1. A few days ago @i_m_m wrote a wonderful story about McKinsey helping the Trump administration's immigration policy implementation. I looked into *why* McKinsey is so embedded into government operations. mattstoller.substack.com/p/why-taxpayer…
2. The immigration cruelty is critical, with McKinsey fighting with ICE staff to deny food and medicine to detainees. The driving incentive for McKinsey was to embed itself into the political center of ICE to grab cash. It's a story of corruption *and* cruelty. 
3. McKinsey is everywhere in gov't, and their business is to charge a lot for pedantic advice. It's also very expensive. A 23-year old McKinsey consultant charges the gov't $56,707 a week, or $2,948,764 per year. Here's a McKinsey schedule published by a government investigator.
4. McKinsey is far more expensive than its competitors. Boston Consulting Group charges half as much, or $33k a week for a junior contractor. In fact McKinsey charges so much it caused a scandal. And that's saying a lot for government contracting.
5. Earlier this year the General Services Administration’s Inspector General recommended in a report that the GSA cancel McKinsey’s entire government-wide contract. gsaig.gov/sites/default/…
6. The scandal was simple. McKinsey asked for 10-14% price hike. The line contracting officer said no. McKinsey appealed to the boss, who said yes and lied about costs to justify the price hike.
7. "We would really appreciate it if you could assist us with our Schedule 70 application. In particular, given that you understand our model, it would be enormously helpful if you could help the Schedule 70 Contracting Officer understand how it benefits the government."
8. The boss at GSA lied, manipulated pricing data, and refused to do audits. Finally the boss just straight up told the inspector general, “My only interest is helping out my contractor.”
And this gets to the real scandal, which is the Reinventing Government initiative.
And this gets to the real scandal, which is the Reinventing Government initiative.
9. The IG did not recommend firing the GSA division boss nor did the boss engage in bribery. And keep in mind, GSA is supposed to do bulk buying to lower costs across government. Why would a bureaucrat in a bulk buying gov't want to *raise costs*?
10. The answer is that since 1995, GSA has gotten a piece of every contract it negotiates. This is called the "industrial funding fee." GSA doesn't have to get appropriated from Congress anymore. mattstoller.substack.com/p/why-taxpayer…
11. In the case of McKinsey, they cost roughly $1B since 2006. GSA got $7.2 million of the contract. GSA is supposed to give extra money back to Treasury, but does not of course. They stuff it into reserves and use it to buy lots of cars. I'm not kidding.
12. The Industrial Funding Fee is completely messed up. Bill Clinton implemented it to make government 'more entrepreneurial', but of course it was just an incentive to outsource everything at higher and higher prices.
13. The GSA Inspector General has noted similar scandals as the McKinsey one with Carahsoft, Deloitte and Oracle. GSA chiefs attack subordinates who hold the line on pricing/value. It's systemic overpayment for poor service and goods. mattstoller.substack.com/p/why-taxpayer…
14. Reinventing Government is why the government overpays for everything and has less and less internal knowledge. It's why the ACA website didn't launch, because government competence has been ripped out.
15. This extreme graft is why D.C. and its surrounding counties are the richest counties in the United States. Meanwhile, McKinsey fucks up everything it touches. politico.com/story/2019/07/…
16. As hard as it is to believe, the U.S. government used to be a jewel of competence and honorable behavior. But Bill Clinton and Newt Gingrich destroyed that culture, and no one in elite circles bothered to pay attention to institutional details to even notice.
17. At any rate, it's not that hard for Congress to start repairing the damage. Kill the Industrial Funding Fee and begin appropriating money for GSA. The gov't spends a few trillion a year. Let's spend it wisely. mattstoller.substack.com/p/why-taxpayer…
18. Just one quick correction. The Federal Acquisition Services part of GSA doesn't have to get appropriations.
19. If you liked this thread, you'll like my book Goliath on the hidden history of the 100 year fight between democracy and monopoly power. amazon.com/Goliath-Monopo…
