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What does being an Independent Consultant mean?

This is an extract from “Steal and You’ll be Punished, except when it’s IP and Industry Associations”, (downloadable from https://amzn.to/3mfug8l), as an example of bad behaviour of some industry participants by describing what should NOT be done in the discussion of professionalism and ethics.  This extract is a true recent example of how some nefarious consultants operate.

This example is by a duplicitous consulting company that involved the development of a tender specification for a major IT initiative for a large national private company.  This specification was based on the work that a large Big 6 consulting company (derived from one of the “Big 6” accounting practices) had recently completed.

The Big 6 consulting company had developed the functional specifications for the major IT system but declined to write the actual tender specification or to manage the tender process because they were considering bidding on the tender.

While this was unethical and raised several “red flags”, it was not uncommon in the IT industry.

That is, the Big 6 consulting company had been paid to develop the specification and then were considering bidding on the tender for which they had developed the specification.  This was clearly dubious and unethical.

Nevertheless, the project to prepare the tender proceeded based on the specification developed by the Big 6 consulting company with the Big 6 consulting company bidding on the tender with a product which coincidentally fitted the functional specification which they had just written.

In addition, and on further investigation, it was discovered that the Big 6 consulting company were “business partners” with the multinational IT company for the product that they had just bid.  They had been business partners for a number of years.

That is, the Big 6 consulting company, who were business partners for a major software product, had just been paid by their client to write a specification for a major new IT system based around the client’s business needs, but instead wrote that specification based around the software product sold by them (the Big 6 consulting company).  Then the Big 6 consulting company responded to the tender with a product that neatly fitted the specification.

The tender had a nominal budget of $6m to $10m, so it was not a small project by any means.

This highlighted a couple of issues:

  • Firstly, the client should have undertaken some “due diligence” before accepting the proposal to retain the Big 6 consulting company. This due diligence should have included the requirement to disclose any conflict of interest, such as selling software that would result in financial gain for the Big 6 consulting company.
  • Secondly, the Big 6 consulting company should have declared they were business partners and resellers of the software before accepting the contract to develop the functional specification.

When the client company CEO learned of the underhanded tactics of the Big 6 consulting company, and despite his exasperation over their behaviour, he allowed the matter to slide. By doing so, he telegraphed that he had little regard for probity and ethical considerations and was prepared to compromise the tender process.

Of course, it goes without saying that if the Big 6 consulting company had done this once, they were probably prepared to do it again.  So how could one trust their advice again, particularly in the future when they would be promising to build more software to a fixed budget and timeframe?

By letting the Big 6 consulting company continue to be involved, it was evident that there was a high risk that this process may become a disaster.

As a precursor to the tender, an Expression of Interest (EOI) document was developed and released to the market with responses being received from suppliers.  The Big 6 consulting company bid their own product, based on the work they did in the development of the functional specification.  The result was that they were selected by the project Steering Committee for the tender short list.

By this time, the CEO had told the Project Steering Committee that he knew nothing about IT and had seen many IT projects fail in his previous roles in Local Government.  However, he continued to direct the process and not listen to those on the Steering Committee who were skilled in this area.  Again, this was a failure of due diligence and governance by both the client and the Big 6 consulting company.

The CEO then informed the Steering Committee he had hired another company of consultants, the Digital consulting company, to provide advice on the technologies bid during the EOI.  This was most likely an attempt to tamp down concerns pointed out by the consultant over the specification developed by the Big 6 consulting company without disclosing that they sold software which they had bid in the EOI.

In response, the Digital consulting company reviewed all of the products tendered in the EOI and provided a positive review on the technology bid by the Big 6 consulting company, thus supporting the CEO’s recommendation to continue to include the Big 6 consulting company’s response.  However, what was apparent after reviewing the website of the Digital consulting company was that they (the Digital consulting company) were also a business partner of the same technology which was bid by the Big 6 consulting company.

Of course, they praised the software tendered by the Big 6 consulting company because it was in their interest to have that product selected so that they could participate in potential future development for their financial gain.

Again, the CEO had not undertaken any due diligence and the Digital consulting company had not disclosed that they had a conflict of interest because they were selling that product as well.  This was starting to look less like a coincidence and more like a deliberate process to empower the Big 6 consulting company to win the tender.

Of course, the Big 6 consulting company and the Digital consulting company were both positioning themselves to receive their share of the on-sell of software development and integration following the sale and implementation of the software under the contract.

Nevertheless, the tender specification was completed and proceeded to go through the Request for Tender (RFT) process.  Again, all bids stated their compliance to the specified requirements of the tender.

But the consultant had suspicions about the truthfulness of some of the vendor responses.  There was concern that they were bidding software which had not been developed, colloquially known as “vapourware”.  Therefore, the consultant suggested that the Project Manager should ask each vendor to confirm that their responses in their tender to which they said that they “complied”, meant that they could demonstrate the complying functionality should they be requested to do so in the next month.

As the consultant suspected, and it was no surprise, the responses from some vendors were changed from “complied” (which meant they could meet the criteria) to “needs to be developed” as they were unable to demonstrate their ability to meet the criteria.

This showed a low level of believability from these vendors, as distinct to those vendors who kept their responses much the same and therefore could meet the criteria because it was apparent their product existed and was not vapourware.

An outcome of this process was the creation of a “believability index” by the consultant based around each vendor’s credibility to meet the criteria and whether they were telling the truth or not.  This was important because at some future point there would be a need to trust one of the vendors to meet their obligations under the contract when awarded.

As expected, the believability index score for the Big 6 consulting company rated the lowest, indicating that their inability to be honest in meeting the criteria showed that they were making untruthful statement and therefore could not be trusted.  From any probity considerations, the Big 6 consulting company should not have been considered a credible vendor and should then have been set aside from the tender process.

However, the CEO again refused to acknowledge this information and continued to assert the process had not been compromised.

By then it was clear the CEO and the Project Manager were facilitating the tender process in favour of the Big 6 consulting company.  Consequently, the consultant terminated his contract to avoid compromising his integrity.

With a tender price upwards of $10M, there was plenty of money in the pot for the Big 6 consulting company to manipulate all ethical boundaries and deceive the client.

Sadly, this process is often typical of many consulting companies who would otherwise appear to be reputable companies but have found they can make more money from selling software rather than providing professional consulting advice. In doing so they compromise the integrity of their consulting process in order to achieve higher margins of profit.

That is, they are conflating “consulting” into “pre-sales activity” under the guise of a “trusted advisor” and in this process are deceiving their clients through the non-disclosure of these unethical practices.