The new brokers in town, consultants!

The conventional wisdom about corruption in India has revolved around the politician, bureaucrat, and the businessman. An equally important but less discussed actor is the consultant. 

It is now widely acknowledged that governments at all levels employ consultants extensively, with some agencies relying on them to do what are essentially statutory responsibilities. Every major infrastructure or development project has several consultants or service providers. Take the example of infrastructure. 

On the upstream side, these consultants help with everything from designing the project, preparing feasibility studies, defining technical specifications, preparing all procurement documentation (DPR, RFQ, RFP, contract etc), and managing the bid process itself. On the downstream side, consultants provide third party quality audits, project monitoring and management support, preparing terms for renegotiations, and so on. 

In other words, consultants span the entire spectrum of work relating to an infrastructure project. On each of the aforementioned activities, consultants exercise considerable scope to influence and shape the terms of reference and ground rules of the activity concerned. These include eligibility norms, technical specifications, service levels, and compliance standards. The fine print associated with each of these have implications in terms of providing preferential access to certain bidders (at the cost of others) and causing large wasteful public expenditures. Such controversies are never far from large projects. Their post-mortems invariably leads to some such fine prints.

Given weak state capacity, limited internal expertise, and aggressive implementation timelines, even well intentioned bureaucrats at the top end up relying completely on the drafts and opinions submitted by the consultants. This gives the consultant an unmatched, but near invisible, influence. What makes it even more problematic is that the same consultant often ends up doing both the upstream and downstream activities (with their associated conflicts of interest), and the same set of large consulting organisations dominate the business across the country and at all levels. 

While the politicians and bureaucrats are blamed (and rightfully for their share) for controversies and scandals associated with projects, the consultant, who in most of these cases would have been the intermediary responsible for transacting the activity, gets away without even a mention. In fact, realising their pivotal role, contractors, politicians, and bureaucrats have discovered in the consultant the perfect intermediary to execute their transactions. Consultants have become the new brokers in the town.

Consultants have embedded themselves across important ministries and agencies of government at all levels. One pathway is to ingratiate themselves to the leadership of these organisations. The senior officials, frustrated by the absence of competent staff (often people who can string together a few sentences or take minutes), find individual consultants extremely useful. These individuals slowly become part of the inner circle of powerful bureaucrats, and abuse their position to peddle favours to contractors. 

In many sectors, individual consultants have emerged as well-known brokers sought out by bidders to influence the procurement process in their favour.  

It is time to shine light on the role played by consultants. Consultants have a useful role to play. But like with the private sector and financial markets, there is a corrosive side to the role of consultants. If left unchecked the latter role comes to dominate the former. Unfortunately, it appears to have become the case in several sectors involving public agencies. And it is a phenomenon confined to not just India.

Update 1 (10.09.2020)

George Monbiot points to have consultants have become the centre of the Covid 19 public procurements gravy train and how consultants have come to populate the revolving door between governments and private sector.