The Department of Defence reduced spending with the Big Four consulting giants by an average 40 per cent in the 2022/23 financial year, the first full 12 month reporting period since the election of the Albanese Government in May last year.
According the AusTender contract data analysed by procurement data platform Tendertrace, since financial year 2020, Defence has disclosed $2.1 billion in contracts to Big Four consulting firms, with average spending growth of 47 per cent with these companies through to the 2022 financial year.
And then in the financial year to the end of June 2023, collective spending with the Big Four consultants by Defence fell by 40 per cent. These firms currently hold contracts worth about $898 million with the department.
KPMG remains the biggest of the Big Four global consultants within Defence having signed 95 contracts worth $231 million during the last fiscal period, although this represented a 33 per cent decline.
Deloitte signed $92 million worth of business through 50 contracts with Defence during FY23, a decline of 28 per cent, while EY signed $59.5 million through 23 contracts — a decline from the previous year of 40 per cent.
Revenues from Defence for PwC, which spent the second half of FY23 in deep controversy, fell by 56 per cent. It signed $62.3 million worth of business with Defence through 43 contracts.
While federal Labor went to the May 2022 election promising to reduce government reliance on consultants, it is not yet clear whether the reduced contracts with the Big Four represents a long-term trend or if it is a more generic change-of-government slowdown in contract signings.
The Tendertrace Market Recap report identified an overall 18 per cent reduction in Defence department spending compared to the 2022 financial year.
You can download the full Tendertrace Market Recap report here. The report includes insights into SME participation rates, contract categories and sub-categories where Defence spending has continued to grow, as well as indicating the categories where the highest value of contracts are due to expire in the current 2024 financial year.
Defence awarded $27.5 billion worth of contracts in FY23 to 5,362 suppliers via 22,900 individual contracts.
Of the top ten suppliers to the Defence department, eight were foreign-based multinationals, while two were Australian suppliers. Cumulatively the top ten suppliers to Defence were awarded $12.3 billion worth of business representing 44 per cent of the total contract value assigned to 5,362 suppliers.
The two Australian companies in the top ten suppliers to Defence were construction firm Sitzler, which won two contracts worth $515 million during the last financial year as the seventh largest supplier, and CEA Technologies which won 27 contracts worth $472 million as the tenth largest supplier.
The contracts awarded to the two Australian companies represented 8 per cent of the $12.5 billion in contracts awarded to the top ten suppliers. 92 per cent of the value of the contracts to top ten suppliers went to foreign-based multinationals.
The full download of the Tendertrace Market Recap can be downloaded here. The report includes a breakdown of information technology suppliers.
InnovationAus.com has partnered with Tendertrace as the market leading provider of government procurement data across state and federal governments. To find out more about the Tendertrace platform, please contact Kim Bourke at Kim@InnovationAus.com.
Do you know more? Contact James Riley via Email.