The Uncle Who Came in From the Cold

Government consulting is more stable than commercial consulting because industry executives are too often focused on short-term profitability, explains Barry Dennis, a partner within PricewaterhouseCoopers' government practice. Today, PwC's federal practice has about 2,500 employees generating nearly $500 million in revenues.

The size and scope of the federal government is what appeals to Bob Campbell, global leader for Deloitte Consulting's federal government practice. There are ten federal government agencies that are each big enough to be in the Fortune 100, he says. Thirty senior Deloitte partners recently completed a yearlong relaunch of its federal government practice, which the company abandoned 15 years ago.

For those commercial consultants looking to make inroads within the government sector, Booz's Doria says that there remain several obstacles. First, you have to understand how to work with high-level political appointees who sometimes overestimate their own power. Political appointees, moreover, serve an average of 17 months, according to Doria. A successful consultant also has to learn how to work with civil servants, who can wield a lot of influence with Congress and can ultimately determine if initiatives succeed because they work at the agencies in some cases for 20 or 30 years.

A successful government consultant also has to use the consultancy's commercial practice to bring in specialists when necessary. Booz-Allen, for example, has psychologists in four specialty areas who work on contracts, Doria says.

Doria has testified before Capitol Hill committees, received press coverage she thought was misleading, and had high-ranking government officials tell her that they'd ensure that she'd "never find work again in this town." Despite the trials, Doria has emerged somewhat unscathed. In early 2000, she became the first female in the nearly 90-year history of Booz-Allen to become a senior partner. For its part, Booz's strategy appears to have worked well. It has about 7,000 employees working in its government practice, which has almost $1 billion in revenues, Doria says.

Stanley J. Gutkowski, the managing partner for Accenture's federal government practices, believes there are more similarities than differences between government and the commercial sector.

"The government runs hospitals, makes loans, owns real estate," and has the same problems in manufacturing and human resources as private industry, he explains.

Government consulting work is "more complex" than dealing with commercial clients, because consultancies ultimately have to deal with groups that have competing interests: political appointees, Capitol Hill, civil servants, the military, and the law, says Booz's Doria. "You not only need to get the work done, but you need to deal successfully with the political ramifications if you are going to accomplish anything," she says. "It's also important not to get too cozy with one political party."

Since the January inauguration, agencies have had to wait until Congress approved the Bush Administration's political appointments of agency secretaries and their top aides.

PricewaterhouseCoopers' federal government head, Grady Means (a former assistant for domestic policy under Nelson Rockefeller in the Ford Administration), called the George W. Bush Administration "a good time to focus on government consulting" because some of Bush's top lieutenants such as Vice President Dick Cheney, Defense Secretary Donald Rumsfeld, and Treasury Secretary Paul O'Neill used to be chief executive officers of companies. They're also former colleagues of Means from the Ford Administration.

Most federal government agencies can't abide by the Chief Financial Officer Act of 1991, which requires them to keep auditable accounting books. "This represents huge opportunities for us," Means says. "They understand we're very good at financial management and technology, as well as outsourcing."

PwC's federal practice has about 2,500 employees who are generating nearly $500 million in revenues. Means tries to spend at least half of his time meeting with clients and helping them solve their problems, with the rest spent managing his PwC employees.

KPMG Consulting has worked for federal government clients for 24 years, says Peter Johnson, managing director of KPMG's government practice. The public sector practice has become KPMG's largest business unit, he adds. Although there are 2,800 employees working on the $650 million business, Johnson says that it's been growing briskly — 25 to 30 percent a year — during the past four years. "We are encouraged by the modernization initiatives in the federal government," he says.

The Internal Revenue Service, for example, processes billions of tax forms representing trillions of dollars sent in by millions of Americans, Dennis says. PwC is helping the IRS to determine what it would take to make tax returns easier to complete.

Campbell and Dennis agree that the federal government consulting market is very competitive and price-sensitive. As a result of the latter factor, it's important that PwC get "more out of" its federal government consultants and use them more efficiently to make the practice profitable, Dennis says.

Senior partners, therefore, have to get more involved in federal government consulting work than they would in similar work for commercial clients, he adds.

Dennis is excited about the possibility of applying commercial tools to help the government manage its financial risk. The Federal Housing Administration, for example, insures about $500 million in single-family housing mortgages, while the Housing and Urban Development Department insures about $50 billion in multifamily properties.

"Government is just starting to realize the size of these businesses and the risk in them," Dennis says. "The interesting thing to me is that all the tools are out there in the private sector" to help government managers analyze each agency's financial risk. "Our job as consultants is to bring the tools to the federal government. It's not too hard," he says.

Dennis is also fascinated by two competing aims the government has: to operate more efficiently like a business and to meet the social and policy goals that Congress and American law set for it. "Those two goals are almost always in conflict," he says. In addition, two-thirds of government managers are eligible to retire within five years, which could create more of a need for consultancies, he says.

What excites Means about government consulting is the broad effect that problem-solving can have. PwC is helping the Army this year in developing a distance-learning program in conjunction with 200 colleges and universities through which soldiers can receive college degrees. Means describes soldiers at Fort Benning, GA, waiting in the rain at 6 a.m. to sign up for the program, and likens it to music fans waiting in line for an 'N Sync concert.

Few people give the government credit for doing anything innovative, but Doria says that it's important to realize the constraints that government managers have to deal with. When Booz-Allen helped the U.S. Mint market its new currency last year, for example, they had to direct their efforts toward four "stakeholders": banks, individuals, and money exchanges, some of which engage in criminal activity, Doria says.

Mint officials had to determine who'd be the spokesperson for the campaign — President Bill Clinton or Treasury Secretary Robert Rubin? — and they had to work closely with the Federal Reserve Board, Secret Service, Treasury Department, Federal Bureau of Investigation, and the Bureau of Engraving and Printing. The marketing campaign helped the Mint not only to get the new currency into circulation, but also to have it become accepted by its targeted audiences.

Sidebar: Early Chapter

Grady Means, Global Leader, PwC, Federal Government Practice

After leaving government service in 1976, Means launched a strategic consulting business with Dick Darmon that registered $1.3 billion to $1.4 billion in sales before he sold it to Coopers & Lybrand in 1984. "I have done just about anything," Means says. A former aerospace engineer, he has studied applied mathematics and economics and also taught at the Stanford University business school.

Bob Campbell, Global Leader, Deloitte Consulting, Federal Government Practice

Campbell became familiar with government consulting when he studied public administration in graduate school. He worked on several assignments then for federal agencies. After becoming familiar with the consultancies, he decided to work at Deloitte. "There is an opportunity to make a real difference in peoples' lives" in public sector work, he says.

Stanley J. Gutkowski, Managing Partner, Accenture, Federal Government Practice

When Gutkowski received his M.B.A. in 1973, he wanted to be an investment banker — but such Wall Street jobs were scarce because of the economy. Unsure of what he wanted to do, he took an "entry-level" consulting job, he says. Early in his career, he worked for transportation and utilities clients before joining Accenture's federal government practice.

Sidebar: Forging a Government Career at Booz

Nearly 23 years after she first joined Booz-Allen & Hamilton, Joyce Doria still recalls the client project that ultimately helped fortify her career.

Seeking to better develop and reward its people, the U.S. Navy was looking to develop a system for measuring the performance of high-level civilians within the Navy's employ.

Contrary to the guidance she received from an advisory panel of four retired Navy captains, Doria proposed that the Navy adopt a performance board made up of both civilian executives and naval officers.

The 3-year, $12 million U.S. Navy contract hardly seems worthy of note by today's standards, but at the time such a contract was a unique opportunity for a 23-year-old looking to build a reputation as a newbie project manager. That is, of course, if Doria won the business — which she didn't.

After the Booz team presented its design proposal, a heated debate about the performance board got underway, with the naval majority winning the day. In the end, the Navy decided that the civilian job performance boards would be composed of only Navy officers. A Booz rival whose bid included an "officer-only" board secured the contract.

After the loss, a senior vice president of Booz's Defense Department business asked Doria if she would have used the same strategy if she knew she were going to lose. Doria recalls responding "yes" to the question without hesitation; upon which the senior partner said: "That's all I wanted to hear."

Today, with some satisfaction, Doria recalls that the job performance evaluation system was a "colossal failure," a situation that led the Navy to eventually migrate to a job performance board design similar to the makeup of what Booz had proposed. But more importantly, Doria recalls how the experience taught her an invaluable lesson.

"You have to maintain the objective integrity of the firm," Doria says. "This firm doesn't roll over" when government clients try to withhold payment because they don't agree with the analysis, which has happened twice, she says. "It's important that people stand firm, even if we lose the client."

Doria came to Booz-Allen 23 years ago after studying psychology at Brandeis University with Abraham H. Maslow, who developed the theory of the hierarchy of needs, which he claims governs human behavior. Doria first worked in counseling psychology, and then started working for government agencies as a consultant. Eventually she developed programs for General Research Corp.

She developed interests in human resources, training, and strategy, but when Booz-Allen "tapped her on the shoulder" to come work with the consultancy, Doria recalls that there were few female consultants. She also remembers that Booz-Allen did not work in the "soft sciences" of human resources, training, and strategy, which she has dedicated her career to developing.

"People use to say 'it's the soft sciences' as if to downplay their importance," Doria says. "But if you mess with the people, you disrupt the whole organization, and it's hard for the organization to achieve its strategy or goals. It's the people who are the soft underbelly of any organization; that's where the organization lives … or dies."