The World Health Organization broke its own rules to spend millions on BCG consultants
March 23, 2022 | News | No Comments
The world’s leading health organization, the WHO, repeatedly broke its own rules and spent millions of dollars on high-priced management consultants, according to a new independent audit — even as the United Nations agency has struggled to pay for lifesaving equipment and vaccines in its global Covid-19 response.
An unnamed consulting company, which Vox has identified as BCG, charged the World Health Organization $11.72 million since the start of the pandemic for contracts that were dubiously awarded, according to the audit.
These revelations, which one expert called “disturbing” in an interview with Vox, came after a Vox investigation showed how management consulting firms such as BCG and McKinsey have become ubiquitous in global public health organizations, despite the concerns of many health practitioners about multimillion-dollar price tags, potential conflicts of interest, and the opaque nature of consulting work.
WHO researchers told Vox that the auditor report raised questions about the agency’s ability to responsibly and transparently spend public money from the 194 member countries that fund it. In recent months, the WHO has requested donations from its members and the general public, citing a funding gap of more than a billion dollars for its pandemic response.
Given that the WHO’s 2020-21 budget is $5.84 billion, $12 million may not sound like a massive amount — “but $12 million for a health care system in a low-income country would comprise a significant portion of their funding,” says Adam Kamradt-Scott, the incoming global health chair at the School of Transnational Governance in Florence, who studies the WHO. That amount could pay for about 600,000 Covid-19 vaccine doses from Pfizer/BioNTech or Moderna. (The WHO is part of Covax, whose aim is to ensure all countries have equitable access to vaccines.) “If it’s money being wasted, that’s a lot of vaccines that could have been purchased,” Kamradt-Scott added.
The audit, which examines a sampling of the WHO’s biggest contracts, analyzed the agency’s work with BCG, known as “Consulting Firm A” in the report, and uncovered multiple violations of WHO policies. The auditors claim WHO staff sought to circumvent the organization’s public procurement rules in order to help BCG win a contract. Staff at the agency also broke WHO rules by repeatedly starting work with the firm before seeking formal approval to do so, according to the report.
Before the pandemic, Vox revealed the WHO committed at least $12 million on consultants to support the agency’s reform, approximately a quarter of which has been paid for directly by the Bill and Melinda Gates Foundation. At the time, a WHO spokesperson said the agency welcomed consultants’ work. “The [consulting] companies have supported WHO in areas where we lack in-house expertise or want to tap the current best-in-class standards.”
But controversy has surrounded high-priced consultants in a field dedicated to improving the health of the world’s poorest people. The consulting firm McKinsey advised the Trump administration on how to cut spending on food and medical care for migrants and played a role in increasing sales of prescription opioids, which have been linked to the deaths of hundreds of thousands of people around the world. Vox also documented how BCG helped boost sales of sugary drinks in India, although the WHO has called for reducing sugary drinks consumption and supports taxing the products.
The findings in the audit were recently accepted by the WHO’s member states at the annual World Health Assembly. In a statement, the WHO said it “takes seriously the recommendations of our oversight bodies and uses the constructive comments to address any identified weaknesses in our control environment — we are a learning organization, and these reports help us to continuously improve in all identified areas.”
The international agency said the contracts were awarded in the context of an unprecedented health emergency, but added that the agency is taking the recommendations in the report seriously, and has “already begun implementing many of those related to procurement.”
In a statement, BCG said, “As the global pandemic unfolded last year, BCG rapidly mobilized teams to support worldwide efforts to fight the spread of the virus. We are extremely proud of our work that contributed to saving lives in this unprecedented time and remain committed to providing our best minds and efforts to support the progress of public health.”
It’s possible “the high stress and the insufficient human resources at the onset of the pandemic made things worse and made WHO even more in need of consultants’ support and more vulnerable to their conditions,” said Gian Luca Burci, the WHO’s former legal counsel.
But “this seems to have been a misuse of funds,” Kamradt-Scott said. “This is disturbing. At least on the surface, it would appear that due diligence checks in how external agencies are engaged don’t appear to have been followed.”
“The auditor’s report raises a red flag, and the issue of WHO’s contracts with management consulting firms deserves more scrutiny,” said Suerie Moon, co-director of the Global Health Centre at the Graduate Institute of Geneva. At the end of the day, Kamradt-Scott said, the WHO has a “moral obligation to ensure every cent is spent appropriately.”
How the WHO broke its rules to work with BCG
Publicly funded agencies, including those that are part of the UN system like the WHO, are supposed to follow stringent rules when hiring external contractors such as management consultants. According to WHO policy, staff should “obtain the best value for money” when hiring external contractors, allow for “transparent competition among prospective providers,” and treat contractors equally.
According to the audit, BCG won eight contracts with the WHO in 2020 for a total value of $11.72 million, and the auditors closely scrutinized the two highest-value contracts, for which the WHO paid $5.4 million.
1) The auditors found WHO staff changed criteria to help BCG win work at the agency. For a contract that lasted from December 2020 to May 2021, the organization asked consultants for competitive proposals to “support the long-term vision for WHO supply chain and to build capabilities to execute the long-term supply chain vision.” Of the four consultants that submitted bids, BCG was one of two that were deemed technically qualified. But another firm won the highest score and should have been awarded the contract, the audit found. “WHO changed the evaluation criteria and re-evaluated the bids as per which Consultant A [BCG] scored higher and was awarded the consultancy,” the report said.
“The findings of the independent auditor suggest this doesn’t seem to be a case of negligence where protocols haven’t been followed because someone didn’t know what to do,” Kamradt-Scott told Vox. “It would appear WHO staff knowingly sought to circumvent the rules in order to engage a preferred provider.”
2) BCG started working for the WHO ahead of formal approval, according to the report. For the second contract, which ran from March to October 2020, BCG was hired to help the WHO purchase personal protective equipment and other essential supplies during the pandemic. Here, too, the auditors uncovered multiple irregularities.
The WHO started the work with BCG “without due approval of the competent authority, despite the fact that it entailed payment of $2.53 million by WHO,” the auditors wrote. WHO staff only sought formal approval four months after BCG started work for the agency and three of the four phases of their contract were complete, the audit found.
In the report, the WHO says it didn’t have the human resources to go through the proper procurement processes, but the auditors rejected this reasoning. “We are of the view that the formal process of approval should have been adopted before accepting the offer of [BCG] and engaging the firm. The delay in getting the approval of the competent authority was not justified.”
3) The auditors questioned whether BCG provided value for money. In one of the nine purchase orders that BCG negotiated on behalf of the WHO, the consultants got a 20 percent price reduction on protective gowns. The WHO and the consultants placed the order and approved the quality of the gowns. But an external PPE supplier, which was supporting the WHO, deemed the gowns low-quality and canceled the order. In another case, auditors flagged a missed opportunity for savings. Consultants negotiated a discount of 0.08 percent off N95 masks, for a savings of $9,750. In the same month, the same supplier fulfilled another mask order with a discount that amounted to $303,200. “We noted that [BCG] did not negotiate this price, which had better potential for saving,” the auditors wrote.
4) WHO paid millions of dollars for “pro bono” work. Another revealing finding from the audit was that BCG characterized its PPE procurement work as “pro bono,” even though one seven-month contract cost $7.3 million, of which $2.53 million was paid for by the WHO. Only the cost of the first of three phases and a transition period was covered by the consulting firm. “We are of the view that calling this engagement pro bono is not correct,” the report says.
The report comes at a time when the WHO is trying to strengthen its finances and wrangle more flexibility over how it spends money. The agency is asking for more support from countries that fund it — known as “assessed contributions” — which can be spent on a variety of expenses. The WHO is also funded by donors, such as the Gates Foundation, but that money tends to be earmarked for specific purposes.
As troubled as Moon was by the audit report’s findings, she suggested that scrutiny from the auditors is a step toward a stronger World Health Organization. “You can only have less earmarking if it’s followed by more accountability and transparency,” she said. “Heightened scrutiny of contracts with management consulting firms is one place to start.”