The cost of consulting: Deloitte, EY, KPMG and PricewaterhouseCoopers earn $813m as government cracks the whip

The consulting and contracting crackdown across the bureaucracy is in full swing and the big four firms - Deloitte, EY, KPMG and PricewaterhouseCoopers - are firmly in sight following a recent tax breach scandal.

Figures from the federal government's contract data show the consulting giants experienced their first year-on-year decline in winning public money since the 2016-17 financial year.

The trend is reflected more broadly across public service contract spending with the overall figure down $7.5 billion on the previous year to $49.4 billion.

But Public Service Minister Katy Gallagher insists it will take years before the "damage" to the bureaucracy is fixed, saying the work of private consultants and contractors can't be clawed back in house over a single year.

It comes as the federal government makes plans to create its own in-house consulting firm but public sector experts say it won't entirely signal the end of the big four's dealings with government.

Extensive analysis of federal government contracts data by The Canberra Times can reveal the big four firms commenced 844 contracts between July 1, 2022 and June 30, 2023 worth a total value of $813.2 million.

The figure marks a decline from the previous financial year where the same four firms won more than 1200 contracts reaching a value of $1.46 billion.

The data, which is published online by each government agency, shows KPMG won the most amount of contracts and for the biggest sum at $257.8 million for the year.

Deloitte, PricewaterhouseCoopers and EY trailed behind with totals of $212.2 million, $189.6 million and $153.6 million respectively.

The firms' biggest customer was the Department of Defence from which the four received a total of $396.8 million across 211 contracts.

The Department of Health and Ageing, Services Australia and Department of Home Affairs were their next biggest customers with contracts worth $43.7 million, $32 million and $28.2 million respectively.

While the big four receive most of the attention, other consulting firms offering a range of services have gotten a decent slice of the pie too.

Tech specialist firm Accenture won $255 million over the financial year while social development consultancy Abt Associates earned $177 million for their work advising agencies on management, IT and social development.

Synergy Group was next in line winning $84.5 million spread across 159 contracts.

Other players, such as Nous, Boston Consulting Group and McKinsey, earned between $12 million and $24 million each.

Firms operating in consulting racked up large figures but labour hire companies also stayed on top.

Adecco sits alone at the top of the chart after it scored a nearly decade-long recruiting deal with the Department of Defence.

The total value of 52 of its contracts is just shy of $10 million but the $1.29 billion contract with Defence until June 30, 2029 secured its first place position.

Hays, Talent International, Hudson Global Resources and DFP Recruitment rounded out the rest of the top five landing $225.7 million, $106.2 million, $101.4 million and $71.8 million in contracts respectively.

The agencies spending the most on outside talent included the Department of Veterans' Affairs, Services Australia and the Bureau of Meteorology with all three spending more than $100 million over the year.

Top legal firms earned their way into the top too with eight firms signing contracts totalling more than $10 million.

Clayton Utz, Minter Ellison, Sparke Helmore, Norton Rose Fulbright and Ashurst all passed $20 million each for their services while embattled Big Six firm HWL Ebsworth scraped in $6.2 million for its government work.

While the total value of government contracts remained high at $49.4 billion for 2022-23, it represented an overall reduction of $7.5 billion in contract spending.

Part of that sum - nearly $650 million - is derived from big four savings.

But there is still work to do before is brought back down to size, says Renee Leon, Institute of Public Administration Australia president and a former secretary for the Human Services and Employment departments between 2013 and 2020.

Up until the mid-2010s, the four consultancy giants cumulatively earned less than $500 million together.

But by 2019-20, that figure surpassed the $1 billion mark for the first time in just a few short years.

Ms Leon said the rise in consultants could be attributed to two reasons.

One, a hollowing out of technical expertise due to staffing levels being capped under the Abbott Coalition government, which led to a reduction in core functions.

Two, successive Coalition governments preferred the advice of outside consultant firms over the work of public servants, she said.

"Very often, the former government didn't give the same respect or value to the work and the views of public servants as it did to the views of outside firms," Ms Leon told The Canberra Times.

"It was a way of ensuring that policy proposals were given greater credence within the government if they were produced, or built on, or signed off by a consulting firm rather than public servants."

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Senator Gallagher pointed to changes in recent May federal budget, which resulted in 3314 contractors and labour hire employees being converted to permanent public servants.

It's expected to save $811 million over the next four years.

A new in-house consulting team will also be set up within the Department of the Prime Minister and Cabinet to allow public servants to do some of the work the big four has been previously contracted to deliver.

More work was necessary, the minister warned, but it would happen over years, not overnight.

Public policy expert, and former Australian Public Service commissioner, Professor Andrew Podger said initial figures were promising but cautioned there would always be a need for outsourced work even once capability is built back up.

However, he said there should be more scrutiny over with whether departments and agencies were getting quality advice and value for money.

"I think there's a place for using consultants and contractors, particularly when you need expertise, and it's not worthwhile investing in having an ongoing capability," he said.

"But the extraordinary growth in the use of consultants and contractors has reduced the capability inside, even to the point where, say in areas like IT, we're no longer able to be informed buyers of contractors.

"I think departments have to be extremely careful to ensure that when they do use consultants, that they actually do get the expertise they're paying for, and the money is not just simply going into profits for the firm."

The data used in this story is taken from the federal government's procurement portal, AusTender.

Using the advanced filter, I extracted all contract notices starting between July 1, 2022 and June 30, 2023. I did this in the days following the end of the financial year.

The figures for the financial year will increase as more contract notices are published on the portal by agencies. Some contract notices are published weeks or months after being entered into.

To determine how much the big four firms had made, I filtered the supplier column and copied and pasted all instances - including name variations, such as PwC and PricewaterhouseCoopers - into a Google sheet.

I then used a pivot table to determine the values.

For the historical data, I used the same process for extracting the data and repeated the steps for all financial years going back until 2011-12.

Data extracted using this method can be unreliable due to the sheer amount of categories allowed and a reliance on public servants manually inputting the data. This means there are sometimes typos in supplier names, making it difficult data to clean and correct.

There is also a "consultancy" filter, though it is not clear how it is defined. Using the consultancy filter yields much lower values and leaves out some consultant contracts.