It has become widely known that the PwC tax scandal and the current Senate inquiry have seen Australians’ level of confidence in the integrity of consultants drop to an all-time low. But in a broader context of lack of trust, should all Australian professional services consultancies suffer the fallout? And why should it matter?
Edelman’s 2023 Trust Barometer, its 23rd annual trust and credibility survey, shows a rapid erosion of trust and an impending polarisation of Australian society. Over 60% of Australians agree the lack of civility and mutual respect today is the worst that they have ever seen. The survey reveals Australia is on a path to polarisation, with the ‘rich and powerful’ identified as a major force in dividing the nation. In that survey, business was the only institution seen as both ethical and competent, creating a significant burden of responsibility for business leaders to navigate the way forward.
There is little doubt that the current focus on the misbehaviour of the “big four” is refocusing a high level of mistrust in government onto business. This comes at a time when Australian society wants and needs more from Australian businesses. However, there is a case for the ongoing use of consultant and contract labour while maintaining accountability and confidence.
Since 2022 the government has required 20% of eligible procurements by volume and 35% by value be awarded to small and medium enterprise. The June 2023 Small Business Matters report, prepared by the Australian Small Business Ombudsman, shows that 51% of professional, scientific, and technical services in Australia are provided by SMEs. This shows that SMEs are a vital source of specialised skills and knowledge for Australia if we are to maintain pace and leverage rapid technology advancements, reduce the threat of offshoring, and retain skilled services.
When governments have large programs of work that require specialist skills, and that work must be delivered within defined periods of time, it is essential to supplement capacity by an approach to the market. This approach must be designed in a way that will support value for the Australian tax-payer’s dollar and allow the vendor to deliver tangible outcomes.
A road well-travelled in government procurement is to approach the market for one single organisation to deliver a full program of work. The size of the procurement typically excludes SMEs and instead locks-in large firms with high staffing capacity. However, as has been proven recently this approach is risky. The government is locked-in to a single provider and has limited agility to change the service provider as the scope increases over increasingly longer periods of time. A common approach to mitigate the risk of the above is to let the pendulum fully swing and instead rely on contracted labour hire of individuals. The incentive for contractors however is to maintain their position for as long as possible. There is no alignment on or incentive to produce outcomes and little opportunity to prove value.
The Goldilocks, ‘just right’ solution is to buy fixed-price services in a way that provides a strong focus on outcomes whilst maintaining flexibility to change that every large programme needs. A panel of SME partners also gives government an ‘out’ if the outcomes are not being delivered by one or more of the panel partners.
Government can procure the services of Australia’s highly skilled and trusted SMEs with deliverables that are designed in bite-sized chunks. This enables SMEs to confidently commit and deliver. Procuring a pre-qualified panel of, say, five SMEs for 10 streams of work keeps the focus on outcomes but provides the agility to change. The result is an outcomes focus of the full program of work with far greater flexibility.
The vendor is incentivised to build trust and demonstrate commitment over the shorter delivery timeframe so that they maintain the government’s confidence and trust. At any time, the government can insert its own personnel into the vendor team to enable skills and knowledge transfer required to sustain the outcomes that have been delivered.
Returning to the Edelman Trust Barometer findings, the best results come when business and government work together, not independently. Australia’s SMEs can deliver outcomes, build consensus, and deliver results that push us toward a more just, secure, and thriving Australia.