Buyers Beware: Magic Market Can Be a Maze
he federal management consulting market is a busy bazaar of firms and services. To get an idea of the players and the size of the market, Government Executive commissioned Eagle Eye Publishers Inc. of Fairfax, Va., to compile information from the General Services Administration Federal Data Procurement Center. The data, which cover only prime contracts worth more than $25,000, added up to approximately $1.5 billion in management consulting services for fiscal 1996, the most recent year for which information was available.
It's tough to separate the work of federal management consultants from other professional services, such as information technology systems integration services, a $1.1 billion market in its own right in fiscal 1996. We attempted to separate management consulting from strictly IT services, even though the two are becoming ever more closely entwined. We also scoured GSA's procurement data to find management consulting work performed in other service categories, such as research and development, management support, studies and analyses, professional services, training, automated data processing systems analysis, and accounting services.
Comparing the rankings of consulting firms overall with the federal sector rankings shows that the biggest firms in the industry tend to have a significant presence in the federal sector. KPMG Peat Marwick, for example, topped the fiscal 1996 federal list and ranked No. 5 overall in 1996, according to Consultants News, an independent monthly newsletter covering the management consulting industry. KPMG also came out on top when Consultants News did its own ranking of consultants to government, though not exclusively federal government, in October 1996. Other top firms, such as Booz, Allen & Hamilton, Price Waterhouse, Coopers & Lybrand and American Management Systems, also appear on both lists.
KPMG owes its position at the head of the federal consulting pack in part to the fact that it ranks first and second respectively at the Defense Department and the Agency for International Development, government's top consumers of management consulting services.
Top firms don't dominate the federal list, however, due to the broad array of services considered "consulting" in the federal arena. Take, for example, the National Medical Association, the No. 2 firm on the federal list, with $61 million in consulting business in government for fiscal 1996. One contract, for management support of the Health and Human Services Department's Health Resources Administration, accounts for the full amount. The association runs the National Minority Mentor Recruitment Network, a program that each year matches between 1,500 and 2,000 U.S. minority medical students with practicing physicians.
At No. 4, Partners for International Education ran a similar program matching foreign students with U.S. educational institutions for the Agency for International Development.
No. 5, Gilbert and Associates, does 86 percent of its consulting work for the Defense Department, where its biggest contract is for running Army job placement assistance. Drop to No. 19 and you'll find an international rice company, Erly Industries, which ranks third at AID. In addition to being the largest U.S.-based rice producer and making forest fire retardants, Erly provides agricultural consulting services.
AID also employs more traditional management consultants. Price Waterhouse, for example, brought in $53 million-more than half its $91 million in fiscal 1996 federal consulting revenue-from AID.
For more information on how the data were compiled, contact Eagle Eye Publishers at (703) 359-8980.