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Consultancies pocketing EU millions prompts MEP grilling

  • The European Commission spent €542.4m between 2016 and 2020 for studies written by external private contractors (Photo: GlynLowe)
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MEP budget sleuths will on 6 December grill the European Commission for handing out increasingly-lucrative contracts, worth hundreds of millions of euros, to large consultancy firms.

Among those are PricewaterhouseCoopers (PWC), KPMG, Deloitte and EY - also known as the 'Big Four'.

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Collectively, they have landed over €462 million in contracts between 2016 and 2019, according to a report earlier this year by the Brussels-based Euractiv media outlet.

Monika Hohlmeier, a German centre-right MEP, chairs the parliament's budgetary control committee.

"Requesting consulting services by external parties is not a problem per se as not all knowledge is available within the EU institutions," she said in an email on Friday (26 November).

"However, the significant increase and the unusual concentration on the so-called Big Four require some explanation by the Commission," she said.

The committee plans on asking EU budget commissioner Johannes Hahn what kind of services the commission had requested and for what purpose.

They also want to know how they assess results delivered.

MEPs earlier this year demanded responses in a letter addressed to both European Commission president Ursula von der Leyen and is executive vice-president Valdis Dombrovskis.

They highlighted possible conflicts of interest given the Big Four were increasingly dealing with the commission's structural reform support programme.

The programme offers EU states technical assistance when it comes to designing public policy in areas like the labour market, police, healthcare or social services.

PWC, for instance, has been involved in the Belgian national tax control framework as part of the co-operative tax compliance reform.

At the same time, they note that PWC delivered training and a guidebook for Belgium's 'excess profit' tax scheme, a scheme considered by the commission as an illegal state aid.

"It is also public knowledge that PwC and the three other consultancy giants took an active part in the elaboration of practices helping more than 340 multinationals to circumvent tax legislation, as revealed by the Luxleaks scandal," notes the letter.

The structural reform support programme has since been replaced by the so-called "technical support instrument".

Half a billion euros for studies

The contract figures are found in the EU's financial transparency system, a website that provides a detailed breakdown of how EU funds are spent and on what.

For his part, Dombrovskis, in a follow up letter in June, said that the "chosen provider is not responsible for policy-making."

He also noted that the commission had concluded study contracts to external private companies to the tune of €542.4m between 2016 and 2020.

A breakdown of those costs reveals they spent €93.4m in 2016, €97.8m in 2017, €92.2m in 2018, €134m in 2019 and €123m in 2020.

Among the biggest spenders are the commission's directorate generals - branches specialised in policy areas ranging from energy to trade and development.

Connect, a DG dealing with communications networks, spent €48.9m over those four years.

Others dealing with development spent just over €40m, while health issues in DG Sante spent much less, at €312,000.

In an email last week, a European Commission spokesperson said the institution does not have unlimited access to human resources and so may turn to external consultants.

"The use of external knowledge based services has become increasingly important in times of organisational and digital transformation coupled with the constraints on administrative expenditure," he said.

It is a service also employed by the commission's own secretariat-general. It paid Deloitte €394,209 for three studies in 2019.

The most-expensive was titled Easing the Administrative Burden and cost €165,785. The secretariat general then demanded another study last year from Deloitte for €87,947.

Other studies cost considerably more.

The same firm last year charged €994,738 to assess possible options for updating an EU law on workplace safety.

"Of course the EU Commission should take in external expertise. But this cannot mean to simply outsource entire lines of work," said German Green MEP, Daniel Freund.

"We should have an interest in building up expertise on our own and not to rely on costly consultancies. This would also decrease the risks of potential conflicts of interests when dealing with consultancies."

This article was updated on 29 November, 2021 at 9:56. It had incorrectly suggested the 6 December meeting would be held with Dombrovskis, when in fact it will be with Johannes Hahn

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