The gravy train culture of providing lucrative consulting and external policy advisory services to government has been put to the blowtorch by Victoria’s Auditor General’s Office after a review found that the way many such engagements have been bought and managed “was tantamount to maladministration.”

In a stinging assessment of how consultants are procured, the Audit found that Victoria’s bureaucracy doesn’t even know how much money it spoons out to the consulting sector because there “is no consolidated record across government of spending on advisory engagements” but added that “expenditure is likely to be significant.”

A questionable reliance in many parts of government on consultants – unkindly dubbed by some bureaucrats as the ‘coalition of the billing’   has been an escalating concern across the state and federal sectors for several years.

While ministers and political advisors are routinely cultivated by the advice industry, a rising concern is a tendency among some consulting firms to cherry pick key talent and expertise from departments and then to sell it back to them at steep premiums.

Victoria’s latest probe into the use of consultants found “four selected departments were unable to demonstrate consistently that their advisory engagements had been well planned, effectively procured, well managed, comprehensively evaluated and transparently reported.”

Those under the spotlight were the Department of Treasury and Finance, the Department of Justice, Department of Education and Early Childhood Development and the Department of Environment and Primary Industries.

“Departments often use contractors and consultants to provide advice about how to best realise government policy goals,” the Audit report said.

“While the costs of these advisory engagements are usually small relative to the service and infrastructure decisions they inform, they are critical because they help shape and direct these much larger expenditures to deliver better outcomes.”

One governance issue identified in the report was the use of so-called contract splitting, where a larger single consulting that would normally attract a competitive procurement process job is artificially split up into smaller jobs to avoid a notification trigger threshold.

But a bigger problem was that the departments that were examined simply didn’t have a cohesive or high level view of what advice was being bought in – largely because they “managed engagements individually, without the type of intelligence gathering, analysis and leadership needed to understand and improve overall performance across all advisory engagements.”

The Audit report said that this “shortfall in oversight” extended to the Department of Treasury and Finance’s “whole-of-government role” where it “did not adequately check that departments correctly classified and disclosed advisory engagements, nor verify the savings departments reported against government targets.”