Small firms fill Big Four gap
Canberra's boutique firms have witnessed a remarkable surge in government contracts in the wake of recent scandals.
Companies are capitalising on the federal government's growing preference for smaller consultancies over the industry's giants.
This change comes after the widely publicised PwC tax scandal, prompting federal agencies to significantly reduce their dealings with the 'big four' – PwC, KPMG, Deloitte, and EY.
The last quarter of 2023 marked a pivotal moment for these smaller entities, with a fourfold increase in new work compared to the same period in 2022.
Data from AusTender reportedly reveals a stark contrast: while the big four's quarterly federal consultancy work plummeted from $36.8 million in the fourth quarter of 2022 to just $21.8 million in the same quarter of 2023, contracts awarded to smaller firms soared from $5.5 million to an impressive $22.1 million.
Interestingly, EY emerged as the sole member of the big four to enjoy federal growth, securing $8.5 million in contracts, up from $5.5 million in the previous year.
In contrast, PwC, post its split and formation of Scyne Advisory, failed to win any federal work in the final quarter of 2023, a stark drop from the $8.9 million in the same quarter of 2022. Scyne Advisory managed to secure a single contract worth $1.1 million with the Health Department.
Despite a governmental push to curb reliance on consulting services, the overall expenditure remained steady at approximately $106 million across comparable quarters in 2022 and 2023.
However, a ministerial drive to utilise smaller and mid-tier consultancies redirected spending away from the big firms in the latter part of 2023.
Leading the charge among the smaller firms was Nous Group, a public policy consulting specialist, which secured $7.7 million in engagements, significantly higher than its $1.6 million achievement in 2022. This included a notable $2.15 million contract to evaluate the Health Department's Head to Health Kids program.
Other noteworthy gains were made by Canberra-based firms like Infinite Consulting, which landed a $1.3 million contract with the Australian Financial Security Authority. Similarly, Artemis secured a nearly $1 million advisory contract with the navy shipbuilding division in the Defence Department, alongside a $382,000 engagement in the Health and Aged Care portfolio.
Projects Assured, another local advisory firm, won contracts totalling over half a million dollars, including a significant $487,000 contract supporting the establishment of the National Anti-Corruption Commission.
ConceptSix, succeeding in its role in transforming the myGov service portal, won a $328,000 contract with the Foreign Affairs and Trade Department's budgeting division.
Terrace Services, another Canberra firm, secured $870,000 in new work, including a substantial project advisory contract with Geoscience Australia.
Additionally, 1 and One Consulting picked up nearly $800,000 in contracts, including a $547,000 contract with DFAT.
Smaller firms like Two Twigs, Bluebird Advisory, Charterpoint, and Interaction Consulting also benefitted, securing contracts for diverse services ranging from IT architecture documentation to financial analysis and health department support.
Experts say this shift in the Canberra consulting landscape underscores a significant change in government contracting, highlighting the growing importance and capabilities of smaller, local firms in the consultancy sector.