Civil Rights Act and it sunsets for a period of time?

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

#199

Post by bduerst » Thu, Dec 05, 2019, 9:15 PM UTC

z3ugma wrote: post #21

I was a technical project management consultant for a long time. The value that most orgs get from a consultant isn't really in the advice the consultant gives them, it's the political cover to make changes they knew they should make all along, but didn't have the social capital or the focus to make those changes until they had a person in a chair across from them.

One of my profs in business school said that 1/3 of the time you hire consultants is because you know what you want to do but you need a fall guy in case it goes south. You're paying a premium to offload the liability.

Wash, rinse, repeat with the big 4.

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

#200

Post by MFLoon » Thu, Dec 05, 2019, 9:15 PM UTC

Sort of a buried lede here. There's nothing shocking about overpriced, underdelivering consultants. But the bit about how the GSA is essentially profit sharing with said overpriced consultants at the expense of the rest of the government and taxpayers, via the IFF incentive structure, is pretty mind blowing. Another brilliant financial "innovation" by the Clinton Administration that's been quietly burning billions of taxpayer dollars to the end of significantly less efficient government for decades now...