Public Sector Consulting Isn’t Evil, but We Have to Keep it Honest

So I’m a public sector consultant.

I know, I’m at the center of the cost of American infrastructure being ridiculous and the public sector capacity crisis, but I promise it’s a little more nuanced than that. If you’ll believe me, there are actually some decent use cases for public sector consultants. However, public sector consulting is only as ethical as the consultants and consulting firms doing the work. Given that public sector consultants are proxy stewards of public funds we all pay when public sector consulting is not done ethically.

After five years working in public sector consulting at a handful of different firms, I’ve found that focusing on delivering high quality work that delivers tangible results to the end user¹, leveraging your position as an outsider to cut through internal politics, and building capacity in your clients is a great way to keep public sector consulting ethical.

In this post I’ll share some of my observations after working in public sector consulting for a bit and leave you with some expectations I think public sector clients should have of their consultants, as well as professional standards I think public sector consultants worth their salt should hold themselves to.

What is public sector consulting?

When governments decide they don’t have the staff, technical capacity, or wherewithal to carry out a task they’ve been assigned, they’re faced with a decision. Do we build the capacity internally, or do we contract the work out? If agency staff decide the best approach is to contract the work out, they’ll issue a Request for Proposal (RFP).

This announces to everyone in the business of doing the work described in the RFP² that this work is up for grabs. In response, all interested parties put together proposals describing why they’re uniquely suited to do the work, how they will get it done, and their price for completing the work. After government staff members review these proposals, they’ll conduct a few interviews and pick a winner. The winner and the government then enter into a contract to complete the work defined by the scope of the RFP for an agreed upon price.

That’s public sector consulting, in a nutshell³. The consulting firms that can convince the government that they have the capacity and knowledge to address their challenges survive to consult another day. The ones that can’t don’t.

Under this framework, I can think of at least one solid use case for hiring a public sector consultant, and several other common use cases that range from decent to downright problematic.

👍🏽 A strong use case for consulting: Industry specialists

At peak service, the Chicago Transit Authority (CTA) has over 1,000 buses and nearly 900 railcars in service (NTD, 2023). Getting these buses and trains out every morning, keeping them running for 12+ hours and getting them back to the garage and prepped to do it all over again the next day consumes the majority of the bandwidth at a transit agency. The smaller the transit agency, the truer this becomes.

When special projects present themselves (say a mandate to only buy electric buses by 2029), it can be hard to find agency staff to dedicate to the project. If the project is recurring, it’s probably worthwhile to find those staff and start building internal capacity. But if the project is a one-off, or if it requires specialized knowledge or an outside perspective, hiring a public sector consultant can make sense. Public sector consulting can help build an ecosystem of industry specialists with a deep understanding of niche topics to spread that knowledge around the industry⁴. However, if this was all that public sector consulting is commonly used for, I probably wouldn’t be writing this article.

🤏🏽 A decent use case for consulting: Agency bandwidth

I mentioned earlier that a lot of agency bandwidth is consumed by getting and keeping service on the road. Beyond this, there are still the administrative requirements of running a labor-intensive operation, the regulatory requirements of receiving public funds, and whatever else is required to keep the lights on, the bills paid and the buses moving. For these ancillary functions, some agencies with limited staff opt to contract them out. 

Depending on the circumstance, outsourcing can make sense, particularly for smaller transit agencies with limited staff. However, the choice to outsource core functions should be made judiciously because it bumps into one of consulting’s nefarious truths. Consulting firms have a natural incentive to be extractive. Remember, consulting firms that don’t win work don’t consult for long. A good way for a firm to ensure its continued existence is to find the work that agencies don’t want to do, and latch onto it. 

If you contract core functions out to a consultant to lighten the load on current agency staff, remember to regularly self-assess to ensure you’re not overly-dependent on consultants. If your self-assessment reveals what feels like an overreliance, don’t panic. Develop an understanding of the work your consultant does for you, and work to build internal capacity on the task.

🚫 A problematic use case for consulting: Outsourcing liability

Acting as an industry specialist is the use case I find most rewarding. I get to pop in and give tailored guidance on bus stop spacing or the appropriateness of microtransit given local context, and if I’ve done my job well, the agency gets to carry people around the city a little better than they did before I arrived.

 If calling in an industry expert to support one-off or special projects represents the strongest use case for hiring a consultant, then outsourcing liability represents the most problematic.

Sometimes, an agency knows exactly what their challenge is and what is needed to resolve it. They also know that if the solution comes from them, they’re going to catch hell from the public, the board, elected officials, and whomever else has a few minutes to yell at the transit authority. When this is the case, the easy workaround is to call a consultant. That way, if the project goes wrong or is poorly received, you can just blame the consultant⁵. On the surface, this looks like an imperfect but workable solution to a persistent challenge; getting anything done in a process seemingly designed to prevent it. The challenge? This creates a honeypot for consulting’s natural impulse to be extractive.

Public Agency: This project means change. Change means political risk. I don’t want to take that political risk.

Consulting Firm: No problem. I’ll take that off of your hands and include custom branding, robust stakeholder engagement, travel demand and ridership modeling, a detailed existing conditions report and a stylized final report. I should be able to accomplish all of that for $250k (if we stay within scope and budget).

The issue is less value creation and more scale mismatch. Sure, there’s value in a study with all the bells and whistles, but do we need all of that to resolve whatever challenge we’re experiencing? More importantly, is it the most judicious use of public funds? Consulting firms have a strong financial incentive to answer “yes,” and depending on the agency’s political risk tolerance, they have a decent incentive to just go along with what the consultant said.

Consulting isn’t intrinsically bad

By now, you may have reached the resolution that consulting is evil and we need to get it out of the public sector. Frankly, that might be a fair opinion, but labeling things as good or bad or righteous or evil often reduces complex things to less than the sum of their parts. A less reductive lens might view consulting firms as one of the many intrinsically motivated institutions interacting heavily with the government. Labor unions, motivated by the needs of their members⁶, and non-profit organizations, motivated by their particular mission regularly coerce the government towards action. Consulting firms do the same thing. The primary difference; consulting firms are motivated by profit.

This might be heretical to say, but the profit motive is not a bad motive. The need to keep the lights on forces you to understand why you’re here, and adapt if that reason stops keeping the lights on. Adam Smith called this the Invisible Hand. An institution with a sound understanding of its purpose can harness the profit motive as a unifying force, channeling energy toward shared goals rather than diffusing it in competing directions. The profit motive steers towards internal alignment, sometimes that can be hard to maintain in the public sector.

So how do we balance the power of public sector consulting to build and share knowledge throughout an industry with its more sycophantic tendencies? First, we’ve got to let cities lead. We know that building housing keeps housing prices down, that frequency makes transit more useful, that protected bike lanes make cities safer and healthier for everybody, and that zoning chokes the growth of cities. But in our existential fear of looking anything like Robert Moses, we’ve required herculean efforts in data analysis and performative public engagement to realize any of these benefits. This creates an opening that consulting is more than happy to fill.

However, the presence of this opening does not excuse exploitative behavior by consultants and consulting firms. After spending about half of my career in the public sector and the other half in public sector consulting, here’s a general code of ethics that I think anyone working in public sector consulting should follow, and some expectations I think any public sector institution should have of any consultants they hire.

Code of ethics for public sector consultants

All of these are based on the understanding that when working as a public sector consultant, you are a steward of public funds (i.e. - tax dollars) by proxy.

• Build Capacity Within Your Clients: If you’re doing your job well, your client should be more equipped to handle the challenge if it presents itself in the future
• Build Capacity Within Yourself: You were hired because of your specialized knowledge on a concept or task. Make sure that knowledge is accurate, current and relevant
• Challenge Your Clients: You were hired because of your industry expertise, not to be a yes man. If your client is making a decision that does not align with their stated objective, you owe it to them (and the taxpayers) to respectfully call that out.
• Deliver Value to Your Client: Make sure the public money being spent is spent on something useful and actionable. For example, I much prefer a formatted ppt with action titles like this one over a 100-page technical report as a final deliverable because it’s succinct, digestible, and useful as a reference document.

Expectations the public sector should have of consultants

• Challenge Your Consultants: You hired a consultant because of their specialized knowledge. In doing the work day in and day out, you also have a valuable knowledge base to contribute. If what the consultant is telling you isn’t reconciling with your understanding, ask them to clarify.
• Expect Your Consultants to Challenge You: You hired a consultant to provide an outside perspective on a challenge you were facing. If your consultant agrees with everything you’re already doing, what did you hire a consultant for?

P.S. - If you work in the public sector and you encounter a consultant that won't stop hounding you for work, RUN 🏃🏽‍♂️‍➡️.

¹ i.e. - the bus got demonstrably better

² Typically consultants or contractors but anybody can respond to an RFP

³ There are also private equity firms and billions in government spending in the mix

⁴ Along with departments of transportation (DOTs), non-governmental organizations (NGOs), industry associations, think tanks and whomever else has valuable insights to offer

⁵ There’s also this weird expectation that every decision needs to be backed by buckets of in-depth, technical analysis

⁶ Ostensibly