UK minister awards $223m contract to KPMG despite promises of consulting spending | KPMG

The British government has awarded KPMG a $223 million contract to train civil servants, despite pledges to cut state spending on external consultants.

Under the 15-month contract with the Cabinet Office, which is billed as KPMG's second-largest public sector contract ever, the firm will manage training and development services across the civil service.

This includes overseeing courses in policy making, communications, and career development, as well as training for assessment or certification qualifications administered by universities, business schools, and professional organizations.

News of the deal, first reported by the Financial Times, follows the new Labour government’s announcement last month that it would take immediate action to halt all non-essential government consultancy spending from 2024-25, as part of a plan to halve government consultancy spending over the next few years.

According to Treasury estimates, the cost-cutting initiative will save $550 million in 2024-25 and $680 million in 2025-26. The government said it would scrap the cap on civil service staff to help departments achieve their targets.

The KPMG contract was awarded just days before the government unveiled its cost-cutting proposals, according to official records of the contract award. At full value, it is equivalent to about 8% of KPMG’s annual UK revenue, making it the firm’s second-largest public sector contract ever awarded, according to data provider Tussell.

Three years ago, the professional services firm took the unusual step of temporarily withdrawing from bidding on contracts following a series of corporate scandals.

Then in 2022 it was hit with one of the biggest fines in UK audit history after a former employee was found to have forged documents and misled regulators about the audits of several companies, including the collapsed outsourcing firm Carillion.

KPMG resumes bidding for public sector contracts in 2022.

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A government spokesman said: The contract was agreed before the general election. The contract value represents a maximum, not the total cost or expected expenditure. All expenditure under the contract must be good value for money.

KPMG declined to comment.

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