How to manage your management consultants

Even before sequestration, federal IT leaders were under pressure to closely monitor contracts and justify every consulting dollar spent. With both planned and arbitrary budget cuts now looming, it is even more important to make sure consultants earn their keep.

A well-planned management consulting engagement can be part of the solution to a tight budget because it can help agencies improve efficiency and identify targeted cuts. After all, willy-nilly budget cuts can cost far more than they save, while a well-spent dollar can end up saving money and improving long-term results.

"As an ex-consultant myself, I fully understand the value that management consultants can bring to agencies in helping solve both strategic and operational issues," said Joe Jordan, administrator of the Office of Management and Budget's Office of Federal Procurement Policy. "There are significant benefits around bringing private-sector best practices and insight to solving public-sector problems. The key is to always ensure that the utilization of consultants or any professional service provider is to supplement and not replace the federal employees."

From 2000 to 2008, agencies' spending on professional management support services quadrupled, prompting OMB to set a goal of reducing that spending by 15 percent from 2010 to 2012. The effort was a success.
"We were able to hit that goal and save $7 billion," Jordan said.

Of course, saving money is only one way of demonstrating the benefit of a given project or course of action. When it comes to consultants, the challenge is to carefully manage every step of the engagement with the overall business goal firmly in mind.

"You have to have a clear understanding of what is the problem you're trying to solve," Jordan said.

Why hire a consultant?

There are good reasons to bring in a management consultant to solve an ongoing and complex federal IT problem, and there are just as many bad reasons. The latter include hiring a consultant because you're comfortable with the person or because it is easier to terminate a consultant than a federal employee.
On the positive side, consultants can bring new ideas, specialized expertise or deep experience with a given challenge, said Mark White, chief technology officer for Deloitte Consulting's technology practice.

The key is to always ensure that the utilization of consultants or any professional service provider is to supplement and not replace the federal employees. -- Joe Jordan, OFPP .

Indeed, the current budget challenges provide an excellent scenario for consulting expertise, said Michael Isman, a vice president at Booz Allen Hamilton. "Instead of thinking about how you can reduce [spending], plan for the future and drive solutions that will result in long-term efficiencies and effectiveness for the agency," he said.

Patsy Garnett, who has successfully used consultants for acquisition support as chief IT transformation officer at the Department of Housing and Urban Development, said it is important to clearly define the role of a consultant and refrain from turning over the government role to an outside party.

"We still have a responsibility to guide and direct, and they're just facilitating that action for us," she said. "Instead of bringing in more network administrators and project managers, we really need to be bringing consultants in to build our skills around doing better contracts."

She also stressed the importance of having consultants train, mentor and otherwise share their knowledge with federal employees.

When Jordan was at the Small Business Administration, he brought in consultants to tackle a backlog of applications and reduce the waiting time for companies to be certified under the Historically Underutilized Business Zones program. By mapping all the steps and documentation required in the certification process, the consulting team was able to identify redundant documents and reduce 40 pieces of information to 15 that satisfied the core eligibility criteria.

That effort trimmed the processing time from nine months to fewer than 90 days while boosting confidence that no waste, fraud or abuse existed.

"On every dimension we felt we had really improved the process and the outcomes through this re-engineering," Jordan said. "The greatest skill consultants have is tremendous pattern recognition. They can quickly come up with hypothesized solutions and test those out."

Setting the right goal

Possibly the most challenging part of hiring a consultant is clearly and fully defining the scope of the project. And the most important thing is to state the requirement in terms of the agency's need — not the type of system you want or the approach you think the consultant should take, Garnett said.

In other words, rather than looking for a consultant to build a predefined IT system, federal leaders should specify their business goal and keep it at the center of all discussions.

Good consultants know the way you build dependency is repeat business.
— Mark Forman, Government Transaction Services.

Garnett begins by holding wide-ranging conversations with industry representatives to identify the directions in which a program might evolve and the consultants who are successfully doing that kind of work — well before her team begins writing a request for proposals.

"You don't want to be in a position of having to define for a contractor you haven't selected yet what...approach to take," she added. "One of the biggest issues we have is letting go of telling the contractors what it is we need from them as opposed to how to do the job."

For instance, a year ago HUD's Community Planning and Development organization wanted to improve a computer system that tracked certain activities, including the removal of lead paint from houses. The team made sure to tie the project's results to the number of houses treated successfully rather than to the IT requirements to upgrade the system.

"They were able to remove lead paint from 4,000 homes," Garnett said. The work "is on the front end of understanding what your requirement really is — what is the business outcome you're trying to achieve, not the computer system you're trying to put in place. They were excellent at defining their business need, and they allowed the technology folks to tell them what system would work."

Technology is only one piece of any solution. "It's not just an IT issue, ever," Isman said. "It's IT combined with human capital combined with process combined with the business portfolio. Really think about what needs to change and how [you] manage that change through the cycle."

Furthermore, consultants are sometimes asked to solve thorny problems for which the solution is not clear, making it counterproductive to nail down detailed specifications ahead of time.

"We'll see a firm fixed-price contract for a very undefined piece of work, which reduces the flexibility on both sides to actually be agile and adjust to the logical changes that are going to happen in a program," Isman said.

As sequestration unleashes hordes of proposals related to cost containment and cost analysis, federal executives should stay focused on how a given project would contribute to the overall mission.

"My advice to the folks who are on the receiving end of those marketing calls is to make sure whoever comes in understands how to put what they're selling into the context of your business situation at your agency," said Mark Forman, who was administrator of e-government and IT under President George W. Bush and is now president of Government Transaction Services.

How to handle the RFP process

Once she has identified the business requirement, Garnett brings in consultants to help her write a statement of work. "There's a big difference between how we in the federal space view what we're saying and how the contracting community looks at it," she said.

The RFP should require contractors to spell out how the proposed solution would work with the agency's IT management framework and specify that they develop a plan for handing off management to agency employees when they are done, which is your path to self-sufficiency.

"Good consultants know the way you build dependency is repeat business," Forman said.

White recommended keeping project cycles short to ease the transition into new, potentially disruptive technology or system updates. "Every cycle needs to deliver an MVP — a minimum viable product," he said.

In addition, the project plan should include every stakeholder. "You have to define what it is you're going to do [and] have clear guidelines on who's doing what when and following up on it," Garnett said. "Whoever has an impact on the success of the plan has to be mentioned."

When reviewing proposals, you should be wary of responses that simply regurgitate the language in the RFP. "The real focus has to be on managing for value and focusing on that desired outcome," Garnett said.

Experts also recommend checking references for potential consultants and looking for examples of their ability to overcome resistance to change and achieve projects' ultimate goals.

"You want to see how they worked with the agency, how they helped the agency undertake the change," Forman said. "There's a difference between the people who have done the study and the people who have helped their customers all the way to benefits realization."

Finally, agencies should take a hard look at the bidders' justification for the methodology proposed, and the depth of experience and resources they can draw on.

For one IT cost reduction project, Deloitte found that the agency's IT spending wasn't clearly connected to mission outcomes and objectives. So when a 10 percent budget cut was ordered, the impact was unclear. By turning to a database of more than 150 hypotheses that described the data required to validate each one, White said, the Deloitte team was able to specify the impact of proposed cuts in detail.

The importance of communication

In addition to the reams of documentation required for any consulting engagement, in-person and phone communication is invaluable. Garnett requires an in-person meeting before any consulting contract is awarded and clearly states her expectations upfront.

She tells consultants: "I don't want your B team. The team you propose to me is the team I expect to be there. If you're not going to be able to deliver on that, we might as well address it now."

That helps solve the "disappearing guru" problem, when a well-known expert helps a consulting firm land a contract but then is whisked off to another project and replaced by the second string.

However, even if the promised team appears, the consulting firm needs to explain how it shares knowledge and lessons learned among its employees, Forman said.

"The government spent a lot of money in the first few iterations of enterprise architecture contracts because some of the biggest-name companies operated as if they were franchises," he said. "They used the corporate insight to win the work, and then the team that showed up had no experience and couldn't use the methodology."

Frequent communication also helps identify when a project is about to go off the rails so participants can adjust as needed. Furthermore, nearly every consulting project will uncover new information that must be incorporated into the plan.

"You get into a piece of work and you're operating against either explicit or implicit assumptions, and then somebody remembers or fleshes out that one of the assumptions is invalid," White said. "When there's blame to be laid, that creates behavior that is far more detrimental than the unknown."

He added that it is important for the agency's IT and contracting teams to work well together and understand the business goals and mission context of the consulting project. "The key to this is effective communications and a good governance structure between the management consultant, the CIO and their contracts officer," White said.

Garnett likes to review a contract six months before it comes up for renewal, which keeps costs in line and signals to the consultant that renewal must be earned. She also insists on a post-implementation evaluation to make sure the system or solution actually solved the original problem.

Such diligence makes even more sense in the ongoing budget crisis. "We're seeing the government respond to the environment and figure out where the right places to cut are," Isman said. "Where they find value from their partnerships with consultants, that value is still there and I'd argue could be even more important in these trying times."