PA Consulting accused of overcharging the taxpayer and lack of clarity about invoices relating to £19m of government contracts

A management consultancy firm that provided experts to a government agency has been accused by MPs of “potential sharp practices” that resulted in the cancellation of a £19m government contract.

PA Consulting was also blamed by a parliamentary committee on Monday of breaches of corporate governance after appearing to mislead the government agency UK Trade and Investment when providing trade specialists to attract overseas investors.

At a hearing of the public accounts committee, MPs said that the consultancy had overcharged the taxpayer, and added that they were considering passing on their concerns to other investigating authorities.

Despite the allegations, Alan Middleton, the chief executive of PA Consulting, denied any deliberate wrongdoing and said that he hoped to bid for Brexit work once the problems over the contract had been solved. “Personally, I would love to be working with the team again in the future – it is certainly our objective,” he said.



The government is expected to rely heavily upon management consultancy firms to provide experts in the runup to an exit from the EU.



In 2014, UKTI, which sat within the now defunct Department for Business, Innovation and Skills, appointed PA Consulting to three three-year specialist services contracts worth a combined total of £18.8m. UKTI auditors raised the alarm after discovering that poorly documented contract alterations made it “impossible” to reconcile invoices with the arrangements in place.

The contracts were cancelled in January this year after a report commissioned by UKTI said PA Consulting had “consistently made incorrect and misleading representations relating to £3.9m of the overheads charged”. A National Audit Office report into the contract said PA Consulting had been insufficiently transparent over the procurement, and “did not make clear the amount of corporate overheads built into its price”.

At the committee hearing, Meg Hillier, the chair of the committee, said the behaviour of PA Consulting was of deep concern. “We have seen sloppy behaviour and possibly sharp practice … We will be reflecting on this hearing … There has been a lot of loose language in letters from PA Consulting, which was designed to obfuscate,” she said.

She also questioned the oversight of management consultancies that may now be given public contracts by the Department for International Trade (DIT) to manage Britain’s exit from Europe. “We are also concerned about this and the role of the DIT and its critical role in Brexit,” she said. “This report throws up some serious shortcomings which we hope do not play out in the Brexit negotiations.”

Philip Boswell, an SNP committee member and an expert in contracts, said the NAO report and committee hearing had unearthed “potential incompetence and negligence” and raised the possibility that the inquiry would be passed on to other investigating authorities. “I am no lawyer, but I am certainly concerned enough to go on record to suggest that this committee needs to consider that this investigation be escalated to another authority or hold another session to see additional witnesses,” he said.

The NAO’s 48-page report said UKTI’s governance of the procurement was “weak” and that it failed to maintain the minimum level of documentation, leaving it “exposed to not understanding what it had agreed to”. The committee was told that no individuals within UKTI or PA Consulting had been held responsible for the problems within the contract.

Sir Amyas Morse, the head of the NAO, said to the committee that PA eventually settled with UKTI to protect its reputation. Addressing Middleton, Morse said: “You got into pretty hot water and you are now trying to get PA Consulting out of it.”

Middleton said the firm had not overcharged on corporate overheads but should have been clearer about how it was dealing with costs. “Should we have made this crystal clear? Yes, and we have changed our procedures to make sure this doesn’t happen again,” he said.

PA Consulting has admitted that there had been “misunderstandings on both sides” as part of the process of changing its contract with UKTI.

Dr Catherine Raines, the director general and CEO of International Trade and Investment, part of the DIT, told the committee that the department has doubled its negotiation team since the referendum vote in June, but would not be employing a “standing army” of civil servants. “We will be ready [for the negotiations],” she said.