February 13, 2024

by Michael R. Wickline | Arkansas Democrat-Gazette

An Arkansas legislative panel on Tuesday signed off on the state Department of Transformation and Shared Service’s consulting contract for up to $5.5 million to help the state’s 15 executive branch agencies become more efficient and improve services to Washington, D.C.-based McKinsey & Co.

The Legislative Council’s Review Subcommittee reviewed the contract Tuesday.

In related action, the Legislative Council’s Performance Evaluation and Expenditure Review Subcommittee recommended the Legislative Council approve the Department of Transformation and Shared Services’ request for $4.2 million in state restricted reserve funds to help pay for the consultant. The transformation department funds will cover the other $1.3 million of the cost for the consultant, based on the contract.

The contract with McKinsey & Co. is for one year and is scheduled to start next week, if the Legislative Council completes its review of the contract, and “our priority within this is for the pay plan and the merit evaluation system for a recommendation to come to us by June 1,” state Department of Transformation and Shared Services Secretary Leslie Fisken told the Legislative Council’s Performance Evaluation and Expenditure Review Subcommittee.

Sen. Greg Leding, D-Fayetteville, asked whether there are any estimates about how much the state could save through increased efficiency in the executive branch agencies with the help of the consultant.

Fisken said “it is about savings, but also updating our internal and external processes and really creating a better experience for our customers — the taxpayers — [and] also creating better processes internally for our employees.

“There are estimates of approximately $500 million in savings [with] the majority of that is looking specifically at procurement with duplicative contracts [and] renegotiating contracts and also looking at the fleet vehicle management,” she said.

Rep. Jeff Wardlaw, R-Hermitage, asked where the significant savings are projected to be.

The “significant savings” would be in procurement, real estate, the fleet management and possibly information technology, Fisken said.

Rep. Tippi McCullough, D-Little Rock, asked over what time period the $500 million in estimated savings could be realized. Fisken said that “part of the savings could happen initially, literally within the first year.

“We would get these recommendations [and] we would have to put a lot of these changes in place over a two- to three-year timeframe,” she said. “The procurement and vehicle fleet I think are the quickest, as they said low-hanging fruit, where we could see savings.”

Leding asked whether McKinsey and Co. submitted the most favorable bid.

Fisken said eight proposals were submitted in response to the state Department of Transformation and Shared Services’ request for proposals, and “this one had the highest technical score and they had the lowest cost … [and] that’s how we selected this contract.”

In its proposal, McKinsey & Co. wrote that “We believe that Arkansas’ transformation could deliver at least $500 [million] + in annual efficiencies and 10-30% effectiveness improvements across government processes and services, based on our experience in other states and an ‘outside-in’ analysis of Arkansas’s data.”

The state Department of Transformation and Shared Services awarded the contract to McKinsey & Co. after issuing a request for proposals for “strategic management consultant services” Dec. 18 and receiving eight proposals by the Jan. 16 deadline for prospective consultants to submit proposals. The transformation department issued the request for proposal after the state’s “pro-bono services” agreement with The Boston Consulting Group, which started Oct. 2 and ended Dec. 15.

McKinsey & Co.’s proposal A received the highest score of 1,000 points from the state’s evaluation team among the eight proposals submitted, and The Boston Consulting Group received the second-highest score of 820.70 points, according to state records.

Full article can be viewed HERE.