KPMG wins UK government contracts despite pulling out of tenders after scandals

KPMG has secured millions of pounds in UK government contracts since pledging to temporarily stop bidding for public sector work after being threatened with a ban over its involvement in a series of corporate scandals .

The Big Four consultancy has won 22 UK public sector contracts worth £10m (€11.9m) since saying in December it would stop offering funded work by taxpayers pending the outcome of a Cabinet Office review.

The biggest of these is an estimated £3m share of a £21m contract awarded by NHS England.

Additionally, KPMG has won contracts worth up to £3.2m to advise four government departments, including the Department of Defense and the Department for Environment, Food and Rural Affairs. , according to Tussell, who tracks government contracts. Energy regulator Ofgem has also hired the company.

KPMG said it had agreed with the Cabinet Office to “pursue tenders already underway or new work where it is in the public interest to do so”. He added: “The very small number of contracts awarded to us since then fall into this category.”


The contracts included “vital work with NHS England”, he said. Some of the contracts were not awarded by the central government and were therefore “outside the agreement with the Cabinet Office”, a person briefed on the matter said.

Since KPMG’s agreement to halt tenders for new government works, regulators have ordered the firm and its partners to pay £4.8million in fines and fees for failures audit of cocktail and restaurant group Revolution Bars and Conviviality, the collapsed owner of Bargain Booze.

In January, he admitted misleading Financial Reporting Council inspectors during checks on his Carillion audit. The following month he pledged to defend a £1.3billion lawsuit brought by Carillion’s liquidators, who claim the auditor missed ‘red flags’ indicating that the UK contractor’s accounts were wrong and that the group was insolvent more than two years before its collapse.

Despite legal and regulatory issues, KPMG’s UK partners received an average of £688,000 last year, their biggest payout since 2014.

The Cabinet Office said it was continuing to monitor the situation and KPMG’s review was “ongoing”.

“KPMG was awarded a small number of contracts in very limited circumstances, such as continuing with major projects that were already underway,” the Cabinet Office said.

Meticulous examination

The government’s scrutiny of KPMG followed the company being fined £13million by an industry court in August for gross misconduct when it pushed bed maker Silentnight to insolvency to help a private equity firm purchase the business without the burden of its pension liabilities.

The consultancy was singled out last year by the FRC for its “unacceptable” failure to improve its bank audits for the third consecutive year. The watchdog is still investigating KPMG’s work for Rolls-Royce and Eddie Stobart Logistics, as well as Carillion.

KPMG, which employs 16,000 people in the UK and is one of the largest government consultants, has already been barred from bidding to run training for civil service apprentices after a report by the Ofsted deemed an existing scheme “inadequate”, the lowest possible score.

A total ban on bidding for public sector contracts is rare. Security firm G4S was temporarily banned in 2013 after it overcharged the government for electronically tagging criminals, some of whom were dead or still in jail.

Deloitte stopped presenting public works for six months in 2016 after a leaked memo in which its consultants criticized the government. – Copyright The Financial Times Limited 2022

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