“We are troubled by reports of the developing of weaponry,” he said melodiously, “exceeding in quality and size the tools of destruction and war known before.” It is October 1979, and the delegates to the United Nations listen closely to this counsel. His Holiness, John Paul II, is reporting to them on the state of the world.
“The continuing preparation for war demonstrates,” the Pope continued, his every tone resonating with sober primacy, “by the production of ever-more numerous, powerful, and sophisticated weapons in various countries, that there is a desire to be ready for war.”
Shifting topics, the Pope declared that “it is my fervent hope that a solution to the crisis in the Middle East may draw nearer.” Shifting again, he advised that “disturbing factors are frequently present in the frightful disparities between excessively rich groups and individuals, and the majority who make up the poor.” He paused to scan the expectant assembly. “Everything will depend on whether differences and contrasts in the sphere of the possession of goods will be symmetrically reduced,” he explained patiently, “through truly effective means.”
The ambassadors nod attentively. Yet something is dreadfully wrong here. The grand pronouncements somehow ring hollow. Is it that the Pope drones on for more than an hour, leaving his audience numb at the extremities? Jesus would have spoken for five minutes, tops, and left the dignitaries in a cold sweat for their souls. But that’s not it. It’s something in the words themselves, and it sounds familiar…
The Middle East needs a “solution,” the gap between rich and poor is “excessive.” …A great crescendo precedes points that are crashingly obvious. “We are troubled by reports of developing weaponry.” Reports? Did he just hear about the V -2? Even this universally acknowledged fact is couched in legalistic equivocation. “The continuing preparation for war demonstrates … a desire to be ready for war.” The gothic sentences, stripped of their flyingbuttress clauses, crumble into a rubble of gibberish.
And to each crisis, the Pope offers the world’s leaders not the slightest hint of what they should do about their problems. There’s just the wispy reference to using “truly effective means.”
What means? What mysterious means will be truly effective? Why doesn’t he explain what they are? Saints defend us! He’s saying the issue needs further study! The Pope is talking like a consultant!
Joining the Cult
Swirling circularities … “solutions” so vague as not to offend the comatose … calls for further study … this is consulting talk, all right. It’s sweeping the world, all the way up to the throne of St. Peter.
Just as clerics schooled in mystic orders surround the Pope, consultants abound in their own Vatican City—Washington D.C. They scurry about at all levels of government, jabbering in arcane dialects, mumbling half-heard benedictions. Their hollow language is fast becoming the city’s only means of communication. Hodding Carter, for example, has mastered it entirely. Can’t anybody give a straight—much less infallible—answer anymore?
Most people are dimly aware that consultants, who keep their numbers obscure and their purpose uncertain in the manner of a cult, are increasing in importance. Consulting companies ring the capital—drawing at least $2 billion in federal paychecks per year into prosperous, ambiguously named organizations like BDM, ICF, Peat-Marwick, Battelle, and Cresap.
Most are dimly aware as well that consultants have been getting into trouble recently. A few months ago, PRC Corp., a $280-million-a-year consulting firm, admitted to billing the Corps of Engineers for studies it had already done under a NASA contract. The Mariscal Corp. was caught billing $29,000 for work it never even pretended to do. Then, in March, the front pages of Washington newspapers were covered with stories about a General Accounting Office study that found a pattern of “pervasive abuses” throughout the consulting industry. There were heated congressional hearings and expressions of outrage.
Many of the volleys of angst, it turned out, were being launched by the defenders of civil servants, who know that consultants are being hired to do work that would otherwise be performed by regular government employees. (It was Virginia Rep. Herb Harris II, whose district is a Washington bedroom community where civil servants do most of the snoring, who requested the GAO report.) They complained about consultant accountability and raised convoluted constitutional questions about the legalities of farming out government work; they made accurate attacks on the waste and favoritism in the field; but they never got down to the real scandal. The way the Pope and Hodding Carter talk gives you more of a clue, one that requires a bit of history to understand. It’s the issue that’s really deserving of further study.
Have Stopwatch, Will Travel
Though today’s consultant dispenses numbing generalities, and would rather be bitten by a snake than give a definite answer about anything, he is descended from a profession once known for its specificity. The word “consultant” traces at least as far back as the English consulting physician, a specialist called in to give the family doctor detailed assistance on difficult cases. His purpose was to provide instructions on exactly how to treat the patient, not to give lectures on the general principles of medicine.
In America, “consultant” was first used to describe the management experts who prowled around factories, stopwatches raised, performing the famous “time and motion” studies. The consultant’s assignment was only temporary—to give brutally frank advice to the businessman with a sick company on his hands. The cold objectivity of the consultant’s stopwatch and transitory status were his greatest assets.
It was in this guise that consultants first came to Washington. During World War II, government had an uncharacteristically profound interest in efficiency. Officials like Frank Knox, then secretary of the Navy, called in consultants like Edwin Booz, a prominent private-industry adviser. Knox told Booz to streamline the Navy’s logistics and management. He succeeded in part by using another technique emphasized during the war—contracting out. Before the war, for instance, when the Navy wanted a new battle cruiser, armor plate and cannons were forged at a naval ordnance plant, while the hull was fabricated and assembled at a naval shipyard. Wartime emergency production quickly outstripped the capacity of naval facilities, so the Navy, like other government agencies, contracted its work out to private plants and shipyards. While consultants like Booz-himself a contract employeerefined these contracting procedures, they also established a beachhead for consultants that was later used in staging all-out invasions.
Government officials exposed to contracting out quickly discovered it had virtues unrelated to military might. By doing projects under contract, officials could commit funds without the fiscal-year limitations that usually bound their hands, and hire talented people (or cousins) regardless of their standing under the civil service rules. In fact, they discovered they could expand the government without ever changing its official “size,” which is reckoned as the number of civil servants. This was particularly important under Eisenhower, Nixon, Ford, and now Carter, when presidents desiring to maintain the fiction that government is not growing imposed strict civil-service hiring limits. Today, almost eight million people work for Washington by working for companies under contract to government; meanwhile the official “size” of the government, 2.5 million civil servants, has scarcely changed in 20 years.
Consultants, of course, were merely a small species within the contracting genus: contractors whose business was giving advice to strangers. Most of the contractors, then as now, supplied material goods like fighter planes and patriotic bunting. But the demand for consultants began to languish after the war, as government reverted to its natural state of indifference to efficiency. The consultants didn’t want to leave Washington, so they began to transform themselves from production efficiency experts to employment agencies, willing to supply bodies to government branches bumping up against their civil-service hiring ceilings. They were greatly aided in this effort by the invention of the computer.
Ain’t Just Whistlin’ FORTRAN
Before the computer, a government manager could wander through the file room of his agency without fear. Things might be in disarray-liverwurst sandwiches and urgent cables filed together under “Inactive”-but if he looked at any given thing in any given drawer, he knew what it was. With the advent of computers, this ceased to be so. Computers were mystery boxes that spewed out numbers and factors without any hint of origin, sniffing rabbits pulled from an empty hat. They used languages like FORTRAN, which not even those who could speak could speak.
It was obvious that government managers could not possibly understand this complex new development; it seemed only natural to reach out to consultants, with their resumes and degrees, for assistance.
The same technology tide that swept in computers was complicating other fields, like defense. In the 1950s, civil service classifications could not offer the kind of salaries needed to attract quality scientists. So government-funded, contractor-operated, quasi-independent think tanks like RAND, Mitre, and Oak Ridge National Laboratory were created. These tanks were staffed by scientists doing “hard” research such as aircraft design (although many later added advice-giving consultant branches). It was desirable to be associated with the prestige of such ventures, which led to what former McKinsey Co. consultant and Department of Energy assistant secretary George McIsaac calls “the explosion of false research.” The advicegiving consultants liked to do “studies” which were little more than digests of technical literature, framed in unassailable generalities-similar in form and content to a college term paper. Sprucing them up with false research elevated their prestige; it also made laymen much more timid about challenging dubious work.
Ed Hearle, a senior vice president of Booz-Allen & Hamilton—the $lOO-million-a-year consulting firm, with seven Washington offices, founded by Edwin Booz, explains: “Everybody tries to claim his study is really ‘research’ and full of ‘new information.’ Government is fascinated with getting ‘new information.’ But it’s usually just old numbers that have been massaged beyond recognition, or new numbers so trivial no one ever cared to get them before.” Like the number of disadvantaged children who bring bagged lunches to school when it’s snowing—”new information.” As long as you don’t look too closely, the charts and sine curves seem to be the essence of scholarly sobriety.
Management by Subjective
The urge to conduct government business in some kind of techno-babble, building since the war, found a champion in Defense Secretary Robert McNamara, patron saint of the consulting cult. McNamara and his Pentagon Whiz Kids convinced the world that you needed three post-graduate degrees to determine whether an artillery shell had exploded. He persuaded Lyndon Johnson that something called Planning-Programming-Budgeting Systems would make Washington a lean machine of cheetah-like efficiency.
Now, civil servants in agency budget offices had no more idea what PPBS was than how to whistle in FORTRAN. No amount of explanation of PPBS could express how it (or any of its successors, from “management by objective” under Nixon, to “zero-based-budgeting” under Carter), in any way differed from the existing budget process; which consisted of sitting around a conference table asking “How much money will we need next year?” But Johnson told the Office of Management and Budget to insist that everything be done in PPBS jargon.
Since few people at OMB could grasp any more than the superficials of PPBS, and OMB lacked the manpower to penetrate an agency’s inner mysteries and seriously challenge its budget, the agency bureaucrats quickly realized PPBS was really no threat at all. All they needed was to lower in someone to mumble the PPBS gibberish, satisfy the pretenses, and keep the system moving. It didn’t matter if the mumbler had just heard the latest set of buzz-words last night, and was winging it with garbled allusions to econometric modeling. As long as he was cloaked in the mystique of the consulting cult-advanced degrees in esoteric disciplines, a senior position with an ambiguously named but clearly successful firm—OMB’s formalities were satisfied.
You had to stop and wonder—would these well-educated and sophisticated consultants, whose great assets were exacting skill and objectivity, stoop to doing your mumbling for you? Would they just do whatever you wanted? The answer was the kind of spirited affirmation a rich crook gets when he asks Edward Bennett Williams if every man has the right to an attorney. But unlike Williams, Washington consultants do not have a wide range of clients. If you are a Washington consultant, you work for the government and you do what you have to do to keep your client happy. You tell it what it pays to hear. So the objective experts, when asked to objectively and independently come to a predetermined conclusion, began to say, “I have the most extraordinary coincidence to report…”
Here Cons the Sun
After Carter took office, for instance, the Department of Energy commissioned some studies of solar power. Energy and Environmental Analysis, a hungry young consulting firm of ex-Whiz Kids, and old stand-by Mitre were hired to devise computer models. The White House planned to announce a sunny outlook for the politically harmless “solar option.”
EEA made the pessimistic prediction that solar collectors worked but were too expensive to be practical. Word filtered back that the White House was not amused. Could either consultant predict, the White House asked, that solar would someday supply 20 percent of the country’s electricity? Yes, Mitre said, our model— called SPURR—could predict that. So Mitre’s model was endorsed. The administration made a glistening Sun Day announcement. SPURR became an institutional feature of DOE thinking, and has been regularly funded by the government since.
Disgruntled academics called a conference at DOE’s Solar Energy Research Institute in Golden, Colorado, to debate SPURR. Mitre sent its representatives and an impressive slide show to explain SPURR; it failed to send the model itself. Later, an EEA computer jock—disappointed at the loss of a contract—sat down for a workout with the SPURR math. He found that even starting with extremely unfavorable assumptions—such as solar power costing ten times more than any other kind to produce—SPURR would reach the 20-percent prediction.
Government’s delight at such wonders achieved so simply led to explosive growth in the consulting industry. The 4,000 Washington residents who described themselves as “consultant” in the 1960 census had risen to 23,000 by the time of the 1973 special census. The number should double or more in this year’s census, unless the consultants list themselves as “contractors.” Consultants have lately taken to calling themselves contractors because they don’t like to be called consultants. “Contractor ” implies they produce something concrete. “Around here we never say ‘consultant,’ ” said a partner in Coopers & Lybrand, at $750 million a year in billings one of the largest consulting firms. “It has a distasteful connotation. ”
Because of such fastidiousness, nobody knows just how many consultants work for the government, or just what they cost. A standing joke on Capitol Hill is the inability of any government branch to answer this seemingly rudimentary question. OMB is the most recent flop. When Carter took office, he sent OMB a handwritten order that it produce an accounting of consultants. OMB first said there were 2,000; then said it really meant 6,000; then said 34,000; and now says 19,000. It compiled no information on the Department of Defense-which, with an estimated 50,000 consultants costing $250 million yearly, is the cult’s largest sponsor -and shows the Department of Housing and Urban Development as having “zero,” when it is known to have hundreds. This is the kind of sequence they make into a ride at Disneyland.
The Paper Weight Principle
The discovery that consultants would tell government whatever it paid to hear was one of the great visionary moments in modern Washington history. But progress didn’t stop there. Telling you what you pay to hear has since been refined into the more sophisticated Paper Weight Principle. Two other great discoveries have been made. One is the realization that hiring consultants in and of itself can delay actual work indefinitely. The other is that there really is a free lunch…
“You have to understand our predicament,” says Sam Powel, a contract manager for the National Highway Traffic Safety Administration. “You’re only a GS14. The chairman of General Motors can call up Carter and say, ‘Get these SOB regulators off my back.’ The President then demands an explanation for your actions. It helps to have a pile of studies to refer to.”
Consultant Ned Jaros of Cary & Jaros calls this “weighable paper.” Good weighable paper is heavy (as in, “I know it was a good report, it was big and thick,” which one HEW official said of a study), tells you what you want to hear, and is so densely written that no one can ever claim otherwise. Using clear language is such a serious violation of the Paper Weight Principle it is not inconceivable that Washington may someday adopt a court language, like Latin.
Two years ago, for example, NHTSA ordered Harbridge House, a consulting firm, to study how auto companies react to regulation. When Harbridge’s report came out, NHTSA administrator Joan Claybrook was so furious she disowned it publicly. Yet NHTSA officials said in private that they agreed with the study’S conclusion. What was the problem, then? “They just came right out and said it,” explains a Claybrook deputy, “it” being that Chrysler was about to go belly-up.
“When word of the report’s language got out, I got calls from every congressman on the Hill, wondering what the hell right we had to say that Chrysler was going bankrupt,” Powel explained. As it happened, Harbridge’s predictions-for instance, that Chrysler would fall $1. 25-billion short of capital last summer-turned out to be quite precise. But putting the conclusions in plain English ruined their Paper Weight Principle value to NHTSA, especially since the crystalline projections made it that much easier for NHTSA critics to claim the agency itself was adding to Chrysler’s woes.
As it happened, NHTSA had simultaneously commissioned another consultant, The Futures Group, to study the same question. It came to almost exactly the same conclusions about Chrysler as did Harbridge. But this consultant’s work, mostly graphs and integrals with little narrative, is so dense the reader needs a slide rule and protractor to plow through it. There was no controversy over The Futures Group’s report. It got tossed onto the weighable stack NHTSA officials wave at when they lobby the Congress, as intended.
DeLae, Evayde, & Stallum
The next great discovery perhaps surpasses the Paper Weight Principle in significance. Chasing consultants around is a great way to kick up a lot of dust and create the appearance of terrific action.
“It’s vital for a government official to always have a study in progress,” says John Gilligan, former director of the Agency for International Development, one of the top consultant users with about $100 million spent for advice last year. “Say his boss calls up and wants to know why in blazes nothing is happening. He explains that he just commissioned a major study. It’s not prudent, he says, to act before the results are in. Now who could be opposed to finishing a study? Everybody wants the most possible information. It’s the perfect excuse.”
This excuse is elevated to the sublime when the study lasts longer than the boss who demanded it. Since most outraged calls for action come from the agency’s assistant secretaries, and assistant secretaries turn over every 18 months or so, all the mid-level bureaucrat whose peace of mind is threatened has to do is plot a study that can’t possibly be finished within the tenure of its sponsor. Then, when it comes. out, everybody has forgotten whatever crisis sparked it. They’re busy with the crisis threatening the Western world this week.
“The official who orders a study is seldom the one who gets the results,” says Booz-Allen’s Hearle. “The guy who gets the results is new. He’s never heard of the study. Priorities have changed, and maybe he’s trying to cut a bold swath by downgrading everything done by his predecessor.” So he just tosses the study on a shelf, and orders a new set of reports he will never see the results of.
EPA, for instance, ordered a $150,000 study of the possible effects of a controversial set of proposed regulations. The study was supposed to enlighten the public about the regulations before they became final, according to GAO’s Jerome Stolarow. But the contractor delayed the start of his work until after the public comment period had closed. The report was not delivered until the regulations were already in effect.
When Jesse Jackson’s Operation PUSH-Excel was awarded unsolicited HEW funds on personal orders from Joe Califano in 1978 (see “I Am Somebody … But Who?” in The Washington Monthly, February), there was controversy over the merit of Jackson’s program. To protect themselves from possible criticism HEW officials commissioned a $750,000 study one study dollar for every four project dollars in HEW’s $3-million grant. The study is being conducted by the National Institute for Education, a quasi-independent agency staffed, by law, primarily with consultants. NIE’s first announcement? That it could reach no conclusions until 1982, long after the funds were inalterably committed. NIE’s second announcement? “We don’t plan to conclude anything terribly specific in 1982 because of the program’s abstract nature,” the contract officer said.
Consider the smooth, globe-like perfection of this device. The boss gets to scream for action. The civil servant gets to promise it. The boss gets to tell Congress the cavalry is coming. Congressmen get to nod gravely. The boss gets to change jobs and forget the whole issue. The civil servant gets to go home early. The appearance of furious action, no loss of face, and none of that unpleasant business of actually doing anything. The first GS-14 who realized this relationship must have heard a choir of heavenly voices bursting forth into his ears. He doubtless felt strangely giddy, as if elevated on a billowy cloud, while envisioning himself being carried, saint-like, to that final place of rest where virtuous civil servants go—a corner office.
A Quiet Lunch
For government officials, one attraction of the consulting cult transcends politics or wartime crisis, even race or origin. It is that, while there is no such thing as a free lunch, you can get someone else to pay. Consultants can pick up the tab. Government officials, for all their power to spend or waste millions, simply do not have expense accounts. To get compensation for even reasonable travel or food expenses, which a conservative company would pay without flinching, they must submit to examinations that make the Nuremberg Trials seem like an awards banquet.
Consultants, however, are under no such strictures. They can treat their sponsoring contract officer to a pleasant lunch and pick up the tab; nothing improper here, not by any standard. Carl Black, a retired Marine colonel and defense consultant, explained that this is a straightforward business proposition. “To prepare a really first-rate proposal for a contract might cost $50,000,” Black said. “For $50,000 you can buy a lot of lunches.”
Consultants are also free to arrange for more important expense-account diversions, like that week-long “conference” at the Broadmoor Hotel. Money for the lunches and conferences comes out of the fees paid to consulting companies. This is one of the reasons government officials do not feel inspired to hold consulting fees down. Buying lunch or a hotel room is a legitimate business expense, and is deducted from the consulting firm’s taxes. Nowhere does it appear on the exhaustive government expense-account. records combed over with righteous fury by public interest groups. This is the dry-cleaning establishment of money laundering.
Won’t Go Home Again
Think you could make interesting conversation about program analysis over cognac and coffee? Figure you could wrap a dynamite Lake Tahoe conference around Our Priorities for the Eighties? Then government consulting may be the job for you. Here’s how your competition sizes up:
During the early days of the cult, consultants generally were drawn from industry or academics. But during the 1 960s, increasing numbers of consultants came from the government itself.
Traditionally, political appointees finishing a tour of government work go back home. In the Eisenhower administration, most appointees were happy to take the prestige of government work back with them into private industry jobs where the real money was. But, in general, the more 20 idealistic appointees of the Kennedy and Johnson years didn’t want to leave. There came times when their careers were on the rocks, either because they had exhausted the possibilities for promotion, or because Nixon was giving them the boot. But to leave Washington was seen as an admission of defeat. Worse, to work for industry was to shift from Samaritan to mugger. Industry was tainted, a robber of the poor. Idealists prefer to rob the rich and consulting jobs were the perfect way to hang around Washington and do just that.
McNamara proteges Donald Ogilvie, who later became a dean of Yale’s management school, and Bruce Caputo, who later was a Republican congressman, formed a consulting company called Inner City Fund. “We didn’t want any nuts and bolts report writing,” Caputo recalls. “We wanted to advise in high-level policymaking, a level few consultants reach, and we were willing to work cheap to do that.”
Inner City Fund got its wish. It became the primary source of advice on how to set up minority-run city businesses. Unfortunately, its advice was worth the price. Almost all of its projects failed. But luckily the energy crisis happened along. Inner City Fund suddenly remembered that what it really cared about all along was energy. It changed its name to the appropriately ambiguous ICF Inc., and now is one of DOE’s leading “wizard” firms, earning most of its income from specialized computer work.
John Clement, a NASA analyst who helped found an environmental consulting firm in the late 1960s, was a similar case. “Anybody could see that the environment would be the next big issue,” he said. “There was no one to go to for the answers. Whoever could set up shop first would get the action.”
For mid-management government officials, the jump to consulting was not without risks; after all, they would have to give up lifetime security in exchange for hustling work. But for anyone from the level of assistant secretary up, the change would be a blessing. Mid-management officials have only to cope with the bitching nonsense of bureaucracy. High-level officials, on the other hand, are marinated in a caustic, back-stabbing atmosphere that can be as rough as anything Madison Avenue offers. Fleeing to a consulting firm that prides itself on a genteel work environment could be a step for health as well as wealth. “It burned me out,” says a former assistant secretary of his two-year stint. “But I could keep on consulting forever.” Around Washington, consultants are called Beltway Bandits, because many of them have offices along 1-495, a circumferential highway far from the downtown clatter. Their cubic office buildings, plated with reflective glass and moist from atrium lobbies, dot the Beltway exits like so many Howard Johnsons.
Nowadays, those leaving government are drawn to consulting both for idealistic influence and money. Energy and Environmental Analysis, founded in the early 1970s, was put together by former Pentagon analysts who “realized they could make a lot more money as consultants,” says a former EEA consultant. He pegs an EEA partner’s earnings at $100,000 annually. (Secretaries of the agencies they serve make $66,000.) Consulting pay isn’t usually that high, but it’s always good. Equally important, no bright person can fail to notice that, while the industrial empires empires are fraying at the edges, Washington’s center grows ever more dense. Every point of inflation sends proportionately more tax money to Washington; every economic tremor underneath the bleak streets of Akron and Buffalo jostles Congress into creating more commissions, more agencies, more studies. Now security, money, and the image of purity are all available at the same stop on the Beltway.
“Fifteen years ago,” says Richard Irish, a consultant who specializes in headhunting for other consultants, “people were telling me, ‘I’d love to go work for the Bureau of Indian Affairs, but I can’t afford to turn down IBM.’ Now they say, ‘There’s real challenge at IBM, but who can turn down the money at the Bureau of Indian Affairs?'”
The 10K Form
If you’re not intimidated by the competition, and would like one of the contracts from the Bureau of Indian Affairs, here’s your first step: have a $9,999 idea. Consultants looking for work frequently find that thoughts come in precisely such increments. One of life’s mysterious constants, like the speed of light? No, more earthly. Consulting expenses under $10,000 can be paid with government. purchase orders. These involve almost no review and can often be authorized by a single civil servant.
It’s common for consultants, who solicit, work by writing proposals for studies, to practically hire themselves by proposing a purchase-order contract to a friendly contract officer. “You get to recognize the language of the proposals,” says a DOE contract officer, “because it goes right into the contract description.”
Under-$10,000 contracts are useful to put a foot in the door, or tide you over, or to build a resume. A high-GS-level manager looking to jump to consulting might call three or four similarly situated friends in government-or corner them at a dinner party-and explain his plans. The morning after the conversation each can write out a purchase order for $9,800 worth of objective analysis. It’s effortless. The fledgling consultant, meanwhile, has enough work to tide him over till he lands a big job. And if all the friends come through, in a single morning he can acquire a high-caliber resume: “Experience as a consultant to HEW, EPA, Marine Mammal Commission, and Bureau of Indian Affairs.”
Once you break the $10,000 barrier, you’ll find the cushy contracts awarded either by competitive bidding or as “sole source.” With bidding, a formal announcement is made in the Commerce Business Daily. Proposals are accepted, and evaluators pour over them, awarding points based on recondite rating systems. Government officials hate competitive bidding. It’s time-consuming and taxing, and not always reliable—the wrong firm might get the job. The fun of having consultants lies in announcing their vital work and then misplacing results, not in struggling with legal details. Federal regulations designed to provide “fair” evaluations demand scrupulous examination of even spurious bids. So generally only the big contracts-for which some scrutiny is inevitable—are let by competitive bid. Others are let on a “sole-source” basis—in which the desired firm is found to be uniquely qualified, all competition is waived, and money can be awarded without even so much as an announcement that a contract has been signed. This technique is popular because of its obvious streamlined features.
Its equally obvious potential for favoritism prompts loud calls for liberal reforms, like competitive bidding of all contracts. Reformers mistakenly assume that the fee accepted by the lower bidder bears some correlation to what he is actually paid. It never does. It merely determines who gets the work.
“What you get on the low-bid contract is irrelevant,” says a Senate staffer. “It’s getting your foot in the door that counts.” Oddly enough, the day after most consulting companies sign their competitive-bid contracts, they discover that the task is far more complex and challenging than they realized the day before. So they start negotiating for more money. DOE’s Inspector General recently analyzed 17 contracts let by the agency’s Office of Solar Applications. Their total value, when bid, was $9.8 million. In a single year, the contracts had been “modified” a total of 45 times. Their cost rose to $18.7 million. They don’t call them awards for nothing.
Winning the first contract gives you access to the ones that follow, like trading up houses. Recently the Navy took bids on a $l-million contract to design its Senior Executive Service. It pre-qualified five prominent firms, among them Coopers & Lybrand, Booz-Allen, and Cresap McCormick & Piaget. All are firms of considerable size and resources, yet the Navy sweetened their bitter task of asking for money by giving them each $75,000 grants to prepare their bids. Coopers won. It later won a related contract-justified by its possession of the first contract-to expand the system. The second contract is for $9 million.
Filet of Sole
Competitive bidding has its attractions, but it’s much more congenial to do business under sole-source exemptions. All that’s necessary is for the agency to recognize in a consultant some unique combination of skills and experience. Since everyone is in some respect “unique,” the potential is unlimited. “It’s easier for a bureaucrat to hire a sole-source consultant than to buy a box of pencils,” explains Jerry Sturges, a former Senate investigator. “No one would ever believe there was only a ‘sole source’ of pencils. Pencils have physical properties that can be compared. People cannot be compared.” Inventing sole-source qualifications is a native American art form, like comic books. People who took college political science courses can be described as “intimately acquainted with recent geopolitical trends.” People who know how to work a pocket calculator become “experienced program analysts.” H. Richard Chew, a Virginia attorney, got a sole-source DOE contract to write a handbook on solar law. His contract justification explained that he and only he could do the work because Chew had “experience unlikely to be found elsewhere.” Chew’s experience; it turns out, is in habeas corpus law. “I didn’t know anything about solar law when they called me up,” Chew acknowledges, “but they heard I was a bright guy.”
Mike Tashjian, a special assistant in the DOE secretary’s office, defends the laissez-faire granting of sole-source exemptions. “Our dynamic environment demands shortcuts,” he says. Once you have sufficient contracts, your next challenge is to master billing techniques. Individuals on “direct hire” to an agency can bill a maximum of $190 a day for their time. Consulting companies, however, routinely bill their employees at $300 to $500 a day, plus overhead. This is because the payment to a company is a fee, not a salary,’and fees can be,as unique as people. Chew, for instance, decided to bill his time out at $500 a day.’ “It was a compromise,” he explains, “because I charge my legal clients more.” Above the salaries and overhead they bill, companies usually receive “professional fee,” loosely thought of as the profit. New York State has perhaps the, most engaging notion. It will pay consultants an eight-percent “profit” on their salaries. Gotten a profit on your salary lately?
The cult has an explanation for these high fees. A consultant is like a private eye, they say-he’s not always working. And he’s got pension and health care costs he must pay himself, costs that don’t show up in the calculation of a civil servant’s pay. And what the consultant makes on any given job must cover all these expenses while he’s not working. True enough, of course: But how much time does this private-eye type consultant actually lose drumming up work? Booz-Allen’s Hearle says about 15 to 20 percent of the consultant’s time is “non-billable.” If Rockford worked that high a percentage of his week, he’d own the whole trailer park by now.
And then there’s that old free enterprise spirit. After explaining how their high salaries have to cover fringe benefits and overhead, consultants go right ahead and bill for those items anyway. Universities are particularly adept at this. Consulting overhead used to be one of the great hidden subsidies to higher education. Schools would sell a small percentage of a professor’s time t6 several different agencies, but sell all of his overhead again and again. (This subsidy is diminishing in importance only because professors, after further study, began opening their own consulting shops.) The Office of Personnel Management recently complained to Case Western Reserve University that, as part of a $126,000 contract to provide five years of part-time study of the merit-pay system, the school was charging too much for overhead. Case Western was moved to compromise. It dropped its overhead bill from 62 percent of salaries to 59 percent, and its fringe benefit bill from 21 percent to 19 percent.
Right Over their Heads
Nearly all the creative potential of consultant billing is expressed in a virtuoso contract written by Pacific Consultants, Inc., of Washington, covering work done for AID by a single consultant, Frank Ballance, and his secretary.
First signed on December 12, 1978, it specified $59,928 for five months’ work. There were no exceptional expenses, just Ballance, his secretary, and overhead. The contract was a sole-source award based on Ballance’s “key personnel” qualifications. His credentials were beyond dispute; one informed observer called him “clearly the recognized authority in his field.”
The contract was modified once, then modified again, and finally expired on October 12, 1979. By that time modifications had pushed its value to $1l1,136. That’s roughly $11,000 a month, or $550 a day for a man and a secretary. Its second modification—an extension covering the two weeks from September 30 to October 12—was for $16,000: That’s $1,600 a day.
The combined contracts totaled $52,836 in salaries and fringe benefits for the consultant and his secretary. There was a total of $7,270 in “professional fees” paid to Pacific itself. There was $39,627 listed as “overhead,” $2,535 as “other costs,” and $8,860 charged to “general and administrative.” The contract contained, of course, the standard boilerplate provision barring the consultant from working on government property during his contract-which is the reason overhead is paid.
The $39,627 for overhead is 75 percent of $52,836 in salaries and fringes. But below that, Pacific tacked on other costs that would normally be ascribed to overhead. What are “general and administrative” expenses if not overhead? Totaling the claimed overhead, “general and administrative,” and “other,” expenses, Pacific received $51,022 for what would properly be called overhead. At that rate—$255 a day—Pacific could have put its consultant up in the luxury suite of the Capitol Hill Hyatt Regency. Since that suite costs $200 a day, there would have been spare change left over for essentials like Chateaubriand sandwiches. But the Hyatt’s commanding view of the historic Capitol dome would have gone to waste. It seems the entire time the government was paying Pacific $255 a day for “overhead,” Ballance was sitting at a desk in the Executive Office Building—where, with some regular AID planners, he worked for the entire span of the contract.
The Clone of Silence
If you were an idealist making your living in this pure fashion, you might not want to talk about it much. Not to anybody, but especially not to a reporter. Consultants are about as interested in meeting a reporter as they are in having a picnic with Godzilla.
Consulting companies are about the only entities in Washington without press offices. “We do not grant interviews to anyone on any subject,” a partner of McKinsey & Co. said flatly. Booz-Allen says it will not discuss even past studies unless ordered to do so by its client agency. It claims, as do many consulting companies, that it keeps no copies of finished reports; if you want to see the report, BoozAllen says, get it from the agency. If the agency cannot locate its copies—as often happens with untitled “advisory” reports that are not logged on the agency’s docket-that’s the agency’s problem.
It is a mistake, however, to assume that this forthcoming attitude is reserved for reporters. ICF founder Caputo, who has left Congress to return to consulting, explains: “When I was a congressman, I would have been very surprised if someone on my staff had gotten a straight answer from a consultant.” In an age of hype and glorification, this self-restraining modesty may seem touching. But there’s more to it. Consultants claim a privileged client relationship. Like the cultish priests they emulate, they want all client contact to take place in the privacy of the confessional. “The consultant is responsible solely to his client,” Caputo says. “What he does is the client’s property, to do with as the client chooses.”
When consultants do proprietary work for private-industry clients, a privileged status makes sense. When they work for government it does not; government has no secrets beyond military ones. Consultants evade this question by holding themselves accountable only to their agency sponsors-not to the legislature that creates and funds the agencies or the public that creates and funds the whole works. This is hardly an environment designed to foster a taut interplay of checks and balances, since the agencies are the ones paying to be told what they want to hear in the first place.
For the consultant himself, claiming privilege is among the most agreeable fringe benefits of the job. It cuts him loose from personal standards, setting him adrift in a calm and peaceful moral void, similar to the “advocacy” void favored by lawyers. Is the work meaningful? That’s for the client to decide. Is it fairly priced? That’s the client’s judgment. Does it benefit anyone besides the consultant himself? Surely only the client could know that. Hired guns are not responsible for the selection of targets.
A Civil Attitude
At least the agencies that consultants work for have press offices, so it’s tempting to propose replacing consultants with civil servants. Civil servants claim a right of silence less frequently these days, in the wake of court decisions eroding the “executive privilege” excuse once common in Washington. Civil servants at least are required to pretend to candor.
Arguments about such civil-servant virtues usually season Congressional hearings on consultants, which have a pronounced “We’re hiring consultants? My God! What next!” flavor. Critics like Rep. Harris go straight for the cosmic issues, asking, as he recently did, if we’re not “abdicating the basic functions of government” by hiring outsiders. Is “government by contract” constitutionally valid? he wonders. Can regulations written by non-civil-servants stand up in court?
Obviously, if we can’t trust consultants to do the discoursing on Our Priorities for the Eighties, we have to hire more civil servants. This would be fine with Harris, who is sponsoring a bill to give any agency cutting back on its use of consultants the “incentive reward” of a raised civil-service ceiling.
Trading one for the other probably sounds like a dynamic reform. Civil servants may be more talkative than consultants, but they are even less accountable. Civil servants are hired for life. If they are lazy or incompetent, they cannot be fired. When a consulting company is involved in a sleazy contract or produces a report so poor the girls in the typing pool start to giggle, it can, in theory at least, be deprived of further work. Meanwhile the civil servant who authorized the study and supervised the contract gets his automatic “step” raise.
In some respects, consulting was encouraged as a means to contravene the stodgy bureaucracy. To the extent that is true, it is foolish to try to correct the problem’s symptoms by reforming the consulting industry. A better approach is to correct the problem’s cause by making civil servants accountable, and instilling in them the sense of vigor and determination they lack.
The Great Pretenders
The trail of meaningless reports and Dom Perignon bottles left by consultants is so poorly covered, no one could fail to notice it. Yet even sincere public officials, fully aware of the problem, continue to demand consulting services. Why aren’t the consultants laughed out of town? Is it possible that, after all their flaws, they still perform some useful service?
Consultants came to Washington to tell government officials things they could not pretend to know, about running factories and computers. They succeeded. Officials continue to need to know things they cannot pretend to understand. But many of the present goals make the mechanical, do-able goals like efficient war production seem simple by comparison. Some are so far distant, they confound even the dedicated: “End poverty.” Some are so involved no person can describe a formula for achieving them: “End racial hatred.” Some have such bewildering ramifications, you can’t even be sure if you’ve achieved them already: “Build enough bombs to prevent war.”
Government officials are given large sums of money to pursue such intractable goals. Frustrated by the lack of immediate success, they begin to tell themselves: If I knew what to do, I’d do it. So they constantly seek out those whose qualifications suggest they might know what to do; or; failing that, will pretend they can figure it out. Advice from outsiders—consultants who have never had the chance to fail at what the government official is supposed to accomplish—supplies a continuing sense of optimism, whether real or imagined.
You can’t lose. You hire a consultant to try to figure out what you can’t figure out. Maybe you get lucky, and he comes up with the answer. Otherwise, he keeps you from sloughing into despondency over your own inaction. If I knew what to do, I’d do it—but I don’t, so I’m waiting for the study.
You Have to Get In!
Most of the rituals of the consulting cult are being acted out in the basements of three suburban Washington homes. These basements serve as offices for the partners of RAM, Inc., a recently formed environmental consulting firm.
RAM’s partners are H. Lanier Hickman, Russell Cummings, and Clay Ervine. Hickman is a former high EPA official; Cummings has been a prominent EPA consultant for several years; Ervine is a former Maryland public works director. RAM is signing contracts with state governments to do planning work under a comprehensive new environmental law, the Resource Conservation and Recovery Act.
RAM is usually paid in federal “rollover” funds-money sent to the states under RCRA, money which must be returned if unspent. “As soon as the feds started funneling out the money,” Cummings says, “we knew it would be time to get in. They’re giving out $24 million for studies … just studies! .. next year in our small field alone. Now talk about money! You have to get in!”
Hickman and Cummings made a natural pair, having worked together in the past. They’d written much of the RCRA regulations they are now explaining to states.
Hickman in particular was ready for a change. “I was sick of the bureaucracy, sitting in meetings and stroking my prima donna underlings,” he says. He was also at an impasse. “My career in EPA was finished. I’d been passed over twice for promotion to the top of my division. I was only waiting it out until I got my pension.” As an officer of the Public Health Service, he had to register a full 20 years’ service to qualify. Two weeks after he hit 20 years, he quit. Hickman, in his late forties, immediately began drawing a $15,000 a year pension.
While at EPA, Hickman was in charge of writing documents that explained RCRA to states, and providing states with “technical assistance.” “Everything I did was just like a consulting environment,” he explains. “I do the same things now, only I get paid a lot more.”
So far RAM has contracts with Virginia, New York, and the District of Columbia. The New York contract, for instance, pays the RAM principals $400 a day to write the state plan and explain the law. So far most of the reports delivered to New York bear a haunting resemblance to EPA documents. One, a 32-page report on provisions of the law, was “prepared for New York State,” according to its cover. Yet inside, the words “New York” appear only eight times, and no New York cities, locations, or particular environmental conditions are mentioned. The contents are almost identical to materials available through the EPA publications office. “We live off the stuff EPA gives out,” notes Hickman.
The New York state plan was supposed to be finished by the end of RAM’s six-month, $38,000 contract. But it isn’t; the plan itself hasn’t been started yet. A contract extension is in the works. “Sometimes we have to admit to the state that even we”—the people who wrote the regulations—”can’t quite figure out what the regulations mean,” Cummings said.
Part of Hickman’s time goes into being director of the Governmental Refuse Collection and Disposal Association, a trade association of public works directors and engineers. This association just won a $50,000 grant from EPA. The grant, Hickman said, will help it provide “technical assistance,” stage “modular seminars,” and publish a newsletter. The “seminar officer” being hired under the grant is Clay Ervine.
Hickman and Cummings like their new situation. “It’s fun to operate out of your basement and have a free lifestyle after all these years,” Cummings explains. “I don’t have to spend all my time pleading with civil servants, trying to get things done,” Hickman said. “If I want to go home at 1 o’clock, I can. If I want to work at home, that’s what I do. If my client doesn’t like it, he can fire me. And if I decide I don’t like him, I can say ‘Sayonara.'”
Hickman and Cummings are, by any reasonable standard, well-qualified to do the states’ planning work. They are well-educated, informed, and resourceful. It is quite conceivable they will someday, as Cummings claims, save their clients time and money by “knowing who to call.” They are independent and happy after years of struggling with tedium.
And if most of their “work product” can be obtained with a phone call to an agency library? If the environmental crisis they are supposedly solving continues unabated, while their “plans” are skating lazy circles of perpetual delay? Now, who could be opposed to further study? •