Why Taxpayers Pay McKinsey $3M a Year for a Recent College Graduate Contractor

Matt Stoller:

Such practices used to be called “honest graft.” And let’s be clear, McKinsey’s services are very expensive. Back in August, I noted that McKinsey’s competitor, the Boston Consulting Group, charges the government $33,063.75/week for the time of a recent college grad to work as a contractor. Not to be outdone, McKinsey’s pricing is much much higher, with one McKinsey “business analyst” – someone with an undergraduate degree and no experience – lent to the government priced out at $56,707/week, or $2,948,764/year.

How does McKinsey do it? There are two answers. The first is simple. They cheat. McKinsey is far more expensive than its competition, and is able to get that pricing because of its unethical tactics. In fact, the situation is so dire that earlier this year the General Services Administration’s Inspector General recommended in a report that the GSA cancel McKinsey’s entire government-wide contract. Here’s what the IG showed McKinsey was eventually awarded.