HP $55 Million Settlement with U.S. DoJ for Alleged Procurement Process Violations Highlights Stiff Penalty for Denial of Allegations
Monadnock Research (VIII N39) - 3 September 2010
MR - The U.S. Department of Justice (DoJ) has reached an agreement with Hewlett-Packard where HP will pay $55 million to settle allegations that it defrauded the General Services Administration (GSA) and other federal agencies. Previous guidance by HP estimated the amount at $47 million. HP has denied that it violated any laws in its settlement. The agreement, and the recent $87.5 million settlement involving EMC in an associated case, highlights the stiff penalty the DoJ is imposing on firms when they deny their failure to comply with Federal procurement guidelines for products and services. Research Note includes: HP settlement details; Summary of allegations and settlements involving numerous other consulting firms in associated litigation; Copies of civil complaints, related documents, and results of government study on whistle-blower lawsuits. (1,515 words) . . . More
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UK's Independent Offers Scathing Editorial on Management Consulting Practices
Monadnock Research (VIII N33) - 20 August 2010
MR - Johann Hari has offered a scathing report of management consulting in an opinion piece in the UK's Independent entitled, "The management consultancy scam." We cite it here to offer a heads-up to readers that might find themselves fielding questions about the assertions proffered by Hari as notorious norms, and not isolated examples of dubious firm practices. The Hari piece quotes "Ripoff" author David Craig and "Management Myth" author Matthew Stewart. The article also refers to Craig's recommendation that clients should tie fees to outcomes. MR's perspective reiterates highlights of our past recommendations and what to look out for with performance-based alternative fee structures, and how to structure those agreements. (440 words) . . . More
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Apple Global Supply Manager and Accomplice Indicted in Alleged $2.5 Million International Kickback Scheme Involving Six Suppliers
Monadnock Research (VIII N32) - 19 August 2010
MR - Paul Shin Devine, a California-based Apple Computer Global Supply Manager, and Andrew Ang of Singapore, were charged in a 23 count indictment that alleges the two orchestrated a procurement kickback scheme. Devine worked on the side as a consultant, most recently through his consultancy CPK Engineering, selling trade secrets and favorable treatment to prospective Apple suppliers. One of Devine's alleged clients, Cresyn Co. of South Korea, claims that it was under the impression its consulting agreement was directly with Apple. Devine, who is facing wire fraud and conspiracy charges and lives in Sunnyvale, Calif., was arrested and made his initial appearance in U.S. Federal Court on 13 August. In addition to wire fraud and conspiracy, the grand jury charged Devine with money laundering and engaging in monetary transactions with criminally-derived property. The alleged kickback scheme dated back to February 2007 or before, through August 2010. The charges hold stiff penalties for Devine, which could be up to 430 years in prison, $6.75 million in fines, and additional restitution and damages realized by Apple. (Research Note includes copy of complaint. 710 words) . . . More
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U.S. Feds Demand Qualified Transparency for Consultancy Executive Compensation
Monadnock Research - 14 August 2010
MR - The U.S. Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council have issued an interim rule amending a federal regulation mandating the U.S. Office of Management and Budget (OMB) to establish a free, public, website containing full disclosure of all Federal contract award information. The rule requires contractors to report executive compensation and first-tier subcontractor awards on contracts expected to be $25,000 or more, except classified contracts, and contracts with individuals. (275 words) . . . More
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A.T. Kearney Procurement Practice Forms Strategic Alliance with Union Partners
Monadnock Research - 1 August 2010
MR - A.T. Kearney's procurement practice, A.T. Kearney Procurement & Analytic Solutions (ATKPAS) has joined forces with Cleveland-based Union Partners in a strategic alliance. The arrangement calls for A.T. Kearney's Leveraged Sourcing Network and Union Partners' CoVest to collaborate in operations, marketing, and management. Kearney says it will be a member in the CoVest partnership, and ATKPAS will support the venture with strategic sourcing capabilities and related technologies. The firms will jointly provide the consortium offering to their respective clients. The CoVest Sourcing Network leverages members' purchasing power in more than thirty indirect materials and services categories such as office supplies, office equipment, temporary labor, and MRO. (490 words) . . . More
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KPMG Acquires Grant Thornton Supply Chain Practice
Monadnock Research - 19 July 2010
MR - KPMG LLP has expanded its restructuring capabilities through the acquisition of Grant Thornton LLP's Supply Chain Advisory Services practice. KPMG says the deal strengthens its restructuring services practice in the automotive, pharmaceuticals, aerospace, defense, and manufacturing industries, and expands the firm's capabilities in financial and operational restructuring, supply chain advisory, supplier services, technology, and performance improvement. The transaction also includes IP associated with Grant Thornton's Vontik community of practice benchmarking application. KPMG will take over projects underway at Fortune 500 clients. (385 words) . . . More
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Consulting Client Insights: Booz Allen Hamilton
Monadnock Research (VIII N25) - 15 July 2010
Monadnock Research Note - The holding company for Booz Allen Hamilton hopes to raise up to $300 million in an IPO. This research note presents a current profile of the firm and summarizes numerous facts, stats and insights contained in Booz Allen's registration statement, including details on its 31 July 2008 acquisition by Carlyle; statistics on the U.S. federal consulting marketplace and procurement trends; details on Booz Allen's strategy; and the terms and conditions of the Booz&Co. spinoff. (includes 2 charts, 1,330 words) . . . More
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Companies are Adopting Indirect Procurement Best Practices at Slower Rate than Anticipated
A.T. Kearney - 30 June 2010
A.T. Kearney - Indirect procurement categories like IT, marketing and advertising, facilities management, MRO, Logistics and professional services, have become increasingly important to Chief Procurement Officers and their organizations, according to the results of a recent study from global management consulting firm A.T. Kearney, the Indirect Procurement Study (IPS). Indirect spend accounts for 60 percent of third-party spend in non-manufacturing companies; more than 90 percent in financial services; and often 50 percent of spend in manufacturing. More than two-thirds of respondents measure financial and internal key performance indicators such as addressable spend, identified savings and addressable categories. But less than half of the respondents track compliance management metrics such as spend integrity or accuracy, and supplier commitments, scorecards and reviews. (465 words) . . . More
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Professionals Concerned with Risk of Procurement Fraud at their Organizations
Deloitte - 8 June 2010
Deloitte - More than three-quarters of business professionals (76 percent) polled during a recent Deloitte webcast on the subject of procurement fraud expressed concern about the risk of fraud within their organizations and/or the vendors with whom their organizations work. More than half of the respondents (52 percent) chose solicitation/negotiation as the procurement lifecycle activity that posed the greatest risk. Twenty four percent thought contract performance was the procurement activity presenting the greatest risk for fraud. (355 words) . . . More
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California County Files $30 million Fraud Complaint Against Deloitte Consulting
Monadnock Research (VIII N20) - 7 June 2010
Monadnock Research - California's County of Marin has filed a $30 million civil fraud case against Deloitte Consulting for alleged actions associated with an SAP financials and HR systems implementation project. Deloitte filed a response with the Marin County Board of Supervisors after the suit was filed, seeking more than $550,000 it says is still owed. The firm noted that it prefers dispute resolution alternatives other than litigation. The case highlights a number of key issues that all clients should focus on during multi-year high risk projects. The allegations of Marin County against Deloitte, whether or not they are ultimately proven, read like a consulting case in what not to do at every stage of an IT services project. This research note provides detail on the key issues and the project risks that were not appropriately mitigated by highlighting key allegations made by Marin County in its complaint. Includes links to Marin County Superior Court filings, and two consulting agreements, including the parties' implementation services agreement. (7,740 words) . . . More
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Lilly Recognizes ZS Associates with Service Provider Award
Monadnock Research - 24 May 2010
MR - ZS Associates was recently presented with the 2010 Lilly Global Sustained Supplier Award by biopharmaceutical company Eli Lilly and Company (Lilly). ZS says the award recognizes the firm's contribution toward helping Lilly make a measurable impact on corporate priorities by delivering exemplary quality, speed, service, and cost savings through its consulting engagements. ZS is one of the largest global firms focused on sales and marketing advisory, with 1,300 professionals serving more than 700 clients globally. Editorial Note: Your peers would like to hear examples of consulting excellence like this, and we will pass the word. Please share your stories via the Monadnock Research Contact page. (355 words) . . . More
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Consulting Client Insights: Hackett Group
Monadnock Research (VIII, N19) - 21 May 2010
MR - The Hackett Group had stronger than anticipated revenues and earnings for its fiscal Q1 2010, and improved its outlook for Q2. This is an early indication that demand for consulting and research services may be rebounding among mid-market firms, as we have seen among some top-performing large firms. This Research Note explores the operational results of Hackett for the first full period following the Archstone acquisition, and also examines the recently-announced accelerated settlement of its Archstone acquisition earn-out obligations under the November 2009 transaction and the recent departure of former Archstone President and CEO, Todd Lavieri. (760 words, 1 chart) . . . More
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Most Supplier Diversity Programs Fail to Deliver
The Hackett Group - 14 May 2010
MR - While world-class procurement organizations continue to outperform their peers in driving supplier diversity spending, a new study by the Hackett Group identifies several critical ways that most companies fail in their supplier diversity programs. Most rely on overly simplistic measures to evaluate the progress of supplier diversity programs, and never truly assess whether programs are meeting corporate objectives. Hackett also found that most companies also fail to consider whether a few large suppliers or many smaller suppliers best supports their corporate goals. The latter finding is particularly relevant for consulting category management leaders who must balance the temptation to shift large blocks of work to larger strategic firms that might otherwise be more appropriately awarded to a large number of niche service providers whose capabilities may meet or exceed those of the larger firms on some projects and have more attractive fee structures, while helping meet the strategic diversity objectives of the organization. (915 words) . . . More
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2010 Consulting Services Sourcing & Procurement Trends: Top 18 Strategic Priorities
Monadnock Research (VIII N14) - 23 April 2010
MR - Recent MR research has identified 18 strategic priorities of consulting services sourcing and procurement organizations. Our "Consulting Category Management 2009: Trends and Best Practices" report profiles what 7 leading organizations have done in these areas to better leverage spending on consulting services and to maximize value from strategic firm relationships. This Research Note lists those priorities and sets the stage for an upcoming in-depth series of research studies on the practices of consulting services sourcing and procurement organizations within each of these 18 strategic areas. The first in the series will be a study into reigning in consulting "maverick / bypass spend." Study participants will receive a PDF containing full detail on study results. The survey will take just 15 minutes to complete, and we encourage category managers and other procurement executives familiar with the category to participate. This study is open to participants now. Paste the link inside the parentheses into your browser and select, to be directed to the Monadnock Research Web site for participation details: (http://survey.monadnockresearch.com/limesurvey/index.php?sid=95611<=en) . . . More
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Fair and Reasonable Prices for Services More Difficult to Determine; Enhanced Competition at Contract and Order Stages Recommended
Monadnock Research (VIII N11) - 17 March 2010
MR - This Research Note summarizes the key findings and recommendations of a two year study conducted by the U.S. GSA's Multiple Award Schedule Advisory panel into procurement policy regulations, solicitations, and contract provisions, which highlights distinctions between services, solutions, and products. Some key study findings include: (1) It is more difficult to determine fair and reasonable prices for services than for products; (2) Meaningful competition occurs at the contract schedule (MSA) and order levels; (3) The value of a price reduction clause as an effective procurement tool is questionable; (4) Order data is not systematically collected as it should be to leverage client purchasing power; and (5) the best method for determining a fair and reasonable price for services and products is to enhance competition at the contract and order levels, and to ensure that the process of contract and order formation is transparent to both procurement and all authorized ordering activities. Report makes 20 key recommendations to re-architect inter-agency procurement policies, processes, and workflow to increase competition and transparency, and to set the stage for transformation to strategic sourcing within the world's largest organization. (1,653 words) . . . More
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2010 US Public Sector Business Consulting Services Rates Increase by 3.5 Percent
Monadnock Research (VIII N10) - 12 March 2010
Rates for business consulting services provided to US public service organizations in 2010 increased by 3.5 percent over 2009 levels. The mean hourly rate for services across all categories was a little under $200. But less than one-fifth of business consulting services firms included executive-level positions in their negotiated rate schedules. This Research Note summarizes our analysis of rates for the business consulting services category under the US GSA's Schedule 874, Mission Oriented Business Integrated Services (MOBIS). It also analyzes the consolidated hourly rates of each firm within MR's 8 labor rate categories, including details on the categories themselves, for the top 5 percent of the 2,000 firms providing related services. Over the next eight weeks we will publish our analysis of rates for financial and business advisory services, human resources and administrative services, advertising and integrated marketing services, and information technology professional services. (1,850 words, 4 Charts) . . . More
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