This audit assessed how effectively New South Wales (NSW) government agencies procure and manage consultants. It examined the role of the NSW Procurement Board and NSW Procurement (a unit within NSW Treasury) in supporting and monitoring agency procurement and management of consultants.

The audit used four sources of data that contain information about spending on consultants by NSW government agencies, including annual report disclosures and the State's financial consolidation system (Prime). It also reviewed a sample of consulting engagements from ten NSW government agencies.

Key findings:

• A review of a selection of consulting engagements indicates that agencies do not procure and manage consultants effectively.
• The audit found most agencies do not use consultants strategically and do not have systems for managing or evaluating consultant performance. The audit also found examples of non-compliance with procurement rules, including contract variations that exceeded procurement thresholds.
• NSW Procurement has made improvements to the information available about spending on consultants, including additional analysis and reporting. However, there is no single data source that accurately captures spending on consultants.
• The analysis of data on whole-of-government spending on consultants, drawn from agency annual reports, indicates that four large professional services firms accounted for about a quarter of consultancy expenditure from 2017–18 to 2021–22. This concentration increases strategic risks, including over-reliance on a limited number of providers and potential reduction in the independence of advice.

The report makes seven recommendations which aim to improve:

• the quality and transparency of data on spending on consultants
• monitoring of strategic risks and agency compliance with procurement and recordkeeping rules
• agencies' strategic use of consultants, including evaluation and knowledge retention.